Airbnb Tax UK: How to Declare Short-Term Rental Income

Airbnb hosts must pay tax on rental income. If you rent a room in your home, you may qualify for the Rent a Room scheme (£7,500 tax-free). If renting a whole property, the Property Allowance gives £1,000 tax-free. Above these thresholds, you pay Income Tax on your profit. Since 2024, Airbnb reports host income directly to HMRC.

This guide covers Airbnb tax obligations, reliefs, expenses, and how to report your income.

Does HMRC Know About My Airbnb Income?

Yes. From January 2024, digital platforms including Airbnb, Booking.com, and Vrbo must report seller/host information to HMRC under the OECD's Platform Reporting Rules.

Airbnb reports:

• Your name and address
• Tax identification number (if provided)
• Total income received through the platform
• Number of bookings

HMRC can compare this data to your Self Assessment return. Unreported income is likely to be discovered.

Rent a Room Scheme (£7,500 Tax-Free)

The Rent a Room scheme lets you earn up to £7,500 per year tax-free from renting furnished accommodation in your main home.

Who Qualifies

| Requirement | Details | |-------------|---------| | Your main home | The property must be where you live | | Furnished room | Guests have use of furnished accommodation | | You live there too | You're in residence during lettings | | UK property | The property is in the UK |

What Counts

| Eligible | Not Eligible | |----------|--------------| | Renting a spare bedroom | Renting whole property (you move out) | | Renting multiple rooms (you stay) | Separate annex/flat (not your home) | | Short-term Airbnb guests | Second home/holiday let | | Long-term lodgers | |

How It Works

| Your Airbnb Income | Tax Treatment | |-------------------|---------------| | £7,500 or less | Tax-free (no need to report) | | Over £7,500 | Choose: deduct £7,500 OR claim actual expenses |

Example 1: You earn £5,000 from Airbnb (spare room). Tax-free under Rent a Room.

Example 2: You earn £12,000 from Airbnb (spare room).

• Option A: £12,000 − £7,500 allowance = £4,500 taxable
• Option B: £12,000 − actual expenses (say £3,000) = £9,000 taxable
• Choose Option A (lower taxable amount)

Shared Ownership

If you share the property with a partner who also receives Rent a Room income, the £7,500 limit is halved to £3,750 each.

Opting Out

If your expenses exceed £7,500, opt out of the scheme and claim actual expenses instead. You must actively elect this by the Self Assessment deadline.

Property Allowance (£1,000 Tax-Free)

If you don't qualify for Rent a Room (e.g., renting a whole property), the Property Allowance provides £1,000 tax-free.

Who Can Use It

Any individual with property income can use the Property Allowance:

• Whole property short-term lets
• Second home rentals
• Holiday lets
• Room rentals (if not using Rent a Room)

How It Works

| Your Rental Income | Tax Treatment | |-------------------|---------------| | £1,000 or less | Tax-free (no Self Assessment needed for this income) | | Over £1,000 | Choose: deduct £1,000 OR claim actual expenses |

Example: You earn £3,500 from a holiday let.

• Option A: £3,500 − £1,000 allowance = £2,500 taxable
• Option B: £3,500 − actual expenses (say £2,800) = £700 taxable
• Choose Option B if expenses are higher

Choosing Between Allowances

| Situation | Best Choice | |-----------|-------------| | Renting room in main home, income under £7,500 | Rent a Room (£7,500) | | Renting whole property, expenses under £1,000 | Property Allowance (£1,000) | | Renting whole property, significant expenses | Claim actual expenses |

You cannot use both Rent a Room and Property Allowance on the same income.

Claiming Actual Expenses

If your expenses exceed the allowance (or you want more precision), claim actual costs.

Allowable Airbnb Expenses

| Expense | Claimable? | |---------|------------| | Airbnb service fees | Yes | | Cleaning costs | Yes | | Laundry and linens | Yes | | Toiletries and supplies | Yes | | Welcome gifts | Yes | | Professional photography | Yes | | Key safe/lock box | Yes | | Guest communication tools | Yes | | Insurance (host liability) | Yes | | Repairs and maintenance | Yes | | Utilities (proportioned) | Yes | | Council tax (proportioned or void periods) | Yes | | Mortgage interest | Yes (as Section 24 credit) | | Furniture replacement | Yes | | Safety equipment (smoke alarms, etc.) | Yes |

Proportioning Expenses

If the property is also your home, apportion expenses:

By time: Days let ÷ 365 × annual cost

By space: Rooms let ÷ total rooms × cost

Example: Spare room let for 100 nights/year, total electricity £1,200.

• Proportion: 100 ÷ 365 = 27.4%
• Room: 1 ÷ 5 rooms = 20%
• Combined: 27.4% × 20% = 5.5%
• Claim: £1,200 × 5.5% = £66

Mortgage Interest (Section 24)

If your Airbnb is residential property (not a Furnished Holiday Let), Section 24 applies:

• Cannot deduct mortgage interest from income
• Receive 20% tax credit on interest payments

Learn more: Section 24 Explained

Furnished Holiday Lettings (FHL) Rules

Important Update: FHL tax advantages are being abolished from April 2025.

Before April 2025

Properties qualifying as FHL had benefits:

• Full mortgage interest deduction (no Section 24)
• Capital allowances on furniture
• Business Asset Disposal Relief on sale
• Profits counted as "earnings" for pension contributions

From April 2025

FHL properties will be treated the same as regular residential lettings:

• Section 24 mortgage restrictions apply
• No special capital allowances
• Standard property income rules

If you have a qualifying FHL, 2024/25 is the last year of these benefits.

Airbnb Tax Calculation Examples

Example 1: Spare Room (Under Rent a Room Threshold)

Emma: Rents spare bedroom on Airbnb

• Income: £4,200/year
• Rent a Room threshold: £7,500

Tax: £0 (within Rent a Room allowance) Action: No need to report on Self Assessment

Example 2: Spare Room (Over Threshold)

Tom: Popular spare room in London

• Income: £10,000/year
• Expenses: £1,500

Option A (Rent a Room):

• Taxable: £10,000 − £7,500 = £2,500
• Tax at 20%: £500

Option B (Actual Expenses):

• Taxable: £10,000 − £1,500 = £8,500
• Tax at 20%: £1,700

Best choice: Rent a Room (saves £1,200)

Example 3: Whole Property Short-Let

Sarah: Rents entire flat on Airbnb while travelling

• Income: £15,000/year
• Expenses: £4,500 (cleaning, fees, utilities, repairs)
• Mortgage interest: £3,000

Option A (Property Allowance):

• Taxable: £15,000 − £1,000 = £14,000
• Tax at 40%: £5,600

Option B (Actual Expenses):

• Profit: £15,000 − £4,500 = £10,500
• Tax at 40%: £4,200
• Section 24 credit: £3,000 × 20% = −£600
• Net tax: £3,600

Best choice: Actual expenses (saves £2,000)

Example 4: Second Home Holiday Let

James: Holiday cottage on Airbnb

• Income: £25,000/year
• Expenses: £8,000
• Mortgage interest: £6,000

Calculation:

• Profit: £25,000 − £8,000 = £17,000
• Tax at 40%: £6,800
• Section 24 credit: £6,000 × 20% = −£1,200
• Net tax: £5,600

When to Register for Self Assessment

You must register for Self Assessment if:

| Situation | Registration Required? | |-----------|----------------------| | Airbnb income over £1,000 (whole property) | Yes | | Airbnb income over £7,500 (room in home) | Yes | | Airbnb income under thresholds but want to claim expenses | Yes | | Airbnb income under thresholds, using allowance | No |

Register by 5 October following the tax year: gov.uk/register-for-self-assessment

Reporting Airbnb Income

Where to Report

On your Self Assessment return (SA100), complete the Property Income section (SA105):

• Total rental income
• Allowable expenses (or state you're using Property Allowance)
• Mortgage interest (for Section 24 credit)
• Net profit

Filing Deadline

31 January following the tax year.

For 2024/25 income (6 April 2024 – 5 April 2025): file by 31 January 2026.

Council Tax and Business Rates

Short-term letting may affect your council tax:

| Situation | Likely Treatment | |-----------|------------------| | Occasional Airbnb in main home | Council tax continues | | Regular short-lets in second home | May become business rates | | Advertised 140+ days/year | Often switches to business rates |

Check with your local council. Business rates may be higher or lower than council tax, and you may qualify for Small Business Rate Relief.

Planning Permission and Regulations

90-Day Rule (London)

In Greater London, you generally cannot short-let your entire home for more than 90 nights per year without planning permission.

Airbnb automatically stops bookings at 90 nights for London properties (unless you confirm permission).

Other Areas

Outside London, check local rules. Some areas have Article 4 Directions restricting short-term lets.

Building Regulations

Ensure your property meets safety standards:

• Working smoke alarms
• Carbon monoxide detectors (if gas appliances)
• Gas safety certificate (if applicable)
• Electrical safety check
• Fire safety measures

Making Tax Digital for Airbnb Hosts

From April 2026 (income over £50,000) or April 2027 (income over £30,000), you must comply with Making Tax Digital:

• Keep digital records
• Submit quarterly updates
• Use HMRC-recognised software

This applies to combined self-employment and property income.

Track Airbnb Income with TaxFolio

TaxFolio helps Airbnb hosts manage their tax:

• Bank connection — import Airbnb payouts automatically
• Expense tracking — categorise cleaning, supplies, fees
• Section 24 calculation — mortgage interest handled correctly
• Multiple properties — track each listing separately
• Real-time tax estimate — see your liability as you earn
• SA105 filing — submit property income to HMRC
• From £69.99/year — affordable for hosts

Start your free 30-day trial and simplify your Airbnb tax.

Summary: Airbnb Tax Quick Reference

| Situation | Tax Treatment | |-----------|---------------| | Room in main home, under £7,500 | Tax-free (Rent a Room) | | Room in main home, over £7,500 | Deduct £7,500 OR claim expenses | | Whole property, under £1,000 | Tax-free (Property Allowance) | | Whole property, over £1,000 | Deduct £1,000 OR claim expenses | | Mortgage interest | 20% tax credit (Section 24) | | Income reported to HMRC | Yes, from 2024 |

Key actions:

1. Determine which allowance applies (Rent a Room or Property)
2. Calculate if allowance or actual expenses give lower tax
3. Register for Self Assessment if required
4. Keep records of income and expenses
5. File by 31 January