The ‘sharing economy’ is a phrase that’s bandied around as often as ‘millennials’ these days. It summarises the concept of sharing with others, but on a widespread – even global – scale, and making and saving money from it.
From homes and pets (I challenge you to visit the website BorrowMyDoggy and not want to sign up) to Stormtrooper costumes (the ‘Force’ can be yours for £100 a day via goods sharing website FatLama), you can share or borrow anything for the right price.
And it doesn’t stop at tangible assets – TaskRabbit.co.uk enables you to share your skills or even your time – I found people charging from £15 an hour to wait in a queue for you at popular London restaurants... OK, so perhaps the world has gone somewhat mad, but even the government is encouraging it.
This tax year (2017/18) was due to see the launch of two new £1,000 tax-free allowances – one for earnings made from property (you can’t get it on top of the £7,500 rent-a-room relief) and the other for earnings from trading, which includes income from providing assets or services.
The tax changes were dropped from the Finance Bill 2017 in a rush to pass it prior to the general election in June 2017. However, they're now in the Finance Bill 2017-19, which is currently making its way through Parliament. If passed, the tax reliefs will be backdated to April 2017 when they were supposed to take force.
The government says the measures support its objective to “help the UK become a leader in the digital and sharing economy”. And it seems to be taking off.
Accountancy firm PwC predicts peer-to-peer (P2P) transactions generated by the UK’s five most prominent sharing economy sectors (which it defines as: collaborative finance, P2P accommodation, transportation, on-demand household services, and on-demand professional services) could grow by 60% or £8 billion in 2017 alone. By 2025, PwC projects total transactions in the UK sharing economy could reach £140 billion.
The Office for National Statistics (ONS) reported for the first time this August on how consumers accessed the sharing economy using the internet. It found that 28% of adults use intermediary websites or apps to arrange accommodation, using the likes of Airbnb, HomeAway, One Fine Stay, and Spare Room, while 22% use the likes of BlaBlaCar, Liftshare, Lyft, and Uber to arrange transport. The ONS also found that those aged 25 to 44 are more likely to use these “relatively new” services.
So is the sharing economy the future for money makers and savers alike?
I’ve only dipped my toe into it twice to rent flats on Airbnb for holidays and it was much cheaper than local hotels (New York and Switzerland are not known for their low-budget options!). I also felt much more like a local and I probably saw and did things that tourists typically wouldn’t do.
I’ve also interviewed people who use Liftshare to share lifts to their workplace, and they’ve been very positive about the scheme’s money-saving, environmental, and social benefits.
But there is one large sticking point for me when it comes to the sharing economy, which Rob Vaughan, an economist at PwC, sums up nicely: “Trust will continue to be the key sharing economy issue in 2017.”
While both my Airbnb stays went without a hitch, I was on tenterhooks beforehand, worried I may have been hoodwinked into paying for a non-existent property.
I’ve also read horror stories from the owners’ side of the fence – homes trashed by nightmare holiday goers and squatters who claim rights. I know many sites and apps in this field allow you to review both the sharer and the borrower, which offers some form of protection – although even here you’re still trusting the views of others.
There’s also a UK trade body – Sharing Economy UK (SEUK), which is part of business organisation the CBI. Members of SEUK follow a best practice code of conduct and are awarded a ‘Trustseal’ kitemark for high standards. But while this is a good start, the code of practice isn’t legally enforceable and not all companies in this marketplace are members.
Perhaps it all boils down to your attitude to risk. Call me a cynic, but I’m not planning to fully jump on the bandwagon just yet. I’d love to hear your views – via editorial@ moneywise.co.uk.