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Government 'should probe tax arrangements' of online short-lets

An accountancy trade body, the Association of Accounting Technicians, is advising the government to investigate what it calls “the questionable tax arrangements” of some short-let online platforms like Airbnb. 

In a response to the government’s call for evidence into the future of the Rent-A-Room scheme - which provides tax relief for home owners letting out furnished accommodation, up to a total rental income of £7,500 per annum - the AAT comes out firmly in favour of the Rent-A-Room principle.

“The simplicity of Rent A Room relief has made it attractive so imposing restrictions based on the success of short term and holiday lettings obviously risks damaging the sector” explains Phil Hall, AAT head of public affairs and public policy. 

“Restrictions will reduce accommodation availability and choice as well as reducing the incomes of many people who find this one of the few ways they can supplement their earnings in a relatively simple and tax efficient manner” he adds.

The government announced in the November Budget that it wanted to establish how Rent A Room relief is used and to better target it towards longer term lettings.

In response, AAT has called on government not to introduce additional complexity to the tax system, to consider the wider benefits to both landlords and renters and to consider instead the tax arrangements of digital platforms.

“It’s not clear why the government is so concerned about people renting their spare rooms out for holiday and short-term lets but if the costs of this relief are the main driver then this appears to be misguided” adds Hall.

“Instead of looking at individuals who just want to supplement their income by renting out a spare room for a few nights a year, government would be better advised to direct its attention to the questionable tax arrangements of some digital platforms” he suggests.

Hall makes reference in his statement, accompanying the submission to the call for evidence, to the revelation last October that Airbnb paid less than £200,000 in UK corporation tax in 2016 despite collecting £657m of rental payments for property owners.

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