It was only ever going to be a matter of time before the taxman got his claws into Airbnb. After all, eBay sellers have been on his radar for years. Well, now it’s time for professional and ad hoc Airbnb hosts to cough up too. 

That’s because, as part of a deal with the online letting giant, the UK Treasury was given the names of 225,000 Airbnb hosts. The company itself was also forced to hand over £1.8m in tax fees. That’s in addition to the £5.6m it declared as tax for 2019. 

Many Airbnb landlords won’t have to pay tax

Not all Airbnb hosts will be due to pay tax on their earnings. Some may fall within the Rent a Room category, for instance, and where it’s possible to earn up to £7,500 without having to be pay tax. Airbnb itself says the majority of its users earn around just £3,100 a year.

For those that may exceed the threshold, HMRC say they will go back at least a couple of years. That means looking through the records for the tax years 2017-18 and 2018-2019.  

Many tax analysts are recommending hosts eligible for tax ‘own up now.’ That way they could avoid further fees, such as interest and penalties for late payment since HMRC may possibly take this ‘quick rectification’ into account.

HMRC can investigate up to two decades of accounts

HMRC can, in fact, investigate tan individual’s tax/business accounts for the past four years if it believes an ‘innocent error’ was made. For a ‘careless’ declaration’ it will go back six years. For international affairs it can be 12 years for an ‘innocent mistake’ and 20 years for ‘failure to notify.’ Deliberate acts of underpayment can result in criminal action being taken.

A spokesman for HMRC said: “People with additional income streams may not be fully aware of their tax obligations and so we have taken steps in HMRC to consider sectors, such as short-term property letting, where we may not be collecting the full amount of tax owed.”

He added: “We would encourage customers to check their tax affairs, seeking advice where necessary, in order to put right any honest mistakes or omissions.” 

Airbnb landlords may be charged business rates

Those that don’t have to pay tax on their Airbnb earnings may have to look out for being charged Business Rates, however. These apply in England, Scotland and Wales if property is rented out for at least 140 days a year. These are based on number of beds available and overall size of the property, as well as its location. 

Other exemptions for Airbnb tax include:

• Rental income for the year is less than £1000
• Total income for the year – including employment – falling below the Personal Allowance (£12,500 for 2020/21)

Airbnb and other ad hoc landlords not familiar with the tax structure of property are always advised to contact an accountant specialising in the subject for further clarification. 

UK House prices hit a record high last month as the move by inner city dwellers to get to greener pastures continues.

Property portal Rightmove’s latest House Price Index recorded a national average asking price of £323,530 per property. That’s a 5.5% increase (£16,818) on the figure for the same time last year.

The stunning statistics, considering the current circumstances surrounding the coronavirus pandemic, has prompted Rightmove forecasters to predict a 7% rise in property values for 2020. They had previously put the figure at 2%.

A number of property records ‘smashed’

But it’s not just property prices that are ‘up’ – the number of properties sold per estate agent is also impressive. To the extent that last month 70% more houses sold than in September 2019.

And property is selling faster too. The average house or apartment is now taking just 50 days to swap hands – compared to 62 days.

It doesn’t look as if the situation is going to quieten down any time soon either, despite the run-up to the winter months. The number of active buyers compared to last year is down only 1% to 66% from its peak in July of 67%.

Even Rightmove are declaring records of their own for the portal – with a huge surge in traffic. They say the number of online visitors to their site was 50% higher than September last year. That’s the highest annual jump since way back in 2006.

But, Property Data Director of Rightmove Tim Bannister warned house sellers not to get too carried away with their asking price. That’s because the sheer volume of house sales has created a backlog and that may mean many transactions not going through before the end of the Stamp Duty Holiday deadline. As a result, some sales may fall through as buyers, losing thousands of pounds, may refuse to pay the higher property prices being asked.

The number of buyers potentially trapped in this property bottleneck could be as high as 200,000 according to online property consultancy TwentyCi.

Bannister added: “Whilst activity levels continue to amaze there are some signs of momentum easing off from these unprecedented levels.”

Estate agents say low mortgage interest rates has also helped fuel demand – to the extent there are currently more buyers than sellers.

Most sales have taken place in what Rightmove refers to as ‘top of the ladder’ properties. These are homes worth more than £500,000 with a minimum three to four bedrooms and where buyers will benefit from up to £15,000 in Stamp Duty savings.

Upmarket estate agency Savills say sales for around 868 properties worth £1 million upwards, have gone through on a weekly basis since June 1. These are mostly for rural areas, with the Cotswolds recording a 94% increase in sales since June this year.

London though is losing out on interest from foreign buyers. Interest in the city centre and other expensive areas has fallen since travel restrictions were introduced during the summer months. And yet, the capital has sold 4% more upmarket properties than at this point the previous year.