Money from letting a room or a whole property on Airbnb or a similar platform is normally property income, taxed on your profit after allowable expenses. If you let furnished rooms in your only or main home, the Rent a Room Scheme makes up to £7,500 a year tax free, or £3,750 if the income is shared. Since the furnished holiday lettings rules ended from 6 April 2025, whole property short lets are taxed in line with other rental property.
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Is short let income property income or trading income?
For most hosts it is property income. HMRC’s UK property notes for 2025 to 2026 say former furnished holiday lettings now form part of the person’s UK or overseas property business and are treated in line with all other property income and gains. HMRC’s online platforms guidance treats letting a room in your main home, your whole home, other property, or space such as a driveway as rental income that may need to be reported.
There is one exception. The same property notes say that if you run a guest house or offer bed and breakfast in your home, the letting can amount to a trade, and you complete the self employment pages instead of the property pages.
Can I use Rent a Room relief for an Airbnb room in my home?
Yes, if the conditions are met. HMRC’s helpsheet HS223 says the scheme gives tax free income if you provide furnished accommodation in your only or main home, whether you are an owner occupier or a tenant. It also covers lettings that amount to a trade, such as a guest house or bed and breakfast. The limit is £7,500 a year, halved to £3,750 if someone else also receives income from letting in the same property.
The scheme does not apply to accommodation that is not part of your main home when you let it, to a UK home let while you live abroad, or to a home converted into separate flats. The limit is tested against gross receipts, which include amounts for meals, cleaning and laundry, so Airbnb cleaning fees count. If receipts go over the limit you choose Method A, tax on actual profit after expenses, or Method B, tax on receipts above the limit with no expenses. See our page on rent a room relief for the elections and time limits.
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What is the property allowance, and when must I tell HMRC?
The property allowance makes the first £1,000 of property income tax free each tax year, and income within it does not need to be reported. Joint owners can each use £1,000 against their share. Above £1,000 you can deduct the allowance instead of actual expenses, but it cannot create a loss. HMRC’s notes say you cannot claim it on income you are already covering with Rent a Room relief. Our page on the property income allowance sets out the exclusions.
| Situation | Rule | Source year |
|---|---|---|
| Furnished room in your only or main home | Rent a Room: £7,500 tax free, £3,750 if shared | 2025 to 2026 notes and HS223 (2026) |
| Any property income | Property allowance: first £1,000 tax free | Each tax year |
| Rental income over £1,000, up to £2,500 | Contact HMRC | Current gov.uk guidance |
| Over £2,500 after expenses or £10,000 before | Report through Self Assessment | Current gov.uk guidance |
| Whole property short let | Normal property income rules since FHL abolition | From 6 April 2025 |
| Platform reporting | No small seller exception for property rentals | From 1 January 2024 |
For reporting, gov.uk says to contact HMRC if your rental income is more than £1,000 and up to £2,500. You must use Self Assessment if income is more than £2,500 after allowable expenses or £10,000 before them. If you do not usually file a return, register by 5 October after the tax year in which you had the income.
What changed when furnished holiday lettings were abolished?
The furnished holiday lettings rules ended on 6 April 2025 for Income Tax and Capital Gains Tax, and on 1 April 2025 for Corporation Tax. Before then, a qualifying holiday let had advantages over ordinary lets, including relief for finance costs outside the residential restriction. Now, an individual host cannot deduct mortgage interest on a let home. Instead the finance costs give a tax reduction at the basic rate value, currently 20%, which cannot create a refund.
The capital gains side changed too. HMRC’s Capital Gains Manual says Business Asset Disposal Relief is not available on a disposal of the whole or part of a holiday lettings business on or after 6 April 2025, and rollover relief is not available where the replacement asset is acquired on or after that date. Returns for 2024 to 2025 and earlier can still use the old reliefs. Our guide to furnished holiday lettings abolition covers the transitional rules.
What expenses can a short let host claim?
If you are not using Rent a Room relief or the property allowance, you deduct allowable expenses, which gov.uk describes as things you need to spend money on in the day to day running of the property. Examples it gives include letting agents’ fees, accountants’ fees, buildings and contents insurance and Council Tax. Capital spending, such as buying the property or substantially renovating it, is not allowable.
You may also claim replacement of domestic items relief when you replace a domestic item bought only for the use of the people staying, provided the old item is no longer used in the property. For a fuller list, see allowable expenses for landlords.
Does Airbnb report my income to HMRC?
Yes. Under the digital platform reporting rules that started on 1 January 2024, platforms report sellers’ details and income to HMRC, with information for 2024 reported by 31 January 2025. Sellers of goods with fewer than 30 sales and 2,000 euros or less (about £1,700) are excluded, but HMRC says that exception does not apply to the rental of immoveable property. Hosts are reported whatever their income, and the platform must collect the address of each property it lists.
A report does not automatically mean you owe tax, and platforms report calendar years while tax years run from 6 April. Our page on digital platform reporting explains what is shared. HMRC can open a check into a return, and the accountant’s fees for dealing with it can be covered by tax investigation insurance.
How will Making Tax Digital and the new property rates affect hosts?
Gross property income counts towards Making Tax Digital for Income Tax qualifying income, together with self employment income. The thresholds are £50,000 for 2024 to 2025 (MTD from 6 April 2026), £30,000 for 2025 to 2026 (from 6 April 2027) and £20,000 for 2026 to 2027 (from 6 April 2028). Read more on MTD for rental income.
HMRC’s technical note says separate property income rates of 22%, 42% and 47% will apply in England, Wales and Northern Ireland from 6 April 2027, with finance cost relief at the property basic rate from 2027 to 2028. These are included in Finance Bill 2025 to 2026. See property income tax rates from April 2027.
How is a spare room let worked out?
Illustration only. Tom lets the spare bedroom in his own home through Airbnb in 2026 to 2027 and is the only person receiving the income.
- Year one: nightly charges plus cleaning fees come to £6,800. This is under £7,500, so it is tax free under Rent a Room and he has nothing to report.
- Year two: receipts rise to £9,000, with £2,100 of costs. Method A taxes £6,900 of profit; Method B taxes £1,500, the amount over £7,500.
- Tom elects for Method B, which taxes far less, through a Self Assessment return.
Frequently asked questions
Can I claim Rent a Room relief and the property allowance on the same income?
No. HMRC’s property notes say that if you claim Rent a Room relief you cannot also claim the property income allowance on that income.
Does the announced £3,000 trading allowance help Airbnb hosts?
Not directly. Budget 2026 described a rise in the trading allowance from £1,000 to £3,000 from 6 April 2027, and did not describe a change to the property allowance, which stays at £1,000.
Do I need to report renting out my driveway?
Possibly. HMRC’s online platforms guidance lists renting out space such as a driveway as rental income. Income within the £1,000 property allowance does not need to be reported.
Do Airbnb cleaning fees count towards the Rent a Room limit?
Yes. HS223 says gross receipts include amounts you receive for meals, goods and services such as cleaning or laundry, so the full amount guests pay is tested against the £7,500 limit.
If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.
Related cover: Landlord insurance for let property. Ask for a quote or call 01795 841 310.
Sources
- assets.publishing.service.gov.uk: UK property notes
- GOV.UK: Check if you need to tell hmrc about your income from online platforms
- GOV.UK: Hs223 rent a room scheme 2026
- GOV.UK: The rent a room scheme
- GOV.UK: Tax free allowances on property and trading income
- GOV.UK: Paying tax
- GOV.UK: manual page PIM4105
- GOV.UK: Changes to tax relief for residential landlords how its worked out inc
- GOV.UK: manual page CG73505
- GOV.UK: Selling goods or services on a digital platform
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 November 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.