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Tax tips for those who rent out properties or rooms on a short-term basis

The number of properties and rooms available to book on Airbnb has soared in major UK cities, as landlords, local families and businesses look to benefit from visitors to their communities, with the average Airbnb host earning more than £3,000 a year. 

The UK’s sharing economy is expected to expand at over 30% per year over the next decade, generating £18bn of revenue for platforms and facilitating about £140bn worth of transactions per year by 2025, according to PWC. 

In London alone, there are almost 80,000 rooms or homes listed on Airbnb - more than any other UK city, while listings in Edinburgh have doubled in three years. 


But with just a few days until the 31 January tax return deadline, short-term rental hosts are being urged to understand their tax obligations and think about opportunities in the year ahead. 

Merilee Karr, CEO of UnderTheDoormat and chair of industry body the UK Short Term Accommodation Association (STAA), said: "To make the most of the fantastic opportunities that the sharing economy offers, it’s very important that hosts who rent out their whole home or just a room on a short-term basis understand the tax implications, take advantage of the allowances and declare the income they make above these thresholds."

According to the STAA, there are three key things short-term hosts need to know about their tax entitlements: 

If you rent out your whole property there’s a £1,000 tax-free allowance.

If your total rental income (before expenses) from sharing economy activities or renting out your home when you’re away, is less than or equal to £1,000, you do not have to declare it to HMRC and you do not have to pay any tax on it. You do not need to do anything to qualify; it will apply automatically. 

In England, if your home is rented out for short periods totalling less than 140 nights, you will continue to just pay council tax.  If you short-let your property for more than 140 nights, you will instead need to pay business rates. 

If you are renting for more than 140 nights, your property will be rated as a self-catering property and valued for business rates.  In some locations this will be more than council tax, in others it might be less. 

If your property is in Wales, it will be rated as a self-catering property and valued for business rates if it’s both available to let for short periods that total 140 days or more per year and actually let for 70 days.

You can earn up to £7,500 a year from renting out a room in your home, for short periods, without having to pay any tax.

If you earn more than £7,500, you must complete a tax return (even if you don’t normally). You can choose to opt-in to the Rent a Room scheme, which will enable you to claim your tax-free allowance. You will need to let HMRC know this on your tax return. 

If you choose not to opt-in to the scheme, you simply record your income and any associated expenses on the property pages of your tax return.  

Note, you cannot claim for both the Rent a Room scheme and whole property rental allowances. It’s one or the other.

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Poll: Do you rent out a property or room on a short-term basis?


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    I think the Airbnb £3k extra pa, is a bad joke. I believe its several times more than that, I live in the real world, so now you might realize the gravity of the problems caused by removal of Section 21, which is the main driver of this. Ah, yes the Government wants to create stable long term tenancies so this is how they propose to do it, this is their joined-up thinking, NOT. Fill the Auction houses & Rooms in Hard Rock Hotels with LL's getting out, then the Land Registry can give you the stats' about how good the Sales figures are. Perhaps you can now see why Airbnb has 80'000 rooms listed, its LL's been driven out of regular letting as a direct result of section 21 removal, Congratulations.


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