A guide to doing taxes as an Airbnb host

Whether you're a full-time Airbnb host or just renting a room to make some extra money on the side, your Airbnb income is taxable in the UK. You're in the right place to find out all you need to know about taxes, and the specific tax reliefs you may be able to claim, as an Airbnb host.

untied — the UK's personal tax app — helps many Airbnb hosts take care of their taxes, making filing tax returns simple and easy for hosts just like you! 

Do I have to declare my Airbnb income?

If you’re just dipping your toe in the water, the good news is that HMRC doesn’t expect you to declare Airbnb or other property income if the total for the year is less than £1,000. And if it’s in your own home, then you can earn up to £7,500.

However, if you earn more than this, the short answer is “yes”, HMRC does want to hear about it!

However, that doesn’t necessarily mean you’ll pay tax on it...

Do Airbnb hosts have to pay tax?

Everyone is entitled to tax-free allowances, irrespective of what the income source is, whether it’s from employment, dividends, or income from renting out space using services like Airbnb. And you’re also able to claim certain expenses. Nonetheless, this must all be declared on the annual self assessment tax return.

How much tax do I have to pay on my Airbnb?

When it comes to paying tax on your Airbnb income, there’s a difference between renting out a room in your own home and renting out a room in an investment property or a property that you don’t live in all the time (and, for that matter, renting out the whole of your home). You’ll be pleased to know that if you use untied, it will prompt you to answer a few simple questions and then calculate the right allowances for you.

What kind of expenses can I claim if I’ve bought a property to rent out?

Your profit is the amount left over once you’ve added together your rental income and taken away the expenses or allowances that you can claim. If you’ve bought a property to rent out, the kind of expenses you can deduct if you pay for them yourself is quite extensive and includes:

  • general maintenance and repairs (but not the cost of large improvements)
  • utility bills and council tax
  • any ground rent and service charges
  • building and contents insurances
  • the cost of services such as cleaning or gardening
  • the direct cost of letting the property such as advertising, agents’ fees and legal costs.

You can also claim the costs that Airbnb charges you and other services associated with it. Some mortgage interest also qualifies as a deductible expense, although since 6 April 2017 this is restricted for higher rate taxpayers.

And it’s not just interest. untied makes it very quick and easy to run through payments you’ve made from your bank accounts, and then tag and list those items that you want to claim as expenses.

What kind of expenses can I claim if I’m renting out a room in my home?

If you rent out a furnished space in your home and you earn less than £7,500 a year then your income is automatically covered by a “rent a room allowance” so you pay no tax on it.

The limit is halved if you share the income with a partner and there are a couple of limitations:

  1. If you rent out your home while you move abroad you can’t claim this relief
  2. Because you can’t claim other expenses, if you make a loss you’d pay tax in the normal way instead of using the scheme.

If you have more than £7,500 of income from renting out space in your own home, then there are further options to reduce the tax you pay. And, of course, untied helps you select the options that are relevant to you. 

I've heard of a furnished holiday letting - FHL. What's an FHL?

A furnished holiday letting (or furnished holiday let) is a type of rental property that gets slightly more favourable tax treatment. This is ending at the end of the 2024/25 tax year (6 April 2024 to 5 April 2025).

Among the criteria are that the property must be furnished (clue's in the title!), that the total of all lets of more than 31 days doesn't exceed 155 days, the property is available for at least 210 days, and let for at least 105 days. More information is available on HMRC's website.

Take care of your taxes with untied

So, as you’d expect, there are some tax implications that come with renting out an Airbnb room, apartment, house or maybe a boat. And, the rules do change from time to time. But the good news is with untied all this is a lot easier.

The app makes it easy to stay on top of your Airbnb income and expenses (including if it's treated as FHL), prompting you to pay exactly what you owe and claim any tax relief you might be entitled to. It’s quick to use, automating repetitive tasks, freeing up your time to spend on your Airbnb business, rather than on your taxes. You can save even more time by using the app to submit your end of year self-assessment to HMRC directly from your mobile phone.

Sign up for a free trial now – www.untied.io

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