Defining the Sharing Economy and What It Means for UK Citizens

The sharing economy has led to the joke that the biggest hotel in the world owns no real estate and the biggest taxi companies have no cars. This is because sites like Airbnb, Uber and others link people trying to make money with others who need such an item or service for a short period of time. Sites that let you sell items online and take on tasks for a set pay rate are also considered part of the sharing economy.

UK Capital of the Sharing Economy in Europe

The UK is seeking to become the capital of the sharing economy in Europe. The UK became the first nation in the world to give tax breaks in order to facilitate growth of the sharing economy.

One tax break allows people to sell items online or work online and earn up to one thousand pounds before they have to declare their income or pay taxes on it. A second tax break allows you to earn up to a thousand pounds tax-free when you rent out property.

This tax break for renting out property is separate from the £7,500 income tax threshold for taking in a lodger. These two sharing economy tax breaks can be combined, saving up to £2,000.

Uber and Airbnb Take the Lead

The biggest sites in the sharing economy are those that let you monetise what you already own on your own schedule. Uber is succeeding because many are able to make money by picking up passengers on routes they already drive or earn extra money on nights and weekends to help to top up their household income. Airbnb is popular because it allows people to rent out a spare bedroom as long as they like, make extra money renting out the summer cottage when they aren’t there or their own home while they themselves are on holiday.

Other Sharing Economy Businesses

Following in the footsteps of Uber and Airbnb and a whole host of smaller businesses that are tapping into the various niches of the sharing economy. On the property side there’s Vroomi that allows people to rent out rooms for use as meeting rooms, there’s YourParkingSpace that allows people to earn money from their unused off-street parking space, and there’s Storemates where you can rent out your attic to a neighbour for use as storage space.

Moving beyond property, sharing economy start-ups are moving into all sectors of the economy. At EatWith you can open up your kitchen to diners, you can join DogVacay to be paid for looking after your neighbour’s dog whilst on holiday, or rent out your car to motorists on HiyaCar.

UK Residents Getting Involved

Brits have been renting out rooms and selling items online for years. An estimated half million UK citizens are expected to qualify for these sharing economy tax breaks. Around a quarter of Brits participate in the sharing economy in one way or another. They bring in £500 million per year, and the numbers are growing every year.

Looking to the Future

Years of low productivity in Europe have led to stagnant wages. By stimulating the sharing economy, the UK hopes to help many residents monetise assets they already own and stimulate the economy. The personal benefits are not to be underestimated, since 40% of those working in the sharing economy are using the money to boost savings while a quarter spend it on luxuries and entertainment that stimulates the broader economy.

The United Kingdom became the first nation in the world to set up tax breaks for the sharing economy. Removing tax reporting for the first few thousand earned will bring millions more into the sharing economy. This is expected to stimulate this fast growing economic sector and encourage many more to join it so they have more money to pay down debt, save for goals and improve the overall British economy.