Thousands of Britons earning from letting their spare room or using parts of their home on platforms like Airbnb could be hit with fines in 2024 if they don’t declare their income as part of their Self Assessment.

The tax exemption is automatically applied to anyone earning less than £7,500 from renting a furnished room in their home, which equates to charging £625 per month for a room or £144 a week. This is halved if the person shares the income with a partner or someone else.

From January 1 Airbnb and other short let platforms will be required to send data on their clients’ earnings to HMRC, which could leave many casual landlords exposed – especially if their earnings are exceeding the Rent A Room threshold. 

For many Britons who might be choosing to rent a room out to a lodger on a casual basis, they might not even be aware what tax they should pay or what to do if they exceed the threshold.

Mike Parkes, technical director at GoSimpleTax, says: “Whilst renting out a room can be a great way to earn an extra income, it’s important for those acting as landlords – even on a casual basis – understand that they still need to pay tax on what they earn. 

“For many it will be an automatic exemption as they earn less than the Government’s threshold of £7500. Yet many might not realise  they need to declare this income if it breaches the Government’s threshold of £7500. This can be easy to do if you’re charging more than £625 per month, and many won’t realise that they need to be liable for tax and income payments to HMRC if they earn above the limit set by the Government.

“Putting money aside for tax can mean these landlords will be prepared for when they complete a self assessment tax return, which is due by January 31st. Having control of finances, including paying tax and following HMRC guidance, is an important part of being a landlord and that also means being ready for the January 31st deadline.”

He continues: “With less than 50 days to go until the deadline, it can seem daunting to pay tax if money isn’t set aside but there are always options. The first is to get an up to date calculation of what is owed and then to understand what you do have to put towards it. The next step is to speak to HMRC and discuss options like a payment plan, which can mean you pay the tax owed but across a feasible and manageable monthly payment plan.”