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Airbnb / Short-stay holiday let tax: THE DEFINITIVE GUIDE Whether you run a B&B or guest house and wish to know how the burden your competition faces, or you rent out any of your property as a furnished holiday let, it is useful to be aware of the parameters of so called Airbnb tax.
FOR many Airbnb UK hosts, no income tax may have been paid on that income as a result of a relief targeted at lodgers called rent-aroom relief. Rent-a-room relief allows for gross income of up to £7,500 a year to be received on a property that is the individual’s main home and the legislation does not currently include any requirements for the landlord to be living in the home at the time. However, from April last year rent-a-room relief has only been available where the host also lives in the property at some point during the rental period. That’s an added extra which many guests want to avoid if they are looking to rent the entire property. The restriction on rent-a-room relief has been described by some as the ‘Airbnb tax’, but for many the platform still offers its hosts the opportunity to benefit from valuable tax reliefs and could drive more entrepreneurial behaviour as they seek to operate more like a business.
LEGAL OBLIGATIONS The reality is that people renting out rooms via Airbnb are deemed by the taxman to be running a business. Therefore, just like any busiw READ ONLINE & SHARE >> ness, they are legally required to pay tax on the luxurybbmag.co.uk/a20-finance money they earn. Matt Bryant, Zig Zag Accounting
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This means that a host who earns a small amount each month from renting out a room, provided that amount over the course of the financial year does not exceed the personal allowance of £12,500, will not be required to pay tax on Airbnb earnings. If, however, the Airbnb revenue exceeds that amount, there is a responsibility to declare that money and pay the relevant taxes. HOW MUCH TAX MUST HOSTS PAY? There’s a difference between renting out a room in a property owner’s main residence and renting out a room in an investment property. If someone is letting a room in their own home, there are several tax-free allowances and advantages that can be gained in relation to paying tax. Hosts running an Airbnb business involving an investment property or a property you do not live at full-time will be taxed as a business owner. BUSINESS RATES ON FURNISHED HOLIDAY LETS IN THE UK Airbnb hosts who own properties in the United Kingdom may be subject to business rates. www.luxurybbmag.co.uk
