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Tax as a Airbnb host

Most Airbnb hosts – and those looking to begin hosting using the platform – will be aware that Airbnb is now required to share data with HMRC. This regulation, which came into force on 1 January 2024, helps the government to ensure that those earning over £1,000 from rentals are paying the right amount of tax. So with the Airbnb/HMRC partnership now official, how much tax do you need to pay as an Airbnb host?

Renting out a property

Landlords in the UK – whether they are buy-to-let landlords or holiday let hosts – are able to earn up to £1,000 from rentals before they must start paying tax. That means if you rent out a converted barn or building on your land, for example, and make £999 each tax year from it, you do not need to pay any Airbnb tax. However, once this threshold is exceeded, you will need to declare your income via the SA100 Self Assessment form.

To work out the amount you need to pay tax on, you need to subtract your property allowance and any allowable expenses from your total rental income. For example: 

Total income from Airbnb let = £2,000

Property allowance = £1,000

Allowable expenses = £300

Your income (£2,000) – (property allowance + expenses [£1,300]) = £700.

You would need to pay tax on £700 of your earnings. Allowable expenses include utilities used by your guests, cleaning products and consumables such as tea and coffee. The amount of Airbnb tax you pay depends on the rate at which you pay tax on your other income. Using the above example, if you are a basic rate taxpayer, you would pay 20% on the £700 – a total of £140.

Renting out a room

If you rent out a room in your primary residence, the relief available is much more generous. Under the Rent a Room scheme, you can earn up to £7,500 each year without needing to pay any tax. If you earn more than that, you will be taxed at the same rate as your Income Tax band.

It’s worth noting that if your property is jointly owned, each person will receive an annual allowance of £3,750. You cannot claim both Rent a Room relief and the £1,000 property allowance.

Other tax considerations

For most people, the Airbnb UK regulations around tax will begin and end with Income Tax. However, if you are letting several properties or earning over a certain amount each tax year, you may need to pay National Insurance Contributions (NICs). All properties are also subject to Council Tax, and if you’re selling a second property you will need to pay Capital Gains Tax on the profit.

Airbnb Accountants

If you have questions about your Airbnb tax obligations, or you need help calculating what you owe, get in touch with the team at Ibiss & Co today. As experienced accountants, we help landlords with their property tax, ensuring they comply with the latest regulations and pay the right amount to HMRC. Contact our Barking, Tooting or Walsall offices today to learn more.

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