Chancellor George Osborne announced a tax break for “micro-entrepreneuers” that use sharing economy platforms like Airbnb.
Homeowners in the UK that let out their properties on Airbnb could soon be able to earn up to £1,000 in additional income tax free, as could anyone else that offers a service or product on a different sharing economy platform.
“We’re going to help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet,” said Osborne in his annual Budget speech at the House of Commons.
“Our tax system should be helping these people so I’m introducing two new tax-free allowances each worth £1,000 a year, for both trading and property income. There will be no forms to fill in, no tax to pay — it’s a tax break for the digital age and at least half a million people will benefit.”
Osborne announced separate plans in July 2015 to increase tax free earnings to £7,500 for Airbnb hosts who qualify for rent-a-room tax relief. This policy comes into effect next month.
Airbnb published a blog post in response to the Budget saying it was “good news for the growing number of Airbnb hosts in the UK.”
The San Francisco-headquartered company said: “The UK has set itself as a global leader for the sharing economy and is introducing progressive new rules that empower regular people and promote innovation through technology. We applaud the government for supporting hosts and progressive business models across the country; their leadership on this important issue is an example to the world.”
Trade body Sharing Economy UK also welcomed the news, having previously championed such tax breaks.
“This is a colossal win for Britain,” said Debbie Wosskow, founding chair of Sharing Economy UK and founder of Love Home Swap.
“Consumers need to be able to use sharing economy platforms such as Airbnb and TaskRabbit to top up their income without the fear that they are breaking the rules.”
Wosskow also highlighted how 65% of those participating in the sharing economy are female. “This move brings us a step closer to empowering these women and other micro-entrepreneurs to live and work in a flexible way,” she said.
The tax cut for Airbnb users comes as Osborne looks to clamp down on buy-to-let landlords, prompting criticism from some Twitter users, including Alex Hern, a technology reporter at The Guardian.
So “buy to let landlords” are evil and must be subject to a punitive tax but “AirBnB hosts” are saintly and should get a break
— Alex Hern (@alexhern) March 16, 2016