Dressing up a tax break in digital clothes

British chancellor George Osborne didn't mention Airbnb by name in his budget speech in the House of Commons yesterday. Others helpfully did. A tax-free allowance worth £1,000 a year, designed to "help the new world of micro-entrepreneurs who sell services online or rent out their homes through the internet", was swiftly dubbed the "Airbnb allowance".

The San Francisco-headquartered company itself was quick to respond, describing it as a “self-starters’ tax break” in a welcoming blog post. Airbnb hosts in the UK were the winners in this £500 million “sharing economy”, it said, applauding the Conservative government for supporting “progressive business models”.

Osborne makes it all sound so delightful: “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.”

But while the idea of not standing in the way of self-starting hosts might seem charming, Osborne’s measure can more prosaically be interpreted as a simple tax break for homeowners. Indeed, despite the chancellor’s digital-focused talk of the “sharing economy”, it seems there is no requirement to use the internet in order to avail of the new tax allowance – it applies to any property or trading income.

And as for the idea that Airbnb hosts are casual “income-toppers”, listings suggest that many who use the platform to earn money from a series of short-term lets are wealthy landlords or quasi-hoteliers with multiple properties in attractive locations – the kind they wouldn’t want to waste on long-term tenants.

Airbnb praised Osborne for setting “an example to the world”, but hasn’t had as much luck in Ireland, where it has been unable to persuade the Government to categorise Airbnb hosts in the rent-a-room scheme. Last year it also contacted its Irish hosts warning them that the Revenue was on their case.

But Airbnb will probably get its way here eventually too. The real example Osborne sets is this: tax breaks dressed up in a “sharing economy” sheen may sound progressive, even when they are not.