Owners of vacation rentals are being pushed to report income from the staycation boom or face criminal prosecution.
HOLIDAY LET owners have profited handsomely from the summer staycation boom, but experts say they must now report their earnings to HMRC. If they keep their windfall hidden, they risk penalties and possibly criminal charges.
Due to the pandemic, millions of Britons have been vacationing in the UK, prompting a rush to invest in holiday rentals. Owners have been sitting on large earnings, yet they must pay income tax on those profits or face criminal penalties for tax evasion.
Following the rise of the last two years, tax specialists advise that income from summer staycations must be recorded.
They are advising holiday let owners to be completely honest when filing their self-assessment returns, which are due on October 31.
Owners who fail to record earnings could face inquiries, according to accounting firm UHY Hacker Young.
There are no safe havens because HMRC has the authority to obtain information from other parties, such as holiday booking companies, in order to verify people’s tax status.
As part of a 2020 tax settlement with HM Treasury, Airbnb already agreed to share information on income made by its UK hosts.
Airbnb agreed to pay an extra £1.8 million in tax and share data on hosts’ earnings with HMRC as part of the settlement.
Owners of holiday flats and cottages will shortly file self-assessment tax returns covering the first year of the Covid-staycation boom, according to UHY Hacker Young partner Neela Chauhan, ahead of the 31 January deadline next year.
“Many will be inclined to under state the windfall gains they made during that period,” she said.
HMRC algorithms, according to Chauhan, will quickly detect holiday homes who under-declare income.
“Landlords who fail to declare delinquent taxes face fines and criminal prosecution in the end.”
Holiday rental revenue has increased by more than a third, with some websites reporting a 300 percent rise in bookings.
After a record-breaking season for UK holiday rents, Chauhan said owners must pay the tax they owe.
“Landlords should ensure they are aware of their tax duties before spending their summer staycation bonanza,” she added.
“HMRC believes that the vast majority of customers, including owners of UK holiday lets, wish to pay the proper amount of tax, and we will continue to engage with such customers to assist them get their tax right,” a spokeswoman for HMRC said.
“Brinkwire Summary News” says, “People with extra income streams may not be.”