The Chancellor's £2,000 tax-free allowance for people renting on Airbnb and selling services online will make the sharing economy more mainstream.
It’s about to become a lot easier to rent a second home on Airbnb, share your car on Hiyacar, or sell goods on eBay.
Yesterday Chancellor George Osborne celebrated these businesses, part of the so-called sharing economy, with two new £1,000 tax-free allowances which will let people earn up to that amount without worrying about the tax implications.
“A tax cut for the digital age,” is how Osborne described it, adding that it was designed to “help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet.”
The move is predicted to benefit more than 700,000 people and cost the Treasury around £200m in lost taxes.
As we reported last month, the Government has been talking to businesses and entrepreneurs from the sharing economy exploring the idea of extending the Rent-a-Room tax break (used by people letting spare rooms on Airbnb) to the entire sharing economy.
Now the Chancellor has done exactly that.
“It’s great that the Government have acted so quickly,” Hiyacar CEO Graeme Risby told The Memo.
“My fear was that nothing would get put in place this time, but this is a great statement from the Government and hopefully a sign of more to come.”
The new allowance is split between £1,000 that can be earned tax-free from occasional jobs, like sharing a lift on BlaBlaCar or selling homemade goods on eBay, and £1,000 of income from property, which could be renting a drive on JustPark or a second house on Airbnb (renting a spare room is still covered by the existing £4,250 Rent-a-Room tax break).
“A lot of the questions we’ve dealt with over the last year on the topic of tax has been people unsure of what they’re allowed to do, how do they declare tax, and if there’s anything they can do tax free,” Debbie Wosskow, CEO of LoveHomeSwap and founding chair of Sharing Economy UK, told The Memo.
“It’s going to make life much easier for people, and it’s a big win in terms of making the sharing economy mainstream.”