Millions of people renting out their homes to holidaymakers on Airbnb or selling items on eBay will be rewarded with tax breaks on earnings up to £2,000.
George Osborne announced the so-called "digital tax break" for those bedroom entrepreneurs forming part of the sharing economy in his Budget statement today.
"We’re going to help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet. Our tax system should be helping these people so I’m introducing two new tax-free allowances each worth £1,000 a year, for both trading and property income. There will be no forms to fill in, no tax to pay – it’s a tax break for the digital age and at least half a million people will benefit.”
More than 2.5m people every month are now part of the sharing economy in the US, According to JP Morgan and there have been calls for this growing part of the economy to be counted in Britain's official economic figures.
It adds to a generous tax break for those renting out a room, hiked to £7,500 from £4,250 by the chancellor in last year's summer Budget.
Airbnb welcomed the news. In a blog post published today, it said:
"This is good news for the growing number of Airbnb hosts in the UK who are sharing their homes, earning a little extra money to pay the bills and bringing new economic benefits to their communities. The UK has set itself as a global leader for the sharing economy and is introducing progressive new rules that empower regular people and promote innovation through technology. We applaud the government for supporting hosts and progressive business models across the country; their leadership on this important issue is an example to the world."
As did eBay in a statement:
“We welcome this personal tax allowance which shows that Britain is leading the way in recognising the rise of micro entrepreneurs. More and more people are using eBay’s marketplace to supplement their income and the chancellor is right to reward and encourage them to take part in the digital economy still further.”