An accountancy firm has recommended that owners of rental properties and hosts should review their tax affairs, as Airbnb has an agreement to provide Her Majesty’s Revenue and Customs (HMRC) with the income details of hosts on the popular short-term rentals site, which may lead to an increase in tax investigations.

Property Wire reports that Airbnb’s UK branch has had £1.8 million added to its 2019 tax bill when HMRC initiated an investigation into its profits. Following this, HMRC issued a statement to announce it would be working to improve collection in many sectors, including short-term rentals.

While it is thought that there would be no additional tax due for the majority, accountancy firm Grunberg & Co. has recommended that hosts perform a voluntary disclosure, which can reduce any potential fines from HMRC.

Alexander Kossoff, a partner at Grunberg & Co, explained that previous reports from Airbnb estimated that the average annual earnings for a typical short-term rental host are a little over £3,000.

“Where someone uses the service to let part of the home that they live in they may be able to take advantage of the Rent-a-Room relief allowance of £7,500, which means they do not generate a tax reporting obligation below this amount,” he said.

He then added that hosts who rent out a second or third home, rather than part of their main home, cannot benefit from the same tax relief.

Disclosure can be advantageous for those who may have omitted residential earnings in previous years. The accountancy firm says doing so efficiently could ensure hosts are only required to pay the outstanding tax amount.

If you need tax planning accountants in Maidenhead, come and talk to us today.