Tax man to blitz holiday lets profits

HM REVENUE & Customs is planning a tax crackdown on holiday lets following the record staycation boom of the last two years.

Tax experts warn that profits from summer staycations will be an easy target for HMRC, and are urging owners to make full disclosure when submitting their self-assessment returns.

Accountancy group UHY Hacker Young said the crackdown will start in 2022, with owners facing investigations if they fail to report earnings.

It warned HMRC has the power to request information from third parties such as holiday booking sites. Airbnb has previously agreed to share information on income earned by its UK hosts, as part of a 2020 tax settlement with HM Treasury.

UHY Hacker Young partner Neela Chauhan said HMRC algorithms will easily identify those under-declaring. “As HMRC’S Let Property Campaign aimed at the buy-to-let sector shows, the Treasury sees landlords as an obvious target for tax investigations and extra tax revenue.”

Chauhan said owners must resist under-reporting income. “Landlords who fail to declare unpaid taxes risk fines and criminal prosecution.”

Separate research shows that nearly two thirds of homeowners consider holiday lets a good investment, with Original Cottages reporting a 40 per cent hike in enquiries in the last year.

Personal finance expert Rachel Springall from Moneyfacts said low interest rates mean savers are seeking alternatives to cash. “The surge made lets more appealing but there’s plenty of admin, including declaring income on your self-assessment tax return.”