HMRC homes in on Airbnb landlords

Newsletter issue – March 2023

Online platforms such as Airbnb are now obliged to provide HMRC with data about the payments it makes to individuals who let rooms on a short-term basis. HMRC is matching that data to tax returns and writing to taxpayers who have apparently not declared their rental income correctly.

If you receive such a letter don‘t be alarmed by the aggressive tone, as HMRC is asserting that you owe tax, but that may not be the case.

If you have let a room or two in your own home, the rental income may be covered by rent-a-room relief (£7500 per year). If you have let out a separate property for holiday lets, income of up to £1,000 per year can be covered by your property income allowance.

If the rents you received in a tax year do not exceed these two thresholds (which can‘t be combined for the same property) you are not required to report the rental income on your tax return.

Where your rental income has exceeded these thresholds, you may have expenses to deduct from the gross income, which will reduce your taxable profit.

In any event you should respond to the HMRC letter within 30 days, and we can help with that.

We do not recommend that you sign the certificate of tax position enclosed with the HMRC letter, as this is not a legal requirement. The declaration on the certificate that the information is "correct and complete" is not restricted to a specified period, so it could mean you are asserting that an unconnected matter is correct when it isn‘t.