Airbnb rental income

7th March 2019


The introduction of services such as Airbnb has opened the door to renting your property, either partly to a lodger or as a whole while you are away. However, the tax implications of this additional source of income should not be overlooked.


Letting furnished accommodation in your main residence should qualify for the rent-a-room scheme, which allows you to earn rents of up to £7,500 per year tax free (or £3,750 each for joint owners), with only any excess income being taxable. This relief will normally be more beneficial than claiming actual expenses, although if actual expenses including commission are greater than £7,500, they may be claimed instead using the standard rental income calculation rules.  Rent-a-room relief must be claimed against gross income rather than amounts received after deduction of commission.


If you are letting a property that is not your main residence, rent-a-room relief will not apply but if your gross property income is £1,000 or less in a tax year you do not have declare the income to HMRC. If your gross income is more than £1,000 but you have few or no expenses you can still claim £1,000 as a flat rate deduction from your property income instead of claiming actual expenses. When your rental income varies from year to year, you can choose whichever method produces the lowest tax liability for each tax year.


If you have a property that is available to holidaymakers for short-term lets for at least 210 days a year and actually let for at least half that time it may qualify as a ‘Furnished Holiday Let.’ Furnished holiday lets attract some tax advantages over other residential lettings, including tax relief on the initial costs of buying furniture and other fixings and a lower rate of capital gains tax on an eventual sale of the property.


 If you want to find out more please get in touch.


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