Tax relief on AirBnB lets may get the chop as the government looks at revamping rent-a-room rules for short-term rentals.
Rent-a-room allows householders to earn up to £7,500 a year from lodgers.
But the Treasury feels holiday lets are an abuse of the rules that were designed to ease the need for long-term homes.
Rent-a-room tax relief was intended to encourage householders with spare rooms to let them out to help ease the housing crisis, but loose wording in the rules has seen the measure exploited, says the Treasury.
The government also admits that no data is available to show how many taxpayers are pocketing the relief as HM Revenue & Customs does not need to be notified of a claim.
Now, the government wants to hear views from householders and property professionals about how rent a room relief is applied, if the rules are working as intended and ideas for reform.
“The current eligibility criteria for Rent a Room relief do not specify any particular length of let, so Rent a Room relief could be given on income from 365 one-day lettings to different people or from one 365 day letting to the same person,” says the Treasury call for evidence.
“Nor do they stipulate that the let should be for a specific purpose, as long as the individual is providing furnished accommodation.
“The relief would be available on the let of a room to someone who is staying in the area as a visitor, on holiday, to attend an event, to work, study etc.”
The government’s suggested reforms are to apply two tests to rent a room relief –
- Banning holiday lets and only allowing residential rentals
- Only allowing lets of 31 days or more
Failing one of the tests would bar the householder from claiming rent a room relief.
The call for evidence closes on February 23, 2018.
Anyone wishing to respond should email rentaroomrelief@HMTreasury.gsi.gov.uk