Work out exactly how much income tax you owe on your Airbnb earnings in the UK for 2025/26. This calculator covers the Rent-a-Room scheme, property allowance, Section 24 mortgage interest restrictions, and helps you choose the most tax-efficient approach. Whether you let a spare room or a whole property, get a complete tax picture in minutes.
Airbnb hosts in the UK face a range of tax obligations that differ depending on whether they let a room in their own home, let the whole property, or operate in a way that HMRC considers a trading business rather than a passive investment. Understanding which rules apply to you is the first step to minimising your tax bill legally.
If you let a furnished room in your own home and your gross receipts are at or below £7,500, the income is completely tax-free and you don't even need to declare it. If income exceeds the threshold, you can either use the scheme (paying tax only on the excess) or opt out and claim actual expenses instead.
The Rent-a-Room scheme is one of the most valuable tax breaks for Airbnb hosts who share their home. Key qualifying conditions are:
All individuals with rental income benefit from the £1,000 property allowance. If your total gross rental income (from all property) is £1,000 or less, you have no tax liability and no need to report it to HMRC. If your income exceeds £1,000, you can deduct the £1,000 allowance instead of claiming actual expenses - useful when your actual expenses are very low or complicated to track.
If you claim actual expenses (rather than the property allowance), you can deduct a wide range of costs from your Airbnb income:
| Expense Type | Deductible? | Notes |
|---|---|---|
| Airbnb platform fees | Yes - 100% | Airbnb typically charges 3% host fee |
| Cleaning costs | Yes - 100% | Between-guest cleaning |
| Guest toiletries/supplies | Yes - 100% | Items provided for guests |
| Insurance (Airbnb hosting) | Yes - proportional | Let period proportion only |
| Utilities | Yes - proportional | Gas, electricity, water for let period |
| Repairs & maintenance | Yes - 100% | Not improvements/capital works |
| Mortgage interest | 20% tax credit only | Section 24 restriction since 2020 |
| Council tax | Yes - proportional | For let period only |
| Capital improvements | No | May reduce CGT on sale |
Since April 2020, landlords can no longer deduct mortgage interest from rental income as an expense. Instead, they receive a tax credit equal to 20% of the mortgage interest paid. This affects higher and additional rate taxpayers most severely: a higher rate taxpayer who previously reduced their taxable rental profit by the full mortgage interest now only gets a 20% credit on that interest.
For example: If your rental profit before mortgage interest is £12,000 and your annual mortgage interest is £8,000, you cannot deduct the £8,000. You pay tax on the full £12,000 and then receive a £1,600 tax credit (20% of £8,000). A higher rate taxpayer saves £1,600 in tax but previously would have saved £3,200 (40% of £8,000).
If your Airbnb property meets the Furnished Holiday Let qualifying tests, it has historically attracted more favourable tax treatment. However, the FHL regime was abolished from 6 April 2025 under the Finance Act 2025. Properties that previously qualified as FHLs are now treated as standard residential rental property for tax purposes.
The qualifying conditions were: available for letting at least 210 days per year, actually let for at least 105 days, and no single letting exceeding 31 days during the threshold period. If your property previously met these conditions, you should plan for higher tax bills from 2025/26 onwards as FHL benefits no longer apply.
If you let your whole property on Airbnb for more than 140 days per year, the property may be assessed for business rates (Non-Domestic Rates) rather than council tax. In England, properties available for short-term letting for 140 days or more and actually let for at least 70 days move to business rates. Many small Airbnb properties then qualify for Small Business Rate Relief, potentially making business rates cheaper than council tax.
In Wales, the threshold is even stricter: 182 days available and 182 days actually let to qualify for business rates. Local councils in Scotland and Wales have introduced additional council tax surcharges for short-term lets in some areas.
You must register for Self Assessment with HMRC if your gross rental income exceeds £1,000 in a tax year (unless fully covered by the Rent-a-Room scheme). You should register by 5 October following the end of the first tax year in which you received the income. The Self Assessment tax return deadline is 31 January for online filing. Failure to register or file on time results in automatic penalties.
Rental income from property is not subject to National Insurance contributions. NI only applies to trading income and employment income. However, if HMRC determines that your Airbnb operation amounts to a trade - for example, because you provide extensive hotel-like services, employ staff, or operate at commercial scale - your profits may be treated as self-employment income and subject to Class 2 and Class 4 NI.
| Approach | Best If | Key Benefit |
|---|---|---|
| Rent-a-Room Scheme | Renting room in your home, income under £7,500 | Completely tax-free |
| Property Allowance | Income over £7,500, low actual expenses | Simple £1,000 deduction, no records needed |
| Actual Expenses Method | High expenses relative to income | Deduct all legitimate costs |
| FHL status (pre-April 2025) | 105+ days actually let per year | ABOLISHED from April 2025 |
Yes, Airbnb income is taxable in the UK. However, the first £1,000 of gross rental income is exempt under the property allowance. If you rent a furnished room in your own home, the Rent-a-Room scheme exempts up to £7,500 per year. If your income exceeds these thresholds, you must report it on a Self Assessment tax return and pay income tax on the taxable profit.
The Rent-a-Room scheme allows you to earn up to £7,500 per year tax-free from letting furnished accommodation in your home. If you share the income with another person (for example a spouse who also owns the property), the threshold is £3,750 each. Airbnb income qualifies if you are letting a room (not the whole property) in your main residence and you are present during the letting period.
The property allowance is £1,000 per year per individual. If your total gross rental income from all sources is £1,000 or less, you pay no tax and don't need to declare it. If it exceeds £1,000, you can either deduct the £1,000 allowance from gross income or claim actual allowable expenses - whichever gives the lower tax bill. You cannot claim both the property allowance and actual expenses simultaneously.
Since April 2020, under Section 24, landlords can no longer deduct mortgage interest directly from rental income as an expense. Instead, you receive a tax credit worth 20% of the mortgage interest paid. This is regardless of whether you're a basic, higher, or additional rate taxpayer. Higher rate taxpayers are significantly worse off under this system than under the old rules.
You must register for self-assessment if your gross rental income exceeds £1,000 in a tax year, unless it is fully covered by the Rent-a-Room scheme with income under the threshold. You should register by 5 October following the end of the first relevant tax year. For example, if you started renting on Airbnb in the 2025/26 tax year, register by 5 October 2026. Failure to register on time can lead to penalties.
No. Rental income from property is not subject to National Insurance contributions. NI only applies to trading income or employment income. However, if HMRC treats your Airbnb activity as a trade (rather than investment) due to extensive services provided - such as daily cleaning, meal provision, or concierge services - NI may apply. Most standard Airbnb hosts are treated as property investors, not traders.
Allowable expenses include Airbnb platform fees, cleaning costs, laundry and linen, guest supplies (toiletries, welcome packs), insurance premiums (proportional for the let period), utilities and broadband (proportional), property repairs and maintenance (not improvements), and basic rate mortgage interest (as a 20% tax credit since Section 24). Capital costs such as furniture purchases cannot be deducted from income but may qualify for Capital Allowances if the FHL rules applied (now abolished).