Landlords face tax crackdown

Homeowners warned they must declare their earnings from rentals

LANDLORDS using popular websites to let their homes shortterm are being warned they could fall foul of the taxman unless they declare the earnings.

HM Revenue and Customs (HMRC) is thought to be taking a close interest in the booming marketplace for people wishing to let out their homes via sites such as US-based Airbnb.

The firm, founded in 2009, has capitalised on the desire for “unique travel experiences” by allowing homeowners to advertise house, apartments and even castles to millions of their “guests” online at the click of a button.

Property owners must register their details, however, and there is a belief that names and addresses of those cashing in could be opened up to the HMRC following similar moves in Ireland.

Many who receive rental income through online sites – which have seen phenomenal grown in Scotland – are often unaware their liabilities are the same as those using traditional agents.

Fears are also growing that Scots Airbnb users will be subject to additional scrutiny by HMRC after Ireland forced the company to reveal its users to tax officials last year, to ensure they were paying tax.

The business has since denied it will do this in the UK, but it may have little choice, as HMRC has the power to force companies to hand over the details of customers thought to be hiding income.

Bruce Wilson, a tax specialist at Murrison and Wilson accountants in Glasgow, said that HMRC were already clamping down on buy-tolet landlords by asking for their details from letting agents across the country, which in the future could expand to online companies. He explained that many people are also unaware of their tax liabilities when renting out buy-to-let properties.

“I think it is quite a big problem – I think a lot of people make a fundamental mistake in thinking that if they’re not on an interest-only mortgage, so capital and income, the whole payment they’re making to the bank or building society is deductible and in fact it’s only the interest that is.”

He added: “So I think it is a lucrative ground for the Revenue to dig around in.

“The professional advice is you should tell the tax man. If people are in doubt, they should contact the tax man.”

The accountant said there had been a huge growth in buy-to-lets in the past ten years – many of which are now being advertised independently on sites such as Airbnb – as an alternative to other investments, especially as people have started to move away from traditional pensions.

An HMRC spokesman said: “Any income you receive in return for providing goods or services, or for the use of assets, is likely to be taxable.

“As with any other type of taxable income, this should be declared to HMRC. This applies even if the income is received in non-cash form, for example, through a barter scheme.You have to pay income tax on any rental income.”

Airbnb advises people to comply with UK regulations on tax declarations.

Properties currently advertised on the website include 12th-century Dairsie Castle, in Fife, at £500 a night. There is no suggestion the owner has not paid the correct tax.

‘‘ I think it is a lucrative ground for the Revenue to dig around in … The advice is tell the taxman