HMRC targets landlords of short-term rental properties over unpaid tax

Landlords listing properties on Airbnb and are the latest group to come under HMRC scrutiny.
Landlords listing properties on Airbnb and are the latest group to come under HMRC scrutiny.

LANDLORDS earning cash from properties listed on the likes of Airbnb and are the latest group to come under the scope from HM Revenue & Customs (HMRC)’s digital-focused tax campaign.

Owners of short-term lets have been warned they risk facing penalties for tax evasion if they fail to report income on their rental properties.

HMRC is increasingly broadening its approach to target undeclared income in the digital age.

Earlier this month, it sent thousands of letters to online traders, gamers and social media ‘influencers’ suspected of not paying the right tax for money earned online.

Around 2,300 people making money or receiving gifts for posting content on the likes of Instagram, TikTok, YouTube and OnlyFans are understood to have been targeted.

So-called ‘nudge’ letters are also to be sent to around 2,000 sellers on marketplaces including eBay, Facebook and Etsy.

Now short-term landlords advertising their property on the likes of Airbnb are coming under scrutiny from the HMRC digital campaign.

Belfast-based tax expert, Angela Keery from Baker Tilly Mooney Moore, said under current tax requirements, people who rent out rooms in their own homes do not need to declare their rental income, unless they earn more than £7,500 from the property per tax year.

If two people receive income from that same property, the limit drops to £3,750.

But she warned the tax relief does not apply to income gained from letting additional properties such as second homes.

In those cases, hosts only receive a tax-free allowance of £1,000 per tax year.

“The rules and limits around income from short-term rentals are very clear, however this move by HMRC to target short-term landlords should serve as a reminder that landlords have responsibility for their own declarations.

“Anecdotally, we see more and more people coming into the rental market as landlords, so many who are new to it or are only renting one additional property may have a limited knowledge of their obligations.

“The launch of the HMRC campaign is a good time for customers to get their tax affairs in order, and ensure they aren’t at risk of facing a penalty down the line."