AirBnB rental income

Hi there, I rent out my home on Airbnb in 2 ways: -as a whole house (when i am away on holidays for a week or weekend) -as one bedroom (rent a room) when I am at home I want to calculate the tax I owe. In a tax year, i expect to earn about £2,500 in total (£1000 from renting the whole house + £1500 from renting one room). Am I better to: A) claim the £1,000 relief from renting the whole house B) claim the 7,500 rent a room relief C) claim allowable expenses (mortgage interest, utility bills, etc). I am unsure what counts towards allowable expenses i.e. mortgage interest for the whole year, or on a pro rata basis based on the number of rental days for the whole year. Many thanks for any clarification you can provide, Ciara

Hi ,
 

Thank you for your question. HMRC cannot advise on what option is most beneficial to you, however rent a room relief would not apply to cover total rents received from the Airbnb and renting out a bedroom whilst occupying your home. More information about when you can use that scheme can be found in our helpsheet : HS223 Rent a Room Scheme (2024)  . What counts as allowable expenditure can be found in  : PIM2068 - Deductions: main types of expense: contents    and : Work out your rental income when you let property  .  Thank you .

Hello, I am currently a lodger in my landlord's house. She will move out shortly and agreed to me putting her room on Airbnb to cover the cost. I have a PAYE job. As I will take the income, do I pay normal tax rates on what comes in from Airbnb? Thank you

Hi Spennis,
Thank you for your question.
The liability arising from Airbnb is solely for the owner of the property.
For you to receive the rental income, you must be a partial owner of the property. This means you must be registered on the property deeds.
Following this, a Deed of Trust must be submitted to HMRC showing the percentage split of the income from property.  
PIM1030 - Introduction: jointly owned property & partnerships - HMRC internal manual - GOV.UK (www.gov.uk)
TSEM9200 - Ownership and income tax: legal background: joint ownership - contents - HMRC internal manual - GOV.UK (www.gov.uk)
Thank you.

If I own a studio apartment as a first-time buyer, which is my primary and only residence, and I rent out the entire apartment for up to 90 days a year on Airbnb while I am abroad on holiday or visiting family, but live in the apartment for the rest of the year, which tax scheme or classification would this arrangement fall under? Additionally, is my mortgage interest a deductible expense?

Hi ,
 

Thank you for your question, please find the relevant information to your question at :   Rent a room in your home and also in relation to expenses , :  Rent, bills and tax    . Thank you .

We have a granny annexe flat attached to our main residence that we refurbished two years ago and have let via Airbnb for the past 18 months (79 nights in 23/24 and 125 already in 24/25). We've received less than £4k each in 23/24 and £7k in 24/25 and only now approaching making a 'profit' after our refurbishment costs. I've read that we could be FHL eligible - are we obliged to be so? I\ 've also read that capital costs incurred before renting the property can be set against future income, but in the thread a response from HMRC suggesting otherwise (if I've read either correctly). Finally, does our Airbnb being a granny annexe on the same deeds as our main home, albeit self-contained and with its own council tax, have any additional implications?

Hi ,
 

You do not have to claim the furnished holiday lettings basis but the criteria to claim is here: www.gov.uk/government/publications/furnished-holiday-lettings-hs253-self-assessment-helpsheet/hs253-furnished-holiday-lettings-2022  . You cannot offset capital costs against future income but with furnished holiday lettings you can claim capital gains tax reliefs for traders (Business Asset Rollover Relief, relief for gifts of business assets and relief for loans to traders).  You are also entitled to plant and machinery capital allowances for items such as furniture, equipment and fixtures. There could be capital gains tax consequences.  Normally your own home would be covered by private residence relief however if all or part of the property has not been your only or main private residence for some or all of the time you have owned it private residence relief may be restricted and so leave a taxable and reportable gain.  The guidance is here: CG64230P - Capital Gains Manual: Reliefs: Private residence relief: Identification of the dwelling-house: Contents : :  Private Residence Relief  :   CG64230 - Private residence relief: identification of the dwelling-house: introduction  : Contents - HMRC internal manual - GOV.UK  . Thank you .

Hi, Looking for some guidance please. My wife and I currently live in a four-bedroom detached house, part of which (attached to the main house) has a furnished annex, which we recently renovated. We have started to rent the annex out on an occasional basis through AirbnB and are trying to confirm whether this would fall under the rules for the Rent a Room tax relief. The property is our family home and we are resident in the house when guests stay in the annex. Any advice would be great. Many thanks Bill

Thank you for your response HMRC, and for raising the issue of CGT which I'd recently engaged with too. I wonder what benefits there might be in not electing to go with FHL?

Hi ,
 

Thanks for your question. Based on the information provided, I would advise that as the annex is attached to the house, your rental business may fall under the rent a room scheme if income galls below the £7,500 income threshold. Thank you .

Sorry to work across two conversations, but my situation sounds similar (perhaps identical) to Bill's. However, to expand, our annexe is subject to its own council bill as it is self-contained and has its own kitchen and bathroom etc (despite being on the same utilities systems) and I therefore understood it could not be considered eligible for the rent-a-room scheme. Are we open to decide whether to go with FHL, rent-a-room, or another option? Thanks

Hi Stewball
Thank you for your question. HMRC cannot advise you on this, you will need to consider all the guidance available to you on our website and decide what is most beneficial to you. Our property income manual Introduction covers rents from land or property and FHL. Further guidance on FHL can be found in HS253 HS253 Furnished holiday lettings (2024) and renting out your property in Work out your rental income when you let property

Hello. My wife and I rent out a two bedroom annexe that is on the grounds of our property. Our income from AirBnB was £4,457 from 1 April 2024 - 31 March 2024. 1. As this falls below the threshold of £7,500 does the income need to be included on a self-assessment report? 2. Does my wife need to complete her own self-assessment (she currently doesn't)? 3. I understand that the £1,000 relief can be claimed by us both through the self assessment? 4. What is the right classification for our letting type - its not a room within the main house and it's not a separate property (it uses the services of our family home). 5. How would we apportion running costs in this situation e.g. electricity? Thanks.

Hi,
We have an annex attached to our house with 2 bedrooms, and self-contained.
a) If we only rented out one of the bedrooms, could it count as 'rent a room' so with the £7,500 tax relief? Or are there no options for this, as the annex is self-contained?
b) Electricity and gas are on the same meter as the main house.
Can we offset electricity and gas usage by the annex guests, deducting the cost from our income?
c) If we can, do we need to estimate the usage of the annex guests?
Thank you.

Hi Martyn,
You can see guidance here:
Rent a room in your home
Rent a room is appropriate in this circumstance. Under this you would not have to complete a return unless you were to go above the threshold of £7,500. How you apportion the running costs is up to you to establish what are your costs for running the rent a room scheme.
Thank you.

Hi Julia Abbott,
Guidance is available at:
Rent a room in your home: The Rent a Room Scheme 
Rent a room is appropriate in this circumstance. Under this you would not have to complete a return unless you were to go above the threshold of £7,500. How you apportion the running costs is up to you to establish what is your costs for running  the rent a room scheme.
Thank you