Rent a Room consultation

    The proliferation of online accommodation matching websites such as Airbnb, HomeAway and Wimdu, which facilitate a global network of lodgers, appears to be one of the factors to have prompted this latest consultation.

    Rent a Room relief was originally designed to encourage owner occupiers to free up their spare rooms for lodgers to benefit from furnished accommodation, making it easier for people to move around the UK for work and study.

    However, the government seems to be concerned that the initial objective has been lost with individuals providing tenancies for any length or purpose, including brief holiday accommodation.

    Inhibited by a lack of quantitative data because the sheer nature of the relief means little information is submitted by those renting rooms out, the consultation contains 13 questions, with two in particular hinting at reform which could be set to follow.

    The first potential change points towards a ‘residential’ test being applied, with relief being restricted to homeowners who let out their spare rooms for residential purposes only. Ireland is quoted as an example where the equivalent relief only applies to residential tenancies, so a student renting a room for an academic year is covered, but not guests staying for a short break. 

    France is quoted as another example applying the residential test. Although the consultation does not explicitly refer to tax evasion associated with Rent a Room relief, Airbnb recently had to withdraw a payment system in France which enabled homeowners to receive payment without income passing through their bank accounts. 

    Executives from Airbnb met with French government officials, including the finance minister Bruno Le Maire, after concerns were raised about tax evasion and money laundering. Airbnb has since agreed to withdraw the payment system operated by Payoneer, a company based in New York.

    The second hint of reform in the consultation, aside from the residential test, concerns the length of letting. The government seems to be considering setting a minimum let period of 31 days, which would reduce the likelihood of the relief being used for holiday accommodation and refocus attention on residential lets.

    The deadline for responses to the consultation is 23 February 2018, with representations encouraged via email to rentaroomrelief@HMTreasury.gsi.gov.uk.

    If you would like to discuss the content of this article further, please email the author, our Head of Technical Research, Guy Smith at g.smith@abbeytax.co.uk.