Tax information only. This guide reflects UK tax law as understood in June 2026. It is not tax advice. Tax treatment depends on individual circumstances. Confirm your position with a qualified accountant or HMRC directly before making decisions.
Yes — Airbnb income is taxable in the UK. Whether you owe anything depends on how much you earn, what you can deduct, and which tax rules now apply following the April 2025 Furnished Holiday Let abolition.
Most UK Airbnb hosts fall into one of two situations: they earn under £1,000 per year and owe nothing, or they earn more and need a self-assessment tax return. The rules for everything above that — expenses, mortgage interest, CGT when you sell — changed significantly on 6 April 2025 when HMRC abolished the Furnished Holiday Let regime.
This guide covers income tax, the £1,000 property allowance, self-assessment deadlines, what you can and cannot deduct, the April 2025 FHL changes, council tax versus business rates, Capital Gains Tax on disposal, and VAT. It is written for UK landlords managing their own Airbnb or working with a management company like Stayful.
Airbnb income is taxable in the UK. If total property income is under £1,000 per year, no tax or self-assessment is required. Above £1,000, income tax applies at your marginal rate and a self-assessment return is required. The Furnished Holiday Let regime was abolished in April 2025, changing how mortgage interest, capital allowances and CGT are treated. This guide covers what applies now.
When the £1,000 property allowance means you owe nothing — and when it does not
HMRC’s property income allowance means that if your total income from property — including all Airbnb, holiday let and any other rental income — is £1,000 or less in a tax year, you pay no tax and do not need to complete a self-assessment return for that income.
Under £1,000 totalNo tax due. No self-assessment return required for this income. This covers the whole year — all Airbnb, all rental income combined. If the total stays under £1,000, HMRC does not need to know about it.
Over £1,000 totalYou must register for self-assessment and complete a tax return. You then choose whether to deduct the £1,000 allowance (simpler) or deduct your actual allowable expenses (more complex but potentially more advantageous if your expenses exceed £1,000). You cannot use both methods.
For context: a two-bed Stayful-managed property in a typical UK city nets around £1,200–£2,500 per month — well above the £1,000 annual threshold. For most Airbnb landlords using a management service, self-assessment will be required.
What changed in April 2025 — the end of the Furnished Holiday Let tax regime
The FHL regime gave qualifying holiday let properties the tax treatment of a trading business rather than an investment. That treatment was substantially more favourable on four fronts. All four changed on 6 April 2025.
Before April 2025 (FHL regime)
●Mortgage interest: fully deductible as a business expense against rental income
●Capital allowances: available on furniture, equipment and furnishings
●CGT disposal: Business Asset Disposal Relief (BADR) available at 10% CGT rate
●Pension contributions: FHL income counted as earned income for pension relief purposes
From April 2025 (current rules)
●Mortgage interest: only a 20% tax credit — the same as long-term buy-to-let
●Capital allowances: no longer available on new purchases. Replacement of domestic items relief applies instead
●CGT disposal: residential property rates apply — 18% or 24%. BADR no longer available
●Pension contributions: holiday let income no longer counts as relevant UK earnings for pension relief
The net effectFor most Airbnb landlords, the 2025 changes mean a higher effective tax rate on mortgage interest and a worse CGT position on disposal. The income advantage of short-let over long-let — typically 50–80% more net income per month — remains significant enough to compensate in most cases, but the calculation has changed. Run the numbers with a tax adviser before assuming it still makes sense for your specific property.
What you can deduct from your Airbnb income — and what you cannot
Allowable deductions against Airbnb rental income
✓Management fees (Stayful’s 15% + VAT, or any other agent fee) — fully deductible as an expense
✓Repairs and maintenance (not improvements — see below)
✓Insurance premiums specifically for the let property
✓Accountancy fees for completing the property section of your tax return
✓Utilities (gas, electricity, broadband) where included in the rental and not recharged to guests
✓Mortgage interest — but only as a 20% tax credit, not a full deduction (from April 2025)
✓Replacement of domestic items (replacing worn furniture, appliances, crockery) — at equivalent standard
✗Capital improvements (new kitchen, extension, first-time furnishing) — not deductible against income; may be allowable against CGT on disposal
✗Personal use proportion — if you use the property yourself, expenses must be apportioned
✗Capital allowances on new furniture or equipment — no longer available from April 2025
Self-assessment for Airbnb hosts — the registration dates most people miss
If your total property income exceeds £1,000 in a tax year, you must register for self-assessment. The two deadlines most hosts miss are registration and payment on account.
5 OctoberRegister for self-assessment
Deadline to register with HMRC for the previous tax year. If you started letting in 2025–26, register by 5 October 2026. Late registration attracts penalties.
31 OctoberPaper return deadline
If filing a paper tax return for the previous year. Most hosts file online.
31 JanuaryOnline return + tax payment
Deadline for online filing and payment of any tax owed, plus the first payment on account for the current year. The January bill is often larger than expected for first-time filers.
31 JulySecond payment on account
Second instalment of the current year’s estimated tax. Can be reduced if you expect lower income — requires a formal claim to HMRC.
Income tax rates (2025/26)Airbnb income is added to your other income and taxed at your marginal rate. Personal allowance: £12,570 (no tax). Basic rate: 20% on £12,571–£50,270. Higher rate: 40% on £50,271–£125,140. Additional rate: 45% above £125,140. Scottish taxpayers pay different rates on non-savings income. The personal allowance tapers to zero above £100,000.
Council tax or business rates — which applies to your Airbnb and how to pay nothing
Since April 2023, HMRC tightened the rules for switching from council tax to non-domestic (business) rates. The conditions now require evidence, not just assertions.
The 140/70 ruleTo qualify for non-domestic rates — rather than council tax — your property must be available to let as holiday accommodation for at least 140 days per year AND must actually be let for at least 70 days per year. Both conditions must be met. HMRC requires evidence of the 70 actual letting days (booking records, bank statements).
Why it mattersIf your property qualifies for non-domestic rates and has a rateable value under £15,000, Small Business Rate Relief (SBRR) typically reduces the liability to zero. A property paying £2,000–£3,000/year in council tax could pay nothing in business rates under SBRR. This requires proactive application to your local council’s business rates team — it is not automatic.
Stayful-managed propertiesA Stayful-managed property typically exceeds 70 actual letting days per year, making the 70-day test achievable for most properties. We can provide booking records as evidence if required. The 140-day availability test is usually met automatically given that the property is listed year-round. Your accountant or local council can confirm the current rateable value and advise on the SBRR application.
Capital Gains Tax when you sell a property used as an Airbnb
Selling a property that you have been using as a short-term let is a residential property disposal for CGT purposes. The FHL abolition removed the BADR option that previously made this significantly more tax-efficient.
Current CGT rates (residential property)18% for basic rate taxpayers; 24% for higher and additional rate taxpayers. The annual CGT exempt amount is £3,000 (reduced from £12,300 in 2022–23). Most landlords with significant gain will pay at 24%.
BADR no longer availableBusiness Asset Disposal Relief — which allowed qualifying FHL properties to use a lower CGT rate — is no longer available for properties whose FHL status arose after April 2025. For properties that were qualifying FHL properties before April 2025 and are sold, seek specific tax advice on transitional rules.
60-day reporting ruleResidential property disposals must be reported to HMRC and any CGT paid within 60 days of completion — not via the January self-assessment return. Failure to report within 60 days attracts automatic penalties.
Capital improvementsCosts of capital improvements made to the property (not repairs, but genuine improvements — a new extension, a kitchen conversion) can be added to your base cost when calculating the gain. Keep records of all capital expenditure throughout the ownership period.
What the 2025 tax changes mean for whether Airbnb is still worth it
Despite the adverse tax changes, the income advantage of short-term letting over long-term letting remains significant for most UK properties. The tax regime has worsened, but the starting income differential is large enough that Airbnb management still produces a materially better net financial outcome for most landlords.
50–80%
Typical net income uplift on short-term letting over long-term letting for a UK property managed by Stayful. The management fee (15% + VAT) is fully deductible as an allowable expense against rental income — reducing the taxable profit, not just the net income. Even after the April 2025 tax changes, the net-of-tax position for most landlords remains significantly better than the long-let alternative. Run the income estimate to confirm this for your specific property and tax position.
VAT noteVAT registration is required when your total taxable turnover exceeds £90,000 in a rolling 12-month period (threshold from April 2024). Most individual Airbnb landlords do not reach this threshold. If you are operating multiple properties or a commercial operation that approaches £90,000 in gross bookings, seek VAT advice. Note that Airbnb charges guests VAT on its service fees directly — you do not typically charge VAT on the underlying accommodation unless you are VAT registered yourself.
See the net figures before taxFree income estimate — what your property could earn on short-term lettingNet after Stayful’s management fee — before your personal tax position applies
The questions Airbnb hosts ask when they discover the income is taxable
Yes — Airbnb income is taxable in the UK. If your total property income (including all Airbnb and any other rental income) is £1,000 or less per year, no tax is due and you do not need to file a self-assessment return for that income. Above £1,000, income tax applies at your marginal rate — 20%, 40% or 45% depending on your total income — and a self-assessment tax return is required.
The property income allowance is £1,000 per year. If your total property income — all rental income including Airbnb — is £1,000 or less, you pay no tax and do not need to report it to HMRC. If it exceeds £1,000, you can choose either to deduct the £1,000 allowance from your gross income, or to deduct your actual allowable expenses — whichever is more beneficial. You cannot use both. For most managed Airbnb properties earning £1,200 or more per month, this threshold is comfortably exceeded and actual expenses will typically produce a lower taxable profit than the £1,000 allowance.
Yes, if your total property income exceeds £1,000 per year. You must register for self-assessment by 5 October following the end of the tax year in which you started letting. The online return is due by 31 January. If you are already registered for self-assessment for another reason, you include property income on your existing return. Failure to register or file on time attracts automatic penalties.
Allowable deductions include: management fees (15% + VAT if using a service like Stayful), platform fees, cleaning costs, repairs and maintenance, insurance, utilities if included in the rent, accountancy fees, and replacement of domestic items. Mortgage interest is allowable only as a 20% tax credit — not a full deduction. Capital improvements are not deductible against income (though they can reduce your CGT liability on disposal). Capital allowances on new furniture are no longer available from April 2025.
Before April 2025, qualifying Furnished Holiday Let properties could deduct mortgage interest as a full business expense — reducing taxable income by the full interest amount. From April 2025, short-let properties are treated the same as long-term buy-to-let: mortgage interest relief is capped at a 20% tax credit. For a higher-rate taxpayer paying £10,000 per year in mortgage interest, this means a tax saving of £2,000 (20% credit) rather than £4,000 (40% deduction). The effective tax cost of mortgage interest has doubled for higher-rate taxpayers with significant borrowing.
From April 2025, no — short-let property income is now taxed as standard UK property income, not as trading income. Before April 2025, qualifying FHL properties received a degree of trading income treatment (capital allowances, BADR, pension contribution credit). Those benefits have been removed. Short-let income is now assessed under the property income rules, the same as long-term buy-to-let. This means it cannot be used for pension contributions as earned income and does not attract trading income CGT reliefs.
If your property is available for short-term letting for at least 140 days per year AND is actually let for at least 70 days, it may qualify for non-domestic (business) rates rather than council tax. If the rateable value is under £15,000, Small Business Rate Relief may reduce the liability to zero — a significant saving over council tax. Since April 2023, evidence of the 70 actual letting days is required. Qualify by applying to your local council’s business rates team with booking records as evidence. This is not automatic.
18% for basic rate taxpayers and 24% for higher/additional rate taxpayers on residential property disposals (current rates as of 2025–26). The annual exempt amount is £3,000. Business Asset Disposal Relief — which previously allowed qualifying FHL properties to pay CGT at 10% — is no longer available. You must report and pay CGT within 60 days of completion, not at the January self-assessment deadline.
Only if your total taxable turnover exceeds £90,000 in a rolling 12-month period. Most individual Airbnb landlords do not reach this threshold. If you manage multiple properties and the combined gross bookings approach £90,000, seek VAT advice promptly — late registration carries backdated liability. Airbnb charges guests VAT on its own service fees directly; this is not your VAT obligation unless you are registered yourself.
It does not change what income is taxable, but it does affect your deductible expenses. Stayful’s management fee (15% + VAT) is a fully allowable deduction against rental income — as are the platform fees, professional photography and other costs Stayful incurs on your behalf. Your monthly income statements from Stayful show the net figure after fees, which is what you report as net property income. Stayful provides documentation in a format your accountant can use directly for your self-assessment return.
The management fee is deductible — see what your property earns net
Stayful’s 15% + VAT management fee is a fully allowable tax deduction. The income estimate shows what your property typically earns on short-term letting after the management fee — before your personal income tax applies.
