Accountants have called on the Government not to make the current rent a room tax relief system where people can let out a furnished room in their home more complex.
Currently they can earn £7,500 per year without paying tax and the UK Government is seeking opinions and evidence on how it is being used and whether it should be changed.
Now the Association of Accounting Technicians (AAT) has cautioned against introducing additional complexity to the tax system and for the Government to consider the wider benefits to both landlords and renters.
It also says in its response document to the Government that it should consider the tax arrangements of digital platforms such as Airbnb, some of which could be described as ‘questionable’.
‘The simplicity of rent a room relief has made it attractive so imposing restrictions based on the success of short term and holiday lettings obviously risks damaging the sector,’ said Phil Hall, AAT head of public affairs and public policy.
‘Restrictions will reduce accommodation availability and choice as well as reducing the incomes of many people who find this one of the few ways they can supplement their earnings in a relatively simple and tax efficient manner,’ he explained.
Hall pointed out that it is not clear why the Government is so concerned about people renting their spare rooms out for holiday and short term lets but if the costs of this relief are the main driver then this appears to be misguided.
‘Instead of looking at individuals who just want to supplement their income by renting out a spare room for a few nights a year, Government would be better advised to direct its attention to the questionable tax arrangements of some digital platforms such as Airbnb,’ he added.
The response document says that digital platforms have had a significant impact on the market but this should not be used as a justification for restricting rent a room relief. In recent years, holiday room letting has attracted more attention than the increase in residential room letting by virtue of the fact it is a relatively new concept.
It argues that restrictions on short term letting are likely to add complexity to the tax system and the simplicity of rent a room relief is one of its main attractions and one of the main reasons for its success since being introduced in 1992.
And it says that imposing restrictions will also reduce accommodation availability and choice because many will simply choose not to rent out their spare rooms. Restrictions will also reduce the incomes of many people who find this one of the few ways in which they can supplement their annual earnings in a relatively simple and tax efficient manner.
