Airbnb Tax Matters: Simplifying Your Taxation for Airbnb Hosts
Airbnb Tax matters? We’ve got you covered. Our team will manage your tax return, business structure, and more for those offering accommodations through Airbnb.
Airbnb hosting can be simplified
We relieve the Airbnb tax hassle by…
- Handling your tax filing and embracing Making Tax Digital
You’re busy enough managing your Airbnb business without the hassle of handling a self-assessment tax return every year. We’ll handle all the paperwork for you, ensuring your return is submitted accurately and promptly. With Making Tax Digital on the horizon, scheduled to begin for property owners in April 2023, we’ll assist you in getting set up and compliant well ahead of schedule.
- Establishing your business framework
Your Airbnb’s future hinges on your intentions. Is it a short-term or long-term endeavor? Do you aim for Airbnb income in retirement or wish to leave it to your children? Your Airbnb’s ideal business structure, tailored to your situation, can lead to significant tax savings. We’ll assess your specific circumstances and assist you in optimizing your tax planning accordingly.
- Enhancing the efficiency of your property income
Navigating the various tax reliefs and allowances for your Airbnb rental can be complex. Determining whether to participate in the rent-a-room scheme and identifying eligible expenses can be confusing.
We will take care of these details for you, ensuring you optimize your earnings while reducing your tax liability.
Frequently Asked questions
Typically, yes.
When you host on Airbnb as an individual, rather than through a limited company, the earnings you generate are regarded as part of your taxable income.
If your overall taxable income surpasses the personal allowance, which stands at £12,570 for each year spanning from 2021/22 to 2025/26, you will be subject to income tax at your marginal rate.
Moreover, depending on your specific situation, there exist several allowances and exemptions that could potentially render some or all of your Airbnb Tax Matters income exempt from taxation.
You have the opportunity to deduct expenses from your Airbnb income prior to taxation, provided they were exclusively related to operating the business. These expenses may encompass:
- Full tax relief for mortgage interest.
- Routine maintenance and repairs for your property, excluding improvements.
- Payments for water rates, council tax, gas, and electricity.
- Insurance expenses.
- Service costs, including fees for cleaners.
- Charges for the services of a property tax accountant.
For a comprehensive understanding of how to deduct expenses against your rental income, please refer to our detailed guide available here.
Each tax year, individuals are entitled to a property allowance of £1,000 for income derived from land or property. In cases of joint property ownership, each owner can claim the full £1,000 against their portion of rental income.
If your annual gross property income falls at or below £1,000, there's no obligation to inform HMRC or report this income on a tax return.
Alternatively, you may be eligible for:
- The rent-a-room scheme, enabling you to earn up to £7,500 tax-free if you were residing in the property while a tenant occupied it.
- Furnished holiday letting status, which offers several tax benefits. For more in-depth information on the Airbnb Tax Matters, you can refer to our blog post
In London, there's a specific regulation that limits Airbnb property rentals to a maximum of 90 days per calendar year in Greater London, unless you possess planning permissions permitting longer durations. Airbnb automatically blocks bookings once this limit is reached. This regulation is significant for your tax matters because it makes it impossible to fulfill the criteria for a furnished holiday let if your property is located in Greater London.
Forming a limited company can offer tax efficiency in certain situations, with corporation tax set at a rate of 19% (increasing to a range of 19% to 25% from April 1, 2023) for company profits, in contrast to the current income tax rates of 20%, 40%, or 45% depending on your income level.
You can then compensate yourself through a combination of salary and dividends.
Opting for a limited company structure can provide personal asset protection in case of unforeseen issues since it separates your personal finances and any debts from the company's finances.
However, taking on the role of a limited company director entails additional administrative responsibilities, including submitting corporation tax returns to HMRC and filing accounts with Companies House.
Moreover, if you intend to transfer a property you already own to a limited company, you may incur stamp duty and capital gains tax charges, and company mortgage interest rates can be high. We strongly recommend seeking professional advice before making such a decision.
Each tax year, individuals are entitled to a property allowance of £1,000 for income derived from land or property. In cases of joint property ownership, each owner can claim the full £1,000 against their portion of rental income.
If your annual gross property income falls at or below £1,000, there's no obligation to inform HMRC or report this income on a tax return.
Alternatively, you may be eligible for:
- The rent-a-room scheme, enabling you to earn up to £7,500 tax-free if you were residing in the property while a tenant occupied it.
- Furnished holiday letting status, which offers several tax benefits. For more in-depth information on the Airbnb Tax Matters, you can refer to our blog post
Fees for Airbnb Tax Matters
One Property
Single Owner
- Simplified tax filings for individuals owning a single Airbnb property.
- Contact us to get a fixed fee quote
One Property
Joint owner
- Simplified tax filings for co-owners of a single Airbnb property.
- Contact us to get a fixed fee quote
Additional Properties / Owners
Single owner Or Joint Owner
- As your property portfolio grows, it's essential to consider a comprehensive tax strategy. Our specialists will collaborate with you to ensure you've established the optimal ownership structure and are capitalizing on eligible tax reliefs and deductions to effectively manage your tax liabilities.