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Hosting on Airbnb: how much tax do you need to pay?

As a general rule, you will need to pay income tax at the usual rate on money earned from hosting on Airbnb.

Your actual tax bill will depend on a few things:

  • if you also live on the property or not
  • how much you earn from it
  • and how many days you’re hosting for.

I’m just listing a room in my own home

In this case it’s pretty simple.

As long as you also live on the property, if you earn under £7,500 from Airbnb, you don’t need to do anything.

If the property is owned jointly, the Rent-a-Room allowance is split between you two – but so is the Airbnb income, so the total tax is actually the same.

You can also choose to pay tax on your profits (earnings minus allowable expenses), if your Airbnb-related expenses are greater than £7,500.

I am running a proper Airbnb business

If you are listing a property that’s not your home, then you will be taxed just like regular business owners:

  • you’ll pay tax on Airbnb earnings minus allowable expenses (or the flat £1,000 trading allowance, whichever works best for you)
  • if your income from Airbnb is higher than £85,000, you need to register for VAT
  • and if your property is available to let for 140 days or more, it will also be subject to business rates (it’s different from income tax).

A special rule: if your property qualifies as a furnished holiday letting (this is what it means), you get a few tax advantages:

  • Entrepreneurs’ Relief: a 10% capital gains tax rate instead of the usual 28%
  • Rollover Relief: if you sell one Airbnb residence and buy another, you can defer capital gains tax on the sale of the initial property
  • capital allowances for property furniture and fittings: you normally can’t claim these against your rental income
  • plus your Airbnb profits will count as earnings for pension purposes.

Where can I find my Airbnb earnings documents?

In your Airbnb account.

Simply visit your Transaction History page.

Some areas have specific rules

  • London: you can only rent out of your own home for fewer than 90 nights. Airbnb currently automatically limits listings in London to 90 nights, unless you have permission to host more frequently
  • Glasgow: you might need a special permit
  • Northern Ireland: you need a certificate from Tourism NI
  • Isle of Man – similar
  • Guernsey – similar
  • Jersey – similar restrictions.

We recommend you contact your local City Council before you host on Airbnb, just to be sure.

Otherwise, if you need help paying your Airbnb tax, just sign up to TaxScouts and we’ll do it for you for a flat £119.

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