Currently, those renting their home get £4,250 tax-free under rules first created 18 years ago. The IoD is lobbying ministers first to up this limit to £6,960 to take into account inflation, then to increase it to £10,000 in line with the personal allowance. The business group also wants the government to take the lead and open the tax-free scheme up to home rentals through Airbnb and other sites, ride-sharing and asset hire.
The government has indicated that it is keen to explore how the sharing economy can be more formally recognised in the UK. Business minister Matt Hancock used the Conservative party conference earlier this year to launch a consultation into the area, following similar reviews into digital currency and crowd-sourcing.
Last week, he told City A.M. that the government wanted to build a nation of entrepreneurs and would “put a rocket booster” under the sharing economy to make this happen quickly. “Renting out your home can earn you an average of £3,000 each year which is hardly small change and it’s a good route to self-employment,” he added.
Author of the IoD report Jimmy McLoughlin said yesterday: “The government has made clear its desire to establish the UK as a global leader in the sharing economy, and we welcome this commitment.
At its simplest, the sharing economy is about letting people make the most of their assets and the government should establish a tax regime that encourages and supports this.”