Airbnb and Tax: Why Airbnb shares data with HMRC

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The relationship between Airbnb and tax in the UK has altered slightly. As of 1 January 2024, Airbnb is required to share relevant financial information with HMRC. It’s an arrangement that doesn’t just affect Airbnb, it also applies to other ‘side hustle’ businesses, such as eBay and Vinted.

It’s worth noting that the new ruling doesn’t significantly alter the pre-existing link between Airbnb and the tax office. Even before 1 January 2024, on an ad hoc basis, HMRC was within its rights to request financial information from Airbnb regarding UK-based hosts.

  • The 2025 DAC7 Directive

How It Changed Airbnb Tax Reporting

In 2025, the DAC7 Directive will come into effect. Requiring platforms like Airbnb to automatically share information with tax authorities. This new rule make sure that tax evasion is harder to hide and gives greater transparency for HMRC in monitoring income across digital platforms. For hosts this means that reporting will become a more streamlined process and compliance with tax regulations will be increasingly scrutinised.

Does Airbnb Report to HMRC?

The new ruling came about following the UK’s decision to sign up to new rules prescribed by the Organisation for Economic Cooperation (OECD). As a way of bearing down on tax evasion. This means that Airbnb is duty bound to pass on relevant financial information pertaining to UK hosts to HMRC.

Essentially, the change means that there’s now a level playing field. This is because digital platforms (such as Airbnb) are now required to adhere to the same rules that have long applied to traditional ‘bricks-and-mortar’ businesses.

Here at IBISS & CO, we know that the vast majority of Airbnb hosts strive to work to the letter of the law. The new Airbnb UK regulations make it easier for HMRC to support online enterprises. Conversely, of course, it will now be easier for HMRC to identify any irregularities.

What Data Airbnb Shares with HMRC?

Online marketplaces such as Airbnb are now obligated to report to HMRC, and the process will begin in earnest at the close of January 2025, and on an annual basis thereafter.

The sort of information that will pass between Airbnb and HMRC include tax IDs, bank account details and seller transactions (including value and volume). However, the new ruling will almost exclusively apply to Airbnb hosts whose income triggers the need for tax payments.

How HMRC Tracks Airbnb Income in the UK

HMRC uses the information shared by platforms like Airbnb to track the income generated by UK hosts. Starting in January 2025, Airbnb will begin reporting this data on an annual basis. This means that HMRC will have a much clearer view of Airbnb income across the UK, making it easier to identify any irregularities or underreported income.

How does this affect me as Airbnb host?

Since the Airbnb HMRC information sharing process has become formalised, how does this affect the average Airbnb host? For some Airbnb hosts, there will not be much change. The £1,000 tax-free allowance on any money you make by renting your property (or properties) means that if the money you earn through rentals comes to less than £1,000, you won’t need to complete a tax return.

Those who earn more than £1,000 in any tax year must start filing a tax return in the same way a landlord of a property must, so if you think your Airbnb income may exceed this figure, be sure to check your accounts and comply. You can refer to our property tax page to learn more. If you’re fortunate enough to qualify for the Rent a Room Scheme, you’ll benefit from a £7,500 income threshold.

In any case, we recommend that you retain your financial records, just in case HMRC requests to seem them. Please note, the new ruling only affects hosts who are required to pay tax in the UK.

What Happens If You Don’t Declare Airbnb Income

Failing to declare Airbnb income can have serious consequences, from penalties to back taxes. HMRC is increasingly relying on platforms like Airbnb to ensure tax compliance. Not declaring income could lead to investigations into your earnings and the penalties for non compliance can be severe.

For hosts  not sure about their tax obligations. It is crucial to consult with a tax professional. Learn how to avoid penalties and stay on the right side of the law with our Airbnb tax help page.

HMRC Let Property Campaign

HMRC Let Property Campaign allows landlords & hosts to disclose previously undeclared income and settle outstanding taxes without harsh penalties. This campaign can help Airbnb hosts who have unintentionally failed to declare their income and offers an opportunity to bring your tax affairs in order.

Learn more about how the Let Property Campaign can assist you with your tax declaration in our dedicated Let Property Campaign guide.

Commonl Questions about Airbnb Tax

Does Airbnb report to HMRC?

Yes, Airbnb is now obligated to report certain financial information to HMRC about UK hosts, as part of the UK’s compliance with the OECD’s global tax reporting rules.

HMRC receives financial data from Airbnb, like transaction details, tax IDs and bank account details.  This help them to track and verify the income earned by UK hosts.

If you have not declared Airbnb income. It is important to consult with a tax professional immediately. HMRC Let Property Campaign may offer a way to settle any outstanding tax obligations.

Contact our Airbnb tax specialists

IBISS & CO is here to assist you with all your Airbnb and tax information queries. Please don’t hesitate to contact us online or visit IBISS & CO nearest office if you have any questions or need advice.

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