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When you run holiday rentals on Airbnb, you should consider how to pay tax on all different types of properties, from penthouses to treehouses. There are different factors that affect how a property is viewed in tax terms.
If you rent out a Furnished Holiday Let (FHL), HMRC sees this as a trade rather than a property business. A property business, in contrast, is an investment business. And this is treated very differently in tax terms.
Defined as “any venture in the nature of trade”, based on certain commercial services being offered
Profits from UK land or property involved in running a ‘rental business’
If your property is classed as a FHL, you will be able to claim certain tax benefits:
An important distinction made is whether you are making profit from the use of the land or from the services forming part of a trade. If your service is more like that of a hotel, it will more likely qualify for the latter.
Below is a selection of services and conditions that qualify a property as a Furnished Holiday Let:
Read more about FHL on the HMRC website.
When you host a property in London, there’s a rule that restricts you from hosting for more than 90 days during a calendar year. This is because when you turn residential property into a rental in London, you need to get planning permission. This planning permission is known as change of use; however, it only affects properties that are rented for more than 90 nights of the calendar year.
If you do want to host for longer than 90 nights in a year, you will have to apply for planning permission to do so. Otherwise, the cap will be applied to your property automatically. Read more about how this works on this Airbnb guide.
Essentially, all of them. Whatever you’re renting out, you’ll owe tax like anyone else. Here are some of the more niche accommodations that you may not have considered in terms of tax purposes.
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