How do I handle taxes and regulations related to Airbnb hosting?

As an Airbnb host in the UK, the tax you pay depends on whether you’re renting out your whole property or just a room in the house you live in. Typically though, you will need to pay rental income tax on money earned through hosting on Airbnb. Factors that affect this include whether you live in the property, the amount you earn from renting it out, and the length of time you have hosted for.

What’s more, depending on your circumstances, you may also have to pay:

Council tax if you are hosting guests on a property located in a council tax area

Business rates, which are a tax on the value of the business premises set by local councils

VAT if your turnover is more than £85,000

The specific permits or licences required for Airbnb hosting depend on local regulations. Some UK councils require hosts to obtain a licence stating that the property is safe and the host complies with local laws, but other local authorities don’t require any specific permits. As a result, it’s important to check regional regulations that may apply to you.

The Rent a Room Scheme allows you to earn up to £7,500 per year tax-free by renting out a room in your main residence. To qualify for this scheme, you must be letting out furnished accommodation in your main home and not letting out the space to a close relative.

There’s no need to register for VAT unless your total income from all sources exceeds the VAT threshold of £85,000. If your turnover is below the threshold, VAT registration is not mandatory, but you can still voluntarily register if it benefits your situation.

Yes, you can deduct certain expenses related to your Airbnb hosting from your income before tax, such as:

General maintenance and repair costs

Water rates, council tax, gas and electricity

Cleaning costs

Accountant’s fees

Insurance

Remember to keep accurate records and receipts to support your deductions.

Yes, you must declare any profit from your Airbnb business in your self-assessment tax return. No tax is due if you earn less than £1,000 in a year, but if you earn more than this amount, you must declare your earnings. Always consult a tax professional if unsure to avoid potential penalties.

If the Airbnb property is your main home, you’ll typically pay council tax as normal. You’ll also pay council tax if you’re occasionally renting a second home on Airbnb, but if the property is available for short-term lets for more than 140 days per year, it might be subject to business rates instead of council tax.

Failure to comply with tax and regulatory requirements as an Airbnb host can lead to financial penalties and possible legal action from local authorities. You may also face penalties from your mortgage provider and your insurance could be invalidated.

In addition, Airbnb could also remove your listing or suspend your account, and your reputation could be damaged, making it harder to attract future guests. Therefore, it’s crucial to understand and comply with all relevant laws and regulations.

The UK Government’s website and the HM Revenue and Customs (HMRC) provide information about tax obligations. Your local council’s website can give helpful information for local taxes or regulatory obligations.

Airbnb also offers resources on its platform, but it’s a good idea to consult a tax professional or accountant specialising in rental income for personalised advice.

An Airbnb management company can assist with tax and regulatory compliance by providing professional services to help you navigate the complexities of Airbnb hosting. They can offer guidance on tax obligations, assist with record-keeping, optimise pricing, ensure compliance with local regulations, and provide support in managing your property effectively.