Airbnb Hosting Tax Guide

Q: Can I use the Rent-a-Room Scheme for Airbnb?

Yes, but only if you are letting a furnished room in your own home (the home you live in). If you let an entire separate property, the Rent-a-Room Scheme does not apply. See our Rent-a-Room guide for full details.

Key facts

The £1,000 property allowance lets you earn up to £1,000 from property income (including Airbnb) tax-free.
If you let a room in your own home, the Rent-a-Room Scheme gives you £7,500 tax-free instead.
Airbnb income must be declared to HMRC via Self Assessment if it exceeds the relevant allowance.
From 2025, digital platforms like Airbnb report your income directly to HMRC under DAC7 rules.
The FHL regime was abolished from April 2025 — short-term lets are now taxed as ordinary property income.

Do You Need to Declare Airbnb Income?

Whether you need to register for Self Assessment and declare your Airbnb income depends on your circumstances:^[2]

Situation	Tax-Free Allowance	Need to Declare?
Room in your own home	Rent-a-Room: £7,500/year	No (if income is under £7,500)
Separate property (income under £1,000)	Property allowance: £1,000/year	No (if total property income is under £1,000)
Separate property (income over £1,000)	£1,000 or actual expenses	Yes — register for Self Assessment
Room in own home (income over £7,500)	£7,500 or actual expenses	Yes — register for Self Assessment

DAC7 reporting: From January 2024, Airbnb and other digital platforms report your income directly to HMRC under DAC7 rules. HMRC will cross-reference platform data with your tax return, so failing to declare could trigger an enquiry.

Rent-a-Room Scheme for Airbnb Hosts

If you let a furnished room (or rooms) in your main residence, the Rent-a-Room Scheme lets you earn up to £7,500 per year tax-free. Key points:^[1]

The property must be your main home (the one you live in)
The room must be furnished
The scheme is automatic — no need to register
If you share the property income with someone, the threshold is £3,750 each
You cannot claim expenses under the scheme — the £7,500 replaces all deductions

The £1,000 Property Allowance

If you do not qualify for Rent-a-Room (e.g. you let a separate property), you can use the £1,000 property allowance. If your total gross property income is under £1,000, it is tax-free and you do not need to declare it.^[2]

If your income exceeds £1,000, you choose between:

Using the allowance: Deduct £1,000 from gross income, pay tax on the rest (no other expenses claimed)
Claiming actual expenses: Deduct all allowable expenses from gross income (usually better if expenses exceed £1,000)

Allowable Expenses for Airbnb Lets

If you opt to claim actual expenses (rather than using the property or Rent-a-Room allowance), the following are deductible:^[3]

Expense	Notes
Cleaning costs	Professional cleaning between guests
Airbnb service fees	The commission Airbnb deducts from your payouts
Utilities	Gas, electric, water, internet (apportioned if shared with personal use)
Insurance	Landlord or short-let insurance
Council tax	Only if paid by you (business rates may apply for frequent short lets)
Repairs and maintenance	Fixing damage, repainting, plumbing repairs
Linen, towels, toiletries	Consumables provided to guests
Mortgage interest	20% tax credit (Section 24) for individual landlords
Photography	Professional photos for the listing
Replacement of domestic items	Replacing furniture, appliances, kitchenware on a like-for-like basis

FHL Regime: Now Abolished

Before April 2025, short-term holiday lets that met certain letting conditions qualified as Furnished Holiday Lettings (FHL), which gave access to trading tax benefits. The FHL regime has been abolished from April 2025. Airbnb income is now taxed as ordinary property income with no special treatment. See our FHL guide for transitional rules.

Business Rates vs Council Tax

If you let a property for short-term stays for 140 days or more per year, the local council may reclassify it from council tax to business rates. This can be advantageous because:

Properties with a rateable value under £12,000 qualify for 100% Small Business Rate Relief (no rates payable)
Properties between £12,001 and £15,000 get tapered relief

Tip: From April 2025, to qualify for business rates (rather than council tax), the property must be actually let for 70 days or more per year in addition to being available for 140 days. Simply being available is no longer sufficient.

Frequently Asked Questions

Do I need to pay tax on my Airbnb income?

It depends on how much you earn and whether you live in the property. If you let a room in your own home, the Rent-a-Room Scheme gives you £7,500 tax-free. If you let a separate property, the £1,000 property allowance applies. Income above these thresholds must be declared and is taxable. Even below the threshold, you may choose to declare it to claim expenses instead.

Does Airbnb report my earnings to HMRC?

Yes. Under the OECD’s DAC7 rules (implemented in the UK from January 2024), digital platforms including Airbnb are required to report host earnings to HMRC annually. This means HMRC knows what you have earned, so it is essential to declare your income correctly.

Can I use the Rent-a-Room Scheme for Airbnb?

Yes, but only if you are letting a furnished room in your own home (the home you live in). If you let an entire separate property, the Rent-a-Room Scheme does not apply. See our Rent-a-Room guide for full details.

What expenses can I claim on my Airbnb property?

If you opt to declare income and expenses (rather than using the property allowance), you can claim: cleaning costs, utility bills, insurance, platform service fees (Airbnb commission), repairs, council tax, mortgage interest (20% tax credit), linen and towels replacement, and a proportion of shared costs for partial lettings.

Sources

Rent a Room in your home — GOV.UK
Property income allowance — GOV.UK
Renting out a property: paying tax — GOV.UK