Airbnb hands over Wales data to HMRC

It should come as no surprise to Airbnb hosts that the platform is sharing data with HMRC. It first disclosed in its 2019 accounts that it was formally data sharing and has likely been doing so since.

Opening enquiries

The Airbnb data will allow HMRC to launch targeted enquiries into the tax affairs of individuals who have not declared their lettings income. The deadline for opening an enquiry into a self assessment return for 2020/21 is 31 January 2023, if the return was issued and submitted on time.

However, the discovery rules allow HMRC to go back much further, up to 20 years in some cases. The data provided by Airbnb will certainly constitute a discovery for HMRC’s purposes, so up to 20 years will be open for enquiry.

HMRC is reported as saying it will address any issues over the landlords’ payment of tax in 2021/22. This clearly indicates that HMRC expects to use its discovery powers to open up tax enquiries going back some years.    

What to declare

The Airbnb insight report for 2017/18 says the annual earnings from Airbnb by a typical UK host is £3,100, (£3,500 here in Wales). This lies within the room-a-room relief allowance of £7,500, so would not generate a tax reporting obligation for a host who only lets out part of their main home.

However, letting a second or third home that generates income in excess of £1,000 in a tax year will create a tax reporting obligation. The £1,000 limit is the trading and miscellaneous income annual allowance that can apply to letting income that doesn’t fall within rent-a-room relief.  

How to declare 

If the landlord hasn’t declared their rental income, and it is not covered by rent-a-room relief or the miscellaneous trading income allowance, this situation should be swiftly corrected.

Where the taxpayer has submitted a tax return, and it is still in date for amendment, it should be amended without delay. The 2020/21 tax return can be amended by the taxpayer until 31 January 2023.

Where the omitted property income or gain relates to earlier tax years the taxpayer should consider disclosing under HMRC’s let property campaign.

This disclosure service has been running for over seven years, but it is only open to individuals who let UK residential property. It can’t be used to declare income from non-residential property or where the property has been let through a company or trust. Where the let property is located overseas the worldwide disclosure facility should be used.

The advantage in using the let property campaign to disclose is that the penalties charged for non-disclosure will be much lower than if the taxpayer waits for HMRC to contact them. If full disclosure and payment of the tax is made before HMRC spots there is a problem, the penalty can be reduced to nil.  

Getting Help

If you’ve not been declaring your Airbnb income (for whatever reason) PropertyTax.Wales can help. We offer a fixed price service to get your tax affairs up to date and keep any penalties to a minimum.

Remember, the data Airbnb are sharing with HMRC will be considerable. They will likely be working through it in order of size. Just because you haven’t heard from them yet, doesn’t mean you won’t.

Don’t wait for that letter!