Tax due on Air BNB & Holiday Let income

A subject of interest to many of our readers will be the rental of property/rooms such as Airbnb and Holiday lets.

Each year we can all have an available tax-free personal allowance of £12,500 (Subject to other factors) which we utilise against mainstream income. There are also separate capital gains allowances which are £12,000 for the tax year to 05 April 2020 with varying rates liable based on total income after the £12,000 is used and the gain on type of asset, property is at 18% and 28% where other assets are 10% and 20%

In addition to these for clients with earnings from Airbnb this income is not exempt from tax, however, if you rent out a room in your main residence, you may qualify for the “rent a room” relief, the amount of relief is currently up to £7,500 or £3,750 if let jointly.

The amount of tax you will be due to pay on Airbnb income will be affected by whether the room you are renting out is in your main residence or not and then subject to rates of tax. If you are letting an Airbnb in a separate property, you will be due to pay the tax on profits just like any other business owners are.

Don’t forget about VAT. If your total income from Airbnb rentals exceeds the VAT threshold (£85,000) then you will need to consider registering for VAT.

Draft legislation from HMRC may be tightening on the rent a room relief. The current level of £7,500 per year will remain, however, if you rent your own home, you must be present some or all of the time that it is let out.

Callan Accountancy and our partner company Garrison Accountancy are your local experts for all areas of property taxes and income, this includes commercial property, buy-to-let properties, hotels, and bed & breakfast, residential letting 

If you require any support or guidance in relation to this area please contact CallanAccountancy Tax Manager Brendan Kelly on 01397 600167 or email him at

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