Declaring rental income through the Let Property Campaign
Airbnb accounts for the year to 31st December 2019 reveal that the company will share data with HMRC about the earnings of those who let out property via its UK platform in the years 2017/18 and 2018/19.
It is anticipated that HMRC will use this data to open enquiries where the Airbnb information does not match the lettings earnings declared by the individual. With the deadline for opening an enquiry into a self-assessment return for 2018/19 being 31st January 2021, some Airbnb landlords could be in for a nasty Christmas surprise!
Criticism has been levelled at Airbnb in regard to its guidance to landlords, which only provides gentle encouragement to report income to HMRC and does not advise how to declare income from past tax years, or what to do in the case of a tax enquiry. However, the Airbnb insight report for 2017/18 states that the annual typical earnings for a UK Airbnb landlord is £3,100. Where rent a room relief applies, this level of income would not give rise to a tax liability and would therefore not need to be reported.
Is it just Airbnb that is affected?
No, HMRC have similar arrangements with other rental platforms and letting agents, so if you rent properties through any kind of third-party provider you could be at risk.
What can you do if you have missed your rental income off your tax return?
The 2018/19 tax return can be amended by the taxpayer up until 31st January 2021. Where the omitted income relates to earlier years, the taxpayer can disclose this using HMRC’s Let Property Campaign. The advantage to making a disclosure via this campaign is that the non-disclosure penalties will be much lower than if you are selected for an HMRC enquiry. If full disclosure and payment of tax is made before HMRC opens an enquiry, the penalty can be reduced to nil.
What is the Let Property Campaign
The Let Property Campaign has been running since 2013 but is only open to individuals who let UK residential property. It cannot be used to declare income from commercial 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.
How to take part in the Let Property Campaign
Notify your accountant at ER Grove & Co, who will guide you through the appropriate steps below:
- Notify HMRC that you want to take part
- Disclose all income, gains, tax and duties that you have not previously declared, in addition to rental income
- Make a formal offer
- Pay what you owe
- Help HMRC as much as you can if they ask you for more information.
Remember, the more helpful you are to HMRC and the more accurate your information is, the larger reduction in penalties you will see!