Government Considering to Introduce Tax Airbnb Style Short Lets

Bad news is on the way for people renting out their property in short style type lets. Thanks to Airbnb and similar platforms, the number of people renting out rooms in their homes on a short-term basis has ballooned but could that be about to change? It might if the government decide to introduce a new tax that will make it more difficult and certainly more expensive.

Recently the government has suggested they are considering introducing a tax that will alter the current terms of the Rent A Room System. This would mean that hosts operating using a platform like Airbnb would have to pay more tax. Some may not even be paying tax right now, but those hosts would certainly have to start.

Changing The Relief System

The Rent A Room Relief system, was first established in 1992. It was used by the government to encourage people to use spare rooms in their home and make them available for rent. This was designed to allow more low-cost housing and hopefully make it easier for people on a low income to find a place to live.

Right now, it’s possible to rent a room in your home and earn up to £7,500 tax-free every year. This tax relief, according to experts is what has driven many people to decide to rent out spaces in their home using a property management company or even just an online platform. It’s unclear whether an increase in taxes would deter people from doing this in the future.

Who Will The Change Impact

The good news is that the change may only affect people who rent out their whole property rather than just a room. According to the treasury people who rent out a room in their home are using it as a second source of income or a side hustle. They will be adding a small amount onto their annual income. In contrast, the Treasury suggests that those who rent out an entire property could be making a lot more money and receive a higher income over a longer period. In other words, they could be operating more like a commercial landlord.

However, it’s also possible that changes to the Rent a Room scheme may also impact those who are renting out spare rooms in their home that could be occupied by them or even more tenants. It will be interesting to see whether this change does come to pass. Currently, it is only being considered as a possible change.

Should You Claim On Entire Properties?

Airbnb and similar platforms, as well as property managers, have always made it clear that owners should only claim relief if they are renting out single rooms in their property rather than entire homes. They seem to share the government’s belief that those who can afford to rent out an entire property can afford to pay taxation. However, the worry is that the change could also at least limit relief for people just making a little extra cash by renting a room in their home as well.