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Londoners who use Airbnb to rent out their homes will benefit from a new tax-free allowance worth £1,000 a year, George Osborne announced today.

The Chancellor said the move was aimed at so-called “micro-entrepreneurs” across the country.

He added: "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."

The California-headquartered company said in a blog post: "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 announcement was one of a number of steps Mr Osborne unveiled in the Budget to help small businesses in a digital world where internet giants like Amazon and eBay dominate the market.

Mr Osborne termed it “the great unfairness”.

The Chancellor also announced that he is permanently raising the threshold for small business rate relief from £6,000 to a maximum of £15,000 and for the higher rate from £18,000 to £51,000.

He said this would mean that, from April next year, 600,000 small businesses will pay no business rates at all, at an annual saving for them of up to nearly £6,000.