Holiday let owners urged to declare profits from staycation boom or face criminal charges

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Millions of Britons have been holidaying in the UK due to the pandemic, and this has triggered a rush to invest in holiday lets. Owners have been banking fat profits but they must also pay income tax on them risk criminal charges for tax evasion.

Tax experts warn that profits from summer staycations must be declared following the boom of the last two years.

They are urging holiday let owners to make full disclosure when submitting their self-assessment returns from 31 October.

Accountancy group UHY Hacker Young said owners could facing investigations if they fail to report earnings.

There is no hiding place as HMRC has the to request information from third parties such as holiday booking sites to check people’s tax position.

Airbnb has previously agreed to share information on income earned by its UK hosts, as part of a 2020 tax settlement with HM Treasury.

Under the deal, Airbnb agreed to pay an extra £1.8million in tax and share data on hosts’ incomes with HMRC.

UHY Hacker Young partner Neela Chauhan said owners of holiday flats and cottages soon file self-assessment tax returns covering the first year of the Covid-staycation boom, ahead of next year’s 31 January deadline.

She warned: “Many be tempted to under report the windfall earnings they have made in that period.”

Chauhan said HMRC algorithms easily identify holiday homeowners who under-declare income.

“Landlords who fail to declare unpaid are ultimately risking fines and criminal prosecution.”

Income from holiday lets has surged by more than a third, while some sites report a 300 percent increase in bookings.

Chauhan said after a bumper season for UK holiday lets, owners must pay the tax they owe.

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She added: “Landlords are recommended to make sure they are aware of their tax obligations before spending their summer staycation windfall.”

A HMRC spokesperson has said: “HMRC believes that the vast majority of customers want to pay the right amount of tax, including owners of UK holiday lets, and we continue to work with such customers to help them to get their tax right.

“People with additional income streams may not be fully aware of their tax obligations and so we have taken steps in HMRC to consider sectors, such as short-term property letting, where we may not be collecting the full amount of tax owed.”

Nearly two thirds of homeowners now consider holiday lets a good investment, according to research from holiday let website Original Cottages. It reported a 40 per cent increase in enquiries in the last year.

Personal finance expert Rachel Springall from Moneyfacts said low interest rates are encouraging savers to seek out alternatives to cash.

“The staycation surge has made holiday lets more appealing but there is also plenty of vital admin, including declaring income on yourself-assessment tax return.”

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