Worked example
Ellie lets her spare room on Airbnb while she lives in the flat. In 2026/27 guests pay £10,000. Platform fees, cleaning, laundry and extra bills come to £2,000. She also earns a £30,000 salary.
| Option | Taxable / tax |
|---|---|
| Rent a Room: £10,000 − £7,500 | £2,500 → £500.00 |
| Property allowance: £10,000 − £1,000 | £9,000 → £1,800.00 |
| Actual expenses: £10,000 − £2,000 | £8,000 → £1,600.00 |
| Best: Rent a Room | £500.00 |
All three are taxed at 20% because her salary plus the rent stays inside the basic rate band. Rent a Room saves her £1,300 compared with the property allowance, and she keeps £7,500 after expenses and tax. Had her guests paid £7,500 or less, the income would have been completely tax-free.
How it works, in plain English
Rent a Room Scheme
If you let furnished accommodation in the home you live in, the first £7,500 a year is tax-free. If someone else also receives letting income from the same home, each of you gets £3,750. Under the limit, there is nothing to report. Over it, you can either pay tax on everything above £7,500 (no expenses) or pay tax on your actual profit — whichever is lower. It works for lodgers and for short-stay guests through Airbnb or similar sites, as long as it is your main home while they stay.
The £1,000 property allowance
Anyone with property income can instead deduct a flat £1,000 rather than their real costs. It is handy when costs are very low, but it cannot be combined with Rent a Room on the same income.
Actual expenses
The ordinary route: income minus allowable costs such as platform commission, cleaning, laundry, consumables, insurance, a share of utility bills and repairs. For a separate holiday let with real running costs this usually wins. Mortgage interest on a separate let is relieved as a 20% credit rather than a deduction — use the landlord calculator if you have a mortgage on the property.
Holiday lets after April 2025
The furnished holiday lettings regime was abolished from 6 April 2025. Holiday lets are now taxed like any other rental property: no special capital allowances, no pension-earnings treatment and mortgage interest gets only the basic-rate credit.
Frequently asked questions
Can I use Rent a Room for Airbnb?
Yes, as long as guests stay in furnished accommodation in your own main home while you live there. It does not apply to a property you do not live in, such as a separate holiday cottage.
Is Airbnb income under £7,500 tax-free?
If it is from letting part of your own home under the Rent a Room Scheme, yes — and you do not need to report it. If it comes from a separate property, only the £1,000 property allowance is available, so anything over £1,000 is taxable.
What if my partner and I both get the rent?
Then the Rent a Room limit is split: £3,750 each. Tick the box in the calculator and enter your own share of the income and expenses.
Does Airbnb tell HMRC about my bookings?
Platforms now send HMRC a yearly report for hosts with 30 or more bookings or about £1,700 or more of income in a calendar year. That is not a tax, but HMRC can use it to check returns.
Do holiday lets still get special tax treatment?
No. The furnished holiday lettings rules ended on 5 April 2025. Holiday lets are now taxed as normal property income, and from April 2027 property income in England and Northern Ireland moves to 22%, 42% and 47% rates.
Estimates only, not tax advice. These figures are a guide based on the information you enter and the 2026/27 rules. Your own position can differ — check GOV.UK or an accountant before relying on them.
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