AirBnB has become increasingly popular over the last decade, with more and more people deciding to rent out their property as short term lets using the organisation. Despite the rise in popularity, no rules have been written specifically for AirBnBs, so instead you need to work out what type of rental income you have, and how that does fit with existing rules.
There are three possibilities:
1. Rent-a-room relief
2. Furnished holiday let
3. Ordinary residential let
Let’s look at each of these in more detail.
Rent-a-room relief
If you are letting part of all of your own home while you are away then you may be able to claim rent-a-room relief (RR). The property must still be your only or main residence in the UK.
The income will then only be chargeable to tax if it exceeds the RR threshold of £7,500 per year. If you own the property jointly, then each of you can claim up to £3,750 per year.
You don’t need to complete a self-assessment Tax Return to claim rent-a-room relief, but you should include the claim on your Return if you do submit one.
Furnished holiday lets
If you are letting a property that is not your home on short term lets this may qualify as a furnished holiday let.
To qualify, the property must be available to let for 210 days a year and actually let for 105 days. There are additional conditions if there are longer lets exceeding 30 days.
If the letting does qualify as a furnished holiday let business then you will need to declare your profits to HMRC.
There are no restrictions for mortgage interest and other finance costs as there are for ordinary residential letting.
See our blog for more details.
Ordinary residential lets
If neither of the above are applicable then it’s likely that you are a landlord with an ordinary residential let.
In this case you will be taxed on income received after deducting your allowable expenses and will need to declare your profits to HMRC.
If your allowable expenses are less than £1,000 then you can claim the £1,000 tax-free property income allowance instead.
Please see my blog for more details.
If you own an AirBnB rental and would like more advice, please contact us here.
