As recently reported on Accountingweb, the Airbnb accounts for 2019 include a statement confirming that the company will share data with HMRC about the earnings of hosts on its UK platform in 2017/18 and 2018/19.
HMRC has used its “Connect” system for years to track property income and identifying unreported income; the statement in Airbnb’s accounts illustrates the extent to which the authorities will go.
The normal deadline for opening an enquiry into a 2018/19 Self Assessment return is 31 January 2021, however “discovery” rules enable HMRC to reach back up to 20 years in cases of fraudulent non-disclosure.
Hosts who let a part of their main home may escape any reporting obligation where the income in question qualifies for rent-a-room relief (the annual rent-a-room relief allowance is £7,500).
However, hosts letting a second or third home that generates income in excess of the £1,000 miscellaneous trading income allowance in any tax year will be required to report the income through the Self Assessment system.
In addition to income tax considerations, capital gains tax may also apply where residential property that has previously been let is sold at a gain. Under new rules that came into effect in April 2020, capital gains on the disposal of residential property must now be reported – and the tax paid – within 30 days of completion.
Non-UK residents must disclose all disposals of UK property or land within 30 days of completion, regardless of whether there is a capital gains tax liability.
In cases of non-declaration of property income, taxpayers are advised to correct matters promptly. The 2018/19 Self Assessment return can be amended by the taxpayer until 31 January 2021. Under-declarations relating to prior years should also be disclosed to HMRC promptly as penalties levied by the taxman may be lower where disclosure is initiated by the taxpayer, rather than prompted by HMRC.
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