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VAT threat to Airbnb and short lets in bid to fill tax 'black hole'

The government is reported to be considering applying VAT to the use of Airbnb and other short let platforms in a bid to fill its ‘black hole’ of missing revenue caused by Coronavirus. 

HM Treasury is issuing a consultation document calling for feedback from digital services - including the likes of Uber as well as Airbnb - on possible future taxation policies.

The Financial Times suggests there is concern at the highest levels of government that the so-called sharing economy means individuals - in the case of Airbnb, individual landlord hosts - who earn too little to hit a traditional VAT threshold. 


Currently businesses have to register for VAT only if they have an income of £85,000 or more per year.

However, UK digital platforms combined are forecast to have revenues of £140 billion a year by 2025 - much of it untaxed because it is secured by small-scale individual operators.

The Treasury consultation identifies five areas where it may introduce new tax regimes - short-term accommodation, so-called ‘collaborative finance’; passenger transport; on-demand household services and on-demand professional services.

Chancellor Rishi Sunak believes that as more people buy services from non-VAT registered providers through digital platforms he is being deprived of tax revenues needed to fund public services.

Currently if you are an Airbnb host letting a room you can earn up to £11,850 a year tax-free; above that, you should in theory declare income to HMRC. However, policing of the relatively informal arrangements of many short let platforms means it is difficult to monitor how many hosts abide by - or even know of - this requirement.

VAT on short lets appears to be commonplace in many countries.



Airbnb’s website says: “Airbnb charges VAT on its service fees for customers from Albania, Belarus, Chile, Colombia, Iceland, Mexico, Norway, Russia, Saudi Arabia, Serbia, South Africa, Switzerland, Taiwan, the Bahamas, the European Union, Uruguay, and the United Arab Emirates.

“In Mexico and Taiwan, VAT applies to the accommodation price plus any fees for other items, such as cleaning, extra guests, and guest service fees. For listings and Airbnb Experiences located in Mexico and South Korea, VAT applies to guest and host service fees (unless otherwise exempt).

“Airbnb is also required to collect VAT on its service fees from all users who contract with Airbnb China. In Japan, Japanese Consumption Tax (JCT) is applicable instead of VAT. In Japan, JCT applies to the hosts (via the “reverse charge” system) and the guests.

“In Australia, New Zealand and Singapore, Goods and Services Tax (GST) is applicable instead of VAT. GST applies to the hosts and the guests. In Malaysia, service tax is applicable instead of GST or VAT. Malaysian service tax applies to service fees for guests and hosts in Malaysia.”

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  • icon

    I was VAT registered for 30yrs until I sold that business 13yrs ago, what a relief it was to get out of VAT, i am told it is worse still now.

  • George Dawes

    I was told during a tax investigation by a tax inspector over 25 years ago that the vat level was going to rise to 100k

    25 years later it still hasn’t !


    Never believe what the tax man tells you!

  • icon

    I was registered when I had a Company what a mugs game, you pay your own tax then the Companies and that time 52% now think its 19% for small Companies, I had to Quote & beat everyone to get the work then kill myself to try & make it pay, then of Course I had the Cash Book, The Bank Book and the VAT Book to maintain & do. Work half the night to work out the Quotes, Periodic Valuations, Invoices /Statements then wait several weeks for the payment, oh I nearly forgot I have Actually got to do the Work. When I was pulled with the Van for being over weight which I wasn't really it was more about Load distribution after I was escorted to Weigh Bridge and the weighed the Axles separately. Of Course I got fined but the Company got fined as well which was myself so I had to pay double. Being a LL's looks to be is turning out the same. Benefit Claimants wins hands down, roof over head money coming , heating , hot water, Children allowance plus several other Benefits. Rishi should not be in a job giving hundreds of millions away needlessly, big Companies so embarrassed giving hundreds of millions back never needed.

  • George Dawes

    That’s just what the market needs…

    Pretty obvious this whole charade like the global warming scam is a devious underhand plot to destroy the middle class through stealth taxes

    The corona scam is to be paid via a supposed one off wealth tax ( no doubt it will be permanent and increase annually )… but it never hits the truly wealthy just people like most landlords who through no fault of their own are asset rich and cash poor

    Now they're putting vat on rentals .... outrageous really , what next ?? Pre-Inheritance tax etc ??

    So much for a democracy - the UK now is more like China than China is/was


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