Originally introduced to incentivise people to let rooms in their own home the use of rent-a-room relief¹ has increased in recent years. While primarily envisaged for use by those providing traditional lodgings, the relief is also available to those providing rooms for short term holiday letting. The Government is currently exploring reforms. It is concerned that the relief, combined with the development of online platforms such as Airbnb – which make it easier for someone with a spare room to find holiday guest/s – could give those people an unfair tax advantage² over commercial guest houses and B&Bs.

An option for reform suggested in the Treasury’s call for evidence³ was a proposal to restrict the relief to residential letting only. CIOT and ATT prepared a joint online survey for their members³, as part of their feedback. Responses to the proposal to exclude holiday letting from the relief were split, with 52.6 per cent of respondents agreeing that the relief should remain available for holiday letting, and 47.4 per cent feeling it should be restricted to residential lets only.

John Cullinane, CIOT Tax Policy Director, said:

“There is no clear consensus in the tax profession for restricting the relief depending on the type of letting activity, its purpose or length. While some members want the relief restricted to residential letting only, others want the scope of the relief widened. On balance, rather than introduce further complexity, the survey results suggest that the relief should be left as it is it.”

Yvette Nunn, Co-chair of ATT’s Technical Steering Group, said:

“A common theme through the responses was the importance of keeping the relief simple and easy to understand. Since any change is bound to lead to further complexity, we consider that the relief should be retained in its present form.

“The survey did highlight some areas of uncertainty in applying the relief and there is a case for improving the quality of the guidance in some areas.”