Landlords need to fully disclose of all their taxable property income, including all prior years.
The Airbnb UK accounts for the year to 31 December 2019 include a statement that the company will share data with HMRC about the earnings of around 225,000 hosts on its UK platform in the years 2017/18 and 2018/19.
This is following an investigation by HM Revenue & Customs (HMRC) into Airbnb UK tax arrangements, resulting in Airbnb paying an extra £1.8m extra corporation tax bill and agreeing to cooperate with HMRC to share data.
The data share could lead to a rise in HMRC targeted enquiries into the tax affairs of individuals who have not declared their lettings income for 2017/18 and 2018/19.
The deadline for opening an enquiry into a self-assessment return for 2018/19 is 31 January 2021, if the return was issued and submitted on time. However, should HMRC raise a discovery assessment they have powers to go back much further, up to 20 years in some cases.
Have I got anything to declare?
The first £1,000 of your income from property rental is tax-free. If you are renting a room in your main residence and meet the condition you may qualify for Rent-a-room relief of £7,500.
It is highly advised that if you have any undeclared rental income, which is not covered by the above reliefs, that you seek to correct the position quickly.
It is possible to amend a 2018/19 tax return up until 31 January 2021, any earlier years would need to be disclosed via HMRC’s ‘Let Property Campaign’. The campaign is open for individuals who let UK residential property only, this does not apply from non-residential property or properties which are let through a company or trust.
The campaign allows property landlords the opportunity to get their tax up to date, and by making a full and voluntary disclosure of all unpaid liabilities it is usually expected that there are lower penalties than if HMRC were to raise an enquiry or compliance check without the disclosure.
More information regarding this campaign can be found here.
If there is undeclared income from property overseas, then HMRC’s Worldwide Disclosure Facility should be used to declare.
If you think this may affect you, get in touch with our team and we can give you more information on this topic.