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Airbnb HMRC information sharing rules come into effect

UK: Rules enforcing the sharing of information by Airbnb and other firms with His Majesty’s Revenue & Customs [HMRC] have come into effect in the UK.

As of 1 January 2024, companies including the home-sharing platform, second-hand marketplace Vinted and e-commerce platform eBay are now required to collect and share details of transactions involving online “side hustle” activities with the tax authority.

The UK Government says that it is keen to “bear down on tax evasion” by sellers on digital platforms who are not declaring the extra income they receive from transactions. HMRC has now signed up to new rules outlined by the Organisation for Economic Cooperation and Development [OECD] that will require platforms to report the income that sellers receive on a more regular basis, and the information will be shared between countries that have also signed up to the OECD tax rules.

Companies affected by the implementation of the OECD rules will only be asked to share data about sellers who make at least 30 transactions a year, earning more than £1,735 [€2,000] in that timeframe.

An HMRC spokesperson told the BBC: “These new rules will support our work to help online sellers get their tax right first time. They will also help us detect any deliberate non-compliance, ensuring a level playing field for all taxpayers.”

Airbnb, Vinted, eBay et al will first be obliged to share information with HMRC at the end of January 2025. Information that will need to be shared includes bank account details, tax identification, and the value and volume of transactions by sellers who fit into the aforementioned bracket.

Last year, it was revealed that Airbnb hosts suspected of not declaring their rental earnings could face a potential 20-year tax investigation from HMRC that would cover six years of income information.

Between February and June 2023, HMRC said that it had sent 800 letters to hosts that it believed had not paid sufficient tax dating back to the 2017-2018 financial year. Before that, the UK Treasury had suggested that more than 50 per cent of owners did not realise it was necessary to pay tax on their incomes earned from renting out their properties.

Airbnb hosts were made aware that their data was being disclosed with the taxman, and the company promised to support them when it comes to understanding tax compliance and their obligations.

Under the current laws since data sharing began in 2018, hosts renting out properties through online rental platforms are able to make £1,000 a year before tax under a ‘tax allowance’, with any profits above that amount needing to be declared to HMRC. Those renting out a single room in their property have a much higher income threshold before they have to pay tax [£7,500] as part of the government’s ‘Rent-a-Room’ scheme.

However, those who fail to pay their income duties were warned that they could face criminal prosecution as well as strict penalties of up to 30 per cent of the tax they owe.

A section on Airbnb’s website currently reads: “As a company that facilitates payments in the UK, we are legally required to provide a limited amount of data about transactions that take place on the Airbnb platform to Her [His] Majesty’s Revenue & Customs [HMRC] when requested.”

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