The rise of short-term letting platforms has transformed the UK property market, with Airbnb becoming one of the most popular ways for homeowners and landlords to generate additional income. However, with increased scrutiny from HMRC and significant changes to property tax rules in recent years, understanding the tax on Airbnb income has never been more important.
Many UK Airbnb hosts mistakenly assume that small or occasional earnings are not taxable, or that Airbnb automatically handles tax obligations on their behalf. In reality, Airbnb income is subject to UK tax laws, and failure to report it correctly can lead to penalties, interest charges, and unnecessary stress. As of 2026, HMRC has clearer reporting requirements, improved data-sharing agreements with digital platforms, and less tolerance for non-compliance.
This guide is designed to provide a clear, practical, and up-to-date explanation of tax on Airbnb income in the UK, whether you rent out a spare room occasionally or operate multiple short-term rental properties. We will explain what counts as taxable income, which allowances may apply, how to declare earnings to HMRC, what expenses you can deduct, and how recent rule changes affect Airbnb hosts.
However, keep in mind that tax rules can change and every host’s situation is unique, it’s always wise to seek legal or tax advice tailored to your needs.
What Counts as Airbnb Income?
For UK tax purposes, Airbnb income is broadly defined as any money or value you receive in exchange for allowing someone to stay in your property, whether for one night or several months. HMRC does not distinguish between income earned through Airbnb and income earned through other letting platforms; the tax treatment depends on the nature of the income, not the platform used. Airbnb income is considered taxable income and forms part of your total income for the year.
Airbnb income includes more than just the nightly rate paid by guests. When calculating the tax on Airbnb income, you must include the full gross amount received before Airbnb deducts its service fees.
If you own the property jointly, your share of Airbnb income is combined with your other income to determine your total taxable income and reporting requirements.
If your Airbnb income exceeds £1,000 in a tax year, you must report it to HMRC, and all earnings above this threshold are considered taxable income.
Income that must be declared includes:
- Nightly or weekly rental charges
- Cleaning fees charged to guests
- Extra guest fees
- Pet fees
- Charges for parking, laundry, or additional services
- Any other payments received directly from guests
Even if Airbnb collects the payment and transfers it to your bank account after deducting its commission, HMRC still considers the full amount paid by the guest for calculating your tax on Airbnb income. Airbnb service fees are treated as an expense, not a reduction in income.
It is also important to note that income received in non-cash form may still be taxable. For example, if a guest provides services in exchange for accommodation, the market value of that stay may still count towards your Airbnb income for tax purposes.
If you jointly own a property with another person, the income is usually split according to your ownership shares, unless a different legal arrangement is in place. Each owner is responsible for declaring their share of the income on their own tax return.
Understanding exactly what counts as income is the foundation of calculating the correct tax on Airbnb income, and errors at this stage often lead to under-reporting and compliance issues later.
Is Airbnb Income Taxable in the UK?
Yes, Airbnb income is taxable in the UK, regardless of whether you rent out an entire property, a spare room, or only host guests occasionally. HMRC treats Airbnb earnings as UK property income, meaning it falls within the UK’s property tax framework rather than being tax-free or automatically exempt. However, there are tax free allowances and thresholds, such as the personal allowance and tax-free allowance, which can affect whether you need to pay tax on your Airbnb income.
A common misconception among hosts is that short-term letting income is informal or casual and therefore does not need to be declared. In reality, HMRC’s position is clear: if you earn money from letting property in the UK, it must be considered when calculating your tax on Airbnb income. You are required to declare Airbnb income to HMRC and pay tax if your earnings exceed the tax free threshold.
If your Airbnb income exceeds the personal allowance (£12,570), you must file a Self Assessment tax return.
How HMRC categorises Airbnb income
For most individuals, Airbnb earnings are taxed as property rental income, not as employment income. This means:
- You are not taxed through PAYE
- You must assess your own tax liability
- You may need to register for Self Assessment
Only in rare cases, where Airbnb activity is highly commercial and resembles a full hospitality business, might HMRC consider the income as trading income. However, for the majority of UK hosts, Airbnb income is taxed under standard property income rules.
Occasional hosting is still taxable
Even if you only rent out your property for a few weekends a year, there will be applicable tax on airbnb income. There is no minimum number of nights or bookings that automatically makes Airbnb income exempt. What matters is:
- How much income you earn
- Whether any tax allowances apply
- Whether your income exceeds the tax free threshold, such as the £1,000 property allowance
- Whether the income exceeds HMRC reporting thresholds
If your Airbnb income exceeds £1,000 in a tax year, you must report it to HMRC.
If your Airbnb income exceeds available allowances, you are required to declare it and calculate the appropriate tax on Airbnb income.
Platform reporting and HMRC visibility
As for Airbnb tax UK 2026, HMRC receives increasing amounts of data directly from digital platforms of Airbnb. These platforms are required to share host income details under international and UK data-sharing agreements. This means HMRC can:
- Cross-check reported income against platform data
- Identify undeclared Airbnb earnings
- Open compliance checks more easily
Relying on the assumption that HMRC “won’t notice” Airbnb income is no longer realistic. Proactively understanding and declaring your income is the safest and most cost-effective approach.
When tax becomes payable
Tax is not automatically due simply because you earn Airbnb income. Tax becomes payable only after:
- Allowable expenses are deducted, or
- Relevant tax-free allowances are applied
How much tax you pay on your Airbnb income depends on your total taxable income and the income tax band you fall into. Tax is applied to your profit (income minus allowable expenses) according to the relevant tax band: Basic (20%), Higher (40%), or Additional (45%).
However, once those thresholds are exceeded, the remaining profit is subject to income tax at your applicable rate. This profit forms the basis of your tax on Airbnb income calculation.
What About the £1,000 Property Allowance?
The £1,000 property allowance is one of the most commonly misunderstood aspects of tax on Airbnb income in the UK. Also known as the Micro-Entrepreneurs Allowance or property income allowance, it allows Airbnb hosts to earn up to £1,000 tax-free each year if their gross income is below that threshold. If your total Airbnb income for the tax year is £1,000 or less, you generally do not need to:
- Declare the income to HMRC
- Register for Self Assessment
- Pay any tax on that income
In this scenario, the property allowance fully covers your Airbnb earnings, meaning there is no tax on Airbnb income to pay.
When the allowance apply for your tax on Airbnb income
The property allowance applies only if:
- Your total property income (including Airbnb and any other rental income) is £1,000 or less
- You are not claiming any allowable expenses
If your Airbnb income exceeds £1,000, you have two options:
- Use the £1,000 allowance, or
- Ignore the allowance and deduct actual expenses instead
You cannot do both. Once income exceeds £1,000, you must submit a Self Assessment tax return, even if the allowance ultimately reduces your taxable profit to zero.
Declaring Your Airbnb Income to HMRC
Once your Airbnb earnings exceed applicable allowances, you are legally required to declare them to HMRC. Proper reporting is essential, not only to calculate the correct tax on Airbnb income, but also to avoid penalties and compliance issues. It is important to declare Airbnb income accurately and pay tax on time to stay compliant with HMRC regulations.
If your gross Airbnb income exceeds £1,000, you must register for Self Assessment by 5 October following the tax year.
How Airbnb income is reported
Airbnb income is reported as property income on your Self Assessment tax return. You will need to:
- Declare the total gross Airbnb income received
- Deduct allowable expenses or apply the property allowance
- Deduct expenses directly related to running your Airbnb to reduce your total taxable income
- Calculate your net profit or loss
This net figure is used to determine your tax on Airbnb income, which is added to your other taxable income for the year. Your total taxable income for the year, after accounting for allowable expenses and reliefs, determines your tax liability.
Key deadlines to be aware of
- 31 October: Deadline for paper tax returns
- 31 January: Deadline for online tax returns and payment of tax owed
- 31 July: Second payment on account, if applicable
Missing these deadlines can result in automatic penalties, interest charges, and further enforcement action.
Record-keeping requirements
HMRC expects hosts to keep accurate records of tax on Airbnb income for at least five years after the submission deadline. This includes:
- Booking confirmations and income statements
- Bank statements showing Airbnb payments
- Receipts for expenses claimed
- Mortgage interest statements (where relevant)
Good record-keeping of tax on Airbnb income not only supports your tax return but also protects you in the event of an HMRC enquiry.
Allowable Expenses: What Airbnb Hosts Can Deduct
One of the most effective ways to legally reduce the tax on Airbnb income is by claiming allowable expenses. Deducting expenses directly related to running your Airbnb can provide several tax advantages, as these costs can be subtracted from your rental income to reduce your overall tax liability. These are costs that are incurred wholly and exclusively for the purpose of running your Airbnb letting. While the abolition of the Furnished Holiday Lettings regime removed certain enhanced deductions, Airbnb hosts can still deduct a wide range of standard property expenses.
If you are renting a second home or investment property, the Rent-a-Room relief does not apply, but you can claim allowable expenses or the £1,000 property allowance.
Common allowable Airbnb expenses
Typical deductible expenses for Airbnb hosts include:
- Cleaning and laundry costs
- Utility bills (gas, electricity, water) relating to guest use
- Council tax or business rates (where applicable)
- Insurance for the rental property
- Repairs and maintenance (not improvements)
- Replacement of domestic items such as beds, sofas, white goods
- Airbnb service fees and platform commissions
- Advertising and listing costs
- Property management or letting agent fees
These expenses are deducted from your gross income to calculate your taxable profit, which then determines the tax on Airbnb income due.
Repairs vs improvements
It is important to distinguish between repairs and improvements for calculating tax on Airbnb income:
- Repairs (such as fixing a broken boiler or repainting) are generally allowable
- Improvements (such as adding an extension or upgrading to a higher standard) are not deductible against income
Incorrectly claiming improvements as expenses is a common error that can lead to HMRC challenges.
Furnished Holiday Lettings vs Regular Rentals — What Changed in 2026
For many UK hosts, the concept of Furnished Holiday Lettings (FHL) historically offered significant advantages and tax relief for Airbnb hosts compared to standard residential rentals. Airbnb properties can qualify as Furnished Holiday Lets (FHL) if they meet specific criteria set by HMRC, and when a property qualifies, it can offer several tax advantages such as special reliefs and allowances.
However, as of April 2025, the FHL tax regime has been abolished, meaning Airbnb and other holiday lets are now treated like regular residential rentals for most tax purposes. Understanding these changes is crucial for accurately calculating the tax on Airbnb income.
Key differences before and after FHL abolition
Previously under FHL:
- Full mortgage interest and finance costs could be deducted from profits
- Capital allowances could be claimed on furniture and equipment
- Certain Capital Gains Tax (CGT) reliefs were available
- Profits could qualify as relevant earnings for pension purposes
From April 2025 onwards:
- Mortgage interest relief for individuals is restricted to a 20% tax credit, same as standard residential landlords
- Capital allowances on furniture and equipment for new purchases are no longer available; only replacement of domestic items is deductible
- CGT reliefs linked to FHL status have been removed
- Profits from Airbnb activity are not automatically considered relevant earnings for pensions
These changes mean that tax on Airbnb income will be fixed and hosts must now manage their properties under the same rules as standard residential landlords, focusing on allowable expenses and accurate reporting.
What still applies
Despite the abolition of the FHL regime, certain deductions and reliefs remain:
- General running costs such as cleaning, utilities, and repairs
- Replacement of domestic items (beds, sofas, appliances)
- Service charges, agent fees, and platform commissions
- Carried-forward losses from previous years
By applying these allowable deductions carefully, hosts can still reduce the taxable profit and, consequently, the tax on Airbnb income.
Rent-a-Room Relief: When Does It Apply to Airbnb?
Rent-a-Room Relief is a valuable tax exemption available to UK homeowners who rent out furnished rooms in their main residence. The rent a room allowance lets you earn up to £7,500 tax-free from your main residence. For Airbnb hosts, understanding when this relief applies can significantly reduce their tax on Airbnb income. However, it is important to recognise the conditions and limitations.
Rent-a-Room Relief allows individuals to earn up to £7,500 per tax year tax-free from letting out furnished accommodation in their main home. If the property is jointly owned, the limit is halved to £3,750 per owner. If you claim relief under the Rent-a-Room scheme, you cannot deduct expenses, and you must declare any income above the threshold to HMRC. Income above this threshold is subject to income tax at your marginal rate.
If you earn more than £7,500 from renting out a room in your home, you need to declare it to HMRC.
Interaction with the £1,000 property allowance
Rent-a-Room Relief cannot be combined with the £1,000 property allowance for the same income. Hosts must choose the more beneficial option depending on income and allowable expenses. Generally:
For low-income hosts with minor expenses, the property allowance may be simpler. But for hosts renting multiple rooms with higher costs, Rent-a-Room Relief may provide greater tax benefit.
Mortgage Interest Tax Relief
If you have a mortgage on your Airbnb property, you can claim mortgage interest payments as an allowable expense, which helps reduce your UK rental income tax. However, the way tax relief on mortgage interest is applied has changed in recent years. For the 2023-2024 tax year and beyond, individual hosts can no longer deduct the full amount of mortgage interest from their rental income. Instead, you receive a 20% tax credit on your mortgage interest payments, which is applied against your tax bill.
This shift means that the amount of tax on Airbnb income may be higher than in previous years, especially for higher-rate taxpayers. To make your Airbnb business as tax efficient as possible, it’s important to understand how these changes affect your taxable income and future profits. Consulting a tax advisor can help you navigate the rules, claim mortgage interest relief correctly, and ensure you’re not missing out on any tax advantages available for the current tax year.
Council Tax and Airbnb
Council tax is an important consideration for anyone calculating tax on Airbnb income, particularly if you’re renting out your main residence. Under the rent a room scheme, you can earn up to £7,500 tax free each year by letting out a furnished room in your main home, but this does not exempt you from paying council tax. As a host, you are still responsible for paying council tax on your property, regardless of whether you have guests staying through Airbnb.
However, if your property is let out as a self catering property and is available to guests for a significant part of the year, it may be reclassified for business rates instead of council tax. Business rates typically apply for tax on Airbnb income if your property is available to let for 140 days or more per year and is actually let for at least 70 days. Understanding whether your property falls under council tax or business rates is crucial, as it affects your overall tax bill and compliance with local updated regulations for Airbnb. Always check with your local authority to ensure you’re paying the correct tax and making the most of any available tax free allowances under the room scheme.
Airbnb Business and Tax
Running an Airbnb business involves more than just welcoming guests—it also means staying on top of your tax responsibilities. All tax on Airbnb income must be declared on your tax return, and you can claim allowable expenses to reduce your tax liability. The UK tax year runs from April 6th to April 5th of the following year, and you must submit your self assessment tax return by January 31st after the end of the tax year.
Failing to report tax owed on your Airbnb business can result in penalties and interest charges from HMRC. To ensure you’re meeting all your tax obligations, keep detailed records of your Airbnb income and expenses, and seek tax advice if you’re unsure about any aspect of your tax return. By understanding the tax rules and deadlines, you can manage your Airbnb business efficiently, claim all available tax reliefs, and avoid unnecessary tax bills.
Self Employment and Airbnb
While most Airbnb hosts are taxed on their property income rather than as self-employed individuals, there are situations where self employment income rules may apply. If you provide significant additional services to your guests—such as daily cleaning, meals, or laundry—HMRC may consider your activity closer to a business, and you could be treated as self-employed for tax purposes.
Understanding whether your Airbnb earnings are classed as property income or self employment income is essential, as it affects how you report your income, claim expenses, and calculate your tax bill. If you’re unsure about your tax on Airbnb income, it’s best to consult a tax advisor who can help you determine your obligations and ensure you’re claiming all allowable expenses. By clarifying your position, you can minimise your tax bill, maximise your Airbnb earnings, and stay compliant with HMRC requirements.
Looking for Expert Guidance on Tax on Airbnb Income?
Calculating and reporting tax on Airbnb income can be challenging, especially with recent rule changes like the abolition of the Furnished Holiday Lettings regime, mortgage interest restrictions, and evolving HMRC compliance requirements. At The Taxcom, we provide expert guidance to help Airbnb hosts manage their tax obligations accurately and efficiently, while also offering support for more complex situations such as HMRC investigations or VAT reviews.
Book a personal consultation or reach out via email at info@thetaxcom.co.uk. Let us help you navigate the tax on Airbnb income with confidence and peace of mind.