Possible Tax Changes on Short-Let Accommodation
How attractive Airbnb is to UK hosts might also depend on how future tax laws impact short-term lettings. Some issues hosts should consider include:
Property allowance. Currently, Airbnb hosts can claim the property allowance. The property allowance is a tax exemption of up to £1,000 a year for those with income from land or property. This could be changed or removed in future.
Furnished holiday lets. Currently, some Airbnb hosts can claim favourable tax allowances if their property qualifies as a furnished holiday let. An Airbnb which qualifies as a furnished holiday let or FHL can usually claim mortgage interest as a tax expense. A furnished holiday let must be available to rent for at least 210 days in a tax year and actually let for at least 105 of those days. This could be changed or removed in future.
Business rates. Some Airbnbs may be rated as a self-catering property and valued for business rates rather than Council Tax. This may result in valuable tax savings for owners. These rules have been tightened in the last tax year and could potentially be further tightened, or the concession removed, in future.
This is only intended to be a general description of the tax situation for Airbnb hosts. It is essential to take expert tax and financial advice on property tax matters.