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:

• Whether or not you also live on the property 🏠
• How much you earn from it 💸
• How many days you’ve hosting 🗓️

What if 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, this doesn’t count as taxable income so you don’t need to do anything. This is called the Rent a Room relief.

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. Read more about this here.

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

What if I am running a full-time holiday 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 property income allowance – whichever works best for you)
• If your income from Airbnb is higher than £90,000, you’ll need to register for VAT
• If your property is available to let for 140 days or more, it will also be subject to business rates (essentially an increase of your council tax)

If your property qualifies as a furnished holiday letting, you’ll luckily be entitled to a few tax reliefs and advantages:

• Entrepreneurs’ Relief: a 10% capital gains tax rate instead of the usual 24%
• 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
• Your Airbnb profits may even count as earnings for pension purposes 😱

Where can I find my Airbnb earnings documents?

This information will be available in your Airbnb account. Simply visit your transaction history page.

🚨 The rules differ across the United Kingdom 🚨

• 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

You’ll also need a certificate in the Isle of Man, Guernsey and Jersey. 

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