Airbnb tax in the UK: how holiday let income is taxed now
Since April 2025 holiday let income is taxed like any other property income. You may be able to use the £7,500 Rent a Room allowance for letting in your own home or the £1,000 property allowance, otherwise you pay tax on your profit after allowable expenses. Airbnb now reports host earnings to HMRC every year, and Making Tax Digital is bringing many hosts into quarterly reporting.
The furnished holiday lettings rules have gone
The special tax treatment for furnished holiday lets ended on 6 April 2025. Holiday let income is now simply property income, taxed the same way as a long-term let. The main changes were:
- Mortgage interest is no longer deducted from profit. Instead you get a tax credit at the basic rate of 20%, which costs higher-rate taxpayers more.
- New capital allowances on furniture and equipment ended. You can still claim for replacing domestic items like-for-like, and any existing allowance pool carries on.
- Business asset reliefs on selling, such as Business Asset Disposal Relief, no longer apply, so gains are taxed at the normal residential rates.
- Holiday let profits no longer count as earnings for pension contribution relief.
Tax-free allowances you might use
- Rent a Room: up to £7,500 a year tax-free for letting furnished accommodation in your own home, halved to £3,750 if you share the income with someone. It cannot be used for a separate flat or a second home.
- Property allowance: up to £1,000 a year of property income tax-free. You claim it instead of your actual expenses, and you cannot combine it with Rent a Room on the same income.
Expenses you can usually deduct
If you do not use an allowance, you pay tax on your profit. Typical allowable expenses include cleaning and laundry, platform fees such as Airbnb's service fee, utilities and broadband you pay for the property, insurance, repairs and maintenance, safety certificates, accountancy fees, advertising and the cost of replacing furnishings like-for-like. Improvements, such as an extension, are not deductible against income.
Airbnb reports your earnings to HMRC
Under digital platform reporting rules that started on 1 January 2024, platforms like Airbnb report hosts' earnings to HMRC every year, with the first reports sent in January 2025. HMRC can match these against tax returns, so declare all your income.
Making Tax Digital
If your self-employment and property income is over £50,000 you are already in Making Tax Digital from April 2026, and the threshold drops to £30,000 in 2027 and £20,000 in 2028. Our Making Tax Digital article has the dates and deadlines.
HostSorted's money section records income and expenses by property in HMRC's categories and splits them into tax years and MTD quarters. This is general information, not tax advice. Talk to an accountant about your own situation.
Related guides
Official sources
- GOV.UK: Rent a Room Scheme
- GOV.UK: tax-free allowances on property and trading income
- GOV.UK: check if you need to use Making Tax Digital for Income Tax
- Airbnb: helping our hosts pay their fair share of tax
This is general information, not legal or tax advice. Rules change, so check the official sources before you act.