HMRC announces changes to regulations for short term let platforms

 

HMRC have set out new regulations for UK 'intermediaries' such as self-catering agencies and online booking platforms including Norfolk Stay. The changes came into effect on the 1st January 2024 and aim to improve tax compliance and transparency. This law does not however change how much tax you need to pay or how you pay it.

 

This guide provides an overview of the key dates, requirements, penalties, and FAQs to help property owners navigate these changes. You can see the new regulations here.

 

It is important to note that under Paragraph 1, Schedule 23 to the Finance Act 2011, Norfolk Stay and any other agency or platform are already required to report information on owner income to HMRC. The change applied from 1 January 2024 is that this reporting must now be automatic rather than upon request.

 

We have broken this guide into three sections:

1.  Key dates and requirements

2. Penalties

3. FAQs 

 

1. Key dates and requirements: 

 When will this come into effect?

This has already passed through government, and it has been mandatory for platforms to collect data from the 1st January 2024. This is with the expectation that platforms will report on a full 2024 calendar year by the 31st of January 2025. Below is the timescale outlined:

 

Reporting period: The scheme operates on a calendar year (1 January – 31 December).

 

Reporting frequency: we will need to report data quarterly within a calendar year. The dates are as follows:

1 January – 31 March

1 April – 30 June

1 July – 30 September

1 October – 31 December

 

First annual report: we must submit our initial report by the 31 January 2025, covering the period from 1 January to 31 December 2024.

 

Transitional period: For the first year (2024), Agencies and Booking Platforms are not required to provide this information to the HMRC for owners who were contracted to them prior to 1st January 2024. Their first reporting period can be postponed until 2025 (due 31 January 2026).

Whilst the expectation is for platforms to report owners’ information by the 31st January 2025, HMRC have not yet shared detailed information on how to safely submit this information. This is yet to be determined and communicated.

 

What information will platforms be expected to report to the HMRC?

1. Information about their platform including the company’s registered name, address, and Tax ID number.

2. Information about the individual properties listed on their platform including street address, and land registry number if it is available.

3. Short term let owner’s details. This includes full name, primary address, date of birth, Financial Account Identifiers, and any known tax identification numbers. 

We have explained what financial information the HMRC will be requiring from platforms in more detail below:

 

Income:

The HMRC refers to payments or values received by owners as ‘Consideration’. 

This is ‘any form of cash payment, cash credit, or cash equivalent received’ by the short term let owner. 

Consideration is the net amount paid or credited to the owner after deducting any fees, commissions, and taxes. We are required to report on the net amount, as well as the breakdown of the deducted fees.

Our reporting must be done on a cash basis, not on an accrual basis. 

  

2. Penalties:

All platforms are expected to meet the deadlines outlined in the timescales above, submitting accurate information for all relevant short term let owners. Failure to do so will result in penalties. 

 

3. FAQs:

Will this apply to all owners who market their holiday let through a platform (e.g. Norfolk Stay, Airbnb, VRBO etc)? 

In simple terms, yes. The only exclusions are non-profit models, Government entities/local authorities, large hotel providers, and quoted companies.

 

I am not resident in the UK – does this affect me?

Yes. Income earned in the UK by all owners, regardless of where they live, must be reported to HMRC. It's essential to ensure that all the necessary information has been provided to us, including any international tax identification numbers.

 

What happens if I take direct bookings through my own website?

Income from your own website is not considered under the scheme.

 

I have been an owner with Norfolk Stay for several years, when will you be reporting my income information to HMRC?

As you were contracted with us prior to 1st January 2024, you will fall within the scope of the 12-month transitionary period. This means your first reporting period will be the 2025 calendar year, which we will need to submit to HMRC by 31 January 2026.

 

I am a new owner with Norfolk Stay, when will you be reporting my income information to HMRC? 

If you contracted with Norfolk Stay after 1st January 2024, the 2024 calendar year will be your first reporting period. We must report your information to HMRC no later than 31 January 2025.

 

What are my Financial Account Identifiers and Tax Identification Numbers?

Financial Account Identifiers generally refer to your bank account details, which include the account number and sort code. We already have these details on file, so there's no need for you to submit them again.

As for Tax Identification Numbers (TINs), these vary depending on whether you're an individual or a company. For individuals, your TIN is your National Insurance Number. If you're a company, the TIN would be your Company Registration Number. We’re awaiting clarification from HMRC for the TIN if you are operating within a partnership.

 

Norfolk Stay do not know all of my information - what should I do?

We will be in touch to request any information required to complete our submissions that we do not currently hold. 

We intend on contacting those owners who contracted with us after 1st January 2024 first, as this information needs to be submitted 31 January 2025. Those owners who joined the portfolio prior to 2024 will be contacted next year for the information.

 

There are multiple owners of my short term let. Do we need to do anything differently? 

In this instance, we will report on the registered owner or owners. We will report the total amount paid for each individual, as we cannot disaggregate the total amount to show individual shares of the income.

 

Can I report my income to HMRC independently to avoid platform errors? 

While Norfolk Stay are required to report your income, you are still responsible for your own tax return. You should include all income from your property or properties in your tax return, regardless of platform reporting.

 

I am VAT registered – how does this affect me? 

We must report the net amount paid, which will include an element of VAT. 

Although not yet communicated by HMRC, the guidance does comment that we must report all known tax numbers, which we anticipate will include your VAT registration number so HMRC can identify those reported amounts that will include an element of VAT.

 

What happens if an owner does not cooperate with their platform? 

It will depend on the platform as to how they communicate and manage the data collection from their short term let owners. HMRC guidance advises suspension of listings and withholding of funds if an owner is uncooperative.

Norfolk stay hope not to be in this situation and will work with owners to avoid any unnecessary penalties.

 

Conclusion

As the HMRC rolls out these new regulations, Norfolk Stay are committed to supporting our property owners through this transition. We encourage owners to stay informed and work closely with us to ensure compliance. Should you have any further questions not covered by this guide, please contact us at accounts@landlorddirect.com.