By Lauren Howells.

Airbnb hosts who do not stay in their homes at the same time as their guests could find that they can no longer earn up to £7,500 tax-free through the Rent-A-Room scheme from next year.

The Finance Bill 2018-19, which is currently in the consultation stage, is set to introduce a new ‘non-exclusive residence test’, which would have to be satisfied by those looking to be eligible for the Rent-A-Room tax relief.

First introduced in back in 1992, the Rent-A-Room relief was designed to encourage those who had spare rooms in their homes to rent them out, in order to “increase the quantity and variety of low-cost rented accommodation”.

Since then, the housing market has changed dramatically, with online platforms such as Airbnb making it much easier for would-be hosts to rent their rooms, or even their entire house, out to people from all over the world.

Test requires hosts stay in house for some of the time they are renting 

‘Non-exclusive residence test’ could stop Airbnb hosts accessing Rent-A-Room tax relief

In order to continue to benefit from the tax relief of up to £7,500, the test requires that those in receipt of the income “share occupancy of the residence in question” with the person who is paying to stay in their home, for at least some of the duration of their stay.

This means that if the new rule comes into force, those who do not stay in their property for at least some of the time that they are renting it out will have to pay tax on what they earn.

The government says that the objective of this change is to ensure that the tax relief is “better targeted” to incentivising those with spare, otherwise unused accommodation, to share their homes.

The draft legislation also includes measures to tackle tax avoidance, help taxi drivers to buy cleaner vehicles and remove barriers for investment in the oil and gas industry.

Mel Stride, Financial Secretary to the Treasury, said:

“Britain is one of the best places in the world to do business, and we’re determined to see that continue.

“This legislation illustrates our commitment to creating an environment in which innovation and enterprise can thrive while ensuring that everyone plays by the same rules.”

Airbnb welcomed the news that the government had decided to continue to keep the Rent-A-Room relief at the same level, saying it was grateful to the government for listening to the voices of UK hosts.

Clause could take effect from April 2019

Consultation of the draft bill will finish on 31 August 2018. If the bill receives the seal of approval, this clause would take effect from April 2019.