Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Uk tax professional before filing.
United Kingdom · UK · Short-term rental taxes
UK Short-Term Rental Tax Guide
STR income in the UK is taxed as property income through Self Assessment, with key allowances including the £1,000 Property Allowance and the £7,500 Rent a Room Scheme — and from April 2025 the old Furnished Holiday Lettings regime has been abolished.
The 30-Second Answer
- All UK short-term rental income above £1,000 must be declared to HMRC via Self Assessment using supplementary page SA105 (UK Property).
- The £7,500 Rent a Room Scheme lets you earn tax-free if you rent a furnished room in your own home; the £1,000 Property Allowance applies to separate properties.
- From 6 April 2025, the Furnished Holiday Lettings (FHL) regime is abolished — all STR income is now taxed the same as standard rental income, with mortgage interest relief capped at the basic rate (20%).
- Income tax is charged at your marginal rate (20%, 40%, or 45%) on net rental profit; VAT may apply if your taxable turnover exceeds £90,000.
Deductions
What UK STR Hosts Can Deduct
You can offset allowable expenses 'wholly and exclusively' incurred for the rental against your rental income before calculating taxable profit.
Capital allowances for furniture and equipment are no longer available for STR properties following the abolition of the FHL regime in April 2025. Instead, you may claim Replacement of Domestic Items Relief for like-for-like replacements of furniture, appliances and furnishings.
Filing Calendar
Key Dates & Filing Calendar
The UK tax year runs 6 April to 5 April. Missing these deadlines triggers automatic HMRC penalties.
Late filing incurs an automatic £100 penalty; further daily penalties apply after 3 months. Late payment attracts interest from 31 January.
HMRC Self Assessment deadlines — gov.uk/self-assessment-tax-returns/deadlines
Tax Treatment
Which Tax Approach Applies to Your UK STR?
From April 2025, all STR income falls under standard UK property income rules. The regime that applies depends on whether you rent a room in your home or a separate property.
Rent a Room Scheme
Tax-free up to £7,500 for a room in your own home
- Automatically applies if gross receipts are below £7,500 — no tax, no return needed for that income
- If income exceeds £7,500, you choose: pay tax on gross receipts minus the £7,500 allowance, OR pay tax on actual profit (receipts minus expenses) — whichever is lower
- You cannot claim both the allowance and expenses simultaneously
- Does not apply to a separate property you own — only your main home
£7,500 gross per year (£3,750 each if jointly owned)
Standard Property Income (SA105)
Tax on net profit for separate STR properties
- Declare gross rental income and deduct allowable expenses on SA105 (UK Property) supplementary page
- Mortgage interest relief is restricted to the basic rate (20%) — no full deduction for higher-rate taxpayers
- Replacement of Domestic Items Relief replaces capital allowances for furniture and equipment from April 2025
- Net profit is added to your other income and taxed at your marginal rate: 20%, 40%, or 45%
£1,000 Property Allowance (below this, no return needed)
Depreciation
Capital Allowances & Replacement Relief for UK STR
Traditional capital allowances on furniture and equipment are no longer available for STR properties after April 2025. Replacement of Domestic Items Relief is now the main route to claim for furnishings.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Furniture & soft furnishings (sofas, beds, curtains) | Replacement cost deducted when replaced | Claim Replacement of Domestic Items Relief — deduct cost of like-for-like replacement, not the original purchase |
| White goods & appliances (washing machine, fridge) | Replacement cost deducted when replaced | Same relief applies; upgrade element (if any) is not deductible |
| Structural improvements / extensions | Not deductible as revenue expense | Capital improvements are not allowable against rental income; may reduce Capital Gains Tax on eventual sale |
| Repairs & like-for-like restoration | Fully deductible in year incurred | Genuine repairs (not improvements) are allowable expenses in the tax year they are paid |
The FHL capital allowances regime (which allowed Annual Investment Allowance on furniture) was abolished from 6 April 2025. Transitional rules may apply for expenditure committed before that date — seek professional advice.
There is no formal depreciation recapture mechanism for residential property in the UK. However, capital improvements not claimed as expenses may reduce your Capital Gains Tax base cost on sale.
Council Tax & Business Rates
Local Property Taxes for UK STR Hosts
The UK has no dedicated tourist or lodging tax at national level. Local property taxation depends on how your property is classified and how often it is let.
Whether your STR property pays Council Tax or Non-Domestic Rates (Business Rates) depends on the number of days it is available and actually let each year. Rules differ slightly between England, Wales, and Scotland.
No single national lodging/tourist tax rate — local property tax depends on usage and location
HMRC / Valuation Office Agency — gov.uk/council-tax; gov.uk/introduction-to-business-rates
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Council Tax | Host pays directly to local council | Record as an allowable expense if you (not the guest) pay it |
| Business Rates (if applicable) | Host pays directly to local council; Small Business Rate Relief often reduces to nil | Check eligibility for relief annually; keep VOA correspondence |
| VAT (if turnover >£90,000) | Host registers, charges, and remits to HMRC quarterly | Add 20% VAT to nightly rate; file VAT returns; reclaim input VAT on costs |
There is currently no UK-wide tourist or visitor tax equivalent to France's taxe de séjour. Some local authorities (e.g. Edinburgh, Manchester) have proposed or piloted visitor levies — check your local council for any emerging schemes.
Platforms
How Airbnb, Vrbo & Others Report UK STR Income
Under the OECD DAC7 / UK Reporting Rules for Digital Platforms, major platforms must report your earnings to HMRC — but this does not create a new tax.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — reports to HMRC under UK Digital Platform Reporting Rules from 2024 | No UK-wide tourist tax to collect; VAT is host's responsibility | Annual earnings summary available in host dashboard |
| Vrbo / Expedia | Yes — subject to same UK Digital Platform Reporting Rules | No UK-wide tourist tax; VAT is host's responsibility | Annual earnings summary available in owner account |
| Booking.com | Yes — subject to UK Digital Platform Reporting Rules | No UK-wide tourist tax; VAT is host's responsibility | Income statements available via extranet |
Hosting on Multiple Platforms?
HMRC will receive reports from each platform separately. You must aggregate all rental income across all platforms on your SA105 return. Keep your own records to reconcile platform summaries with your actual receipts — platform figures are gross and may include amounts later refunded.
UK Digital Platform Reporting Rules (DAC7 equivalent)
From January 2024, digital platforms operating in the UK must collect and report seller information (including rental income) to HMRC annually. This is a reporting obligation only — it does not create a new tax. If your income is already correctly declared, no action is needed beyond your normal Self Assessment return.
HMRC — Reporting Rules for Digital Platforms: gov.uk/government/publications/reporting-rules-for-digital-platforms
Example P&L: Separate STR Property (Standard Regime)
Illustrative figures for a host earning £18,000 gross rental income in 2025–26, taxed as a basic-rate taxpayer.
Record-Keeping
Stay Audit-Ready: What to Keep and for How Long
HMRC can open an enquiry into your Self Assessment return, typically within 12 months of filing, but up to 4 years for innocent errors and 20 years for suspected fraud.
| Keep | How long | Why |
|---|---|---|
| Booking records (dates, guest names, nightly rates, platform statements) | At least 5 years after the 31 January filing deadline | Proves gross income declared on SA105 matches actual receipts |
| Expense receipts & invoices (repairs, cleaning, insurance, agent fees) | At least 5 years after the 31 January filing deadline | Substantiates deductions claimed; HMRC can disallow undocumented expenses |
| Mortgage statements showing interest paid | At least 5 years after the 31 January filing deadline | Supports basic rate mortgage interest relief claim |
| Property purchase documents, improvement costs, legal fees | Lifetime of ownership plus 5 years | Needed to calculate Capital Gains Tax base cost on eventual sale |
HMRC's standard enquiry window is 12 months from filing, but can extend to 4 years for careless errors. Keep digital copies as well as originals — cloud storage with dated backups is recommended.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
This page is for educational purposes only and does not constitute tax advice. Tax rules change frequently — always verify with HMRC or a qualified UK tax adviser before filing.
- HMRC — Work out your rental income when you let property — gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income (updated March 2025)
- HMRC — Abolition of the Furnished Holiday Lettings tax regime — gov.uk/government/publications/furnished-holiday-lettings-tax-regime-abolition (2024–25)
- HMRC — Rent a Room Scheme — gov.uk/rent-room-in-your-home/the-rent-a-room-scheme
- HMRC — Reporting Rules for Digital Platforms — gov.uk/government/publications/reporting-rules-for-digital-platforms
- Airbnb — UK Tax Considerations for Short Term Lettings (2025–26) — assets.airbnb.com/help/Airbnb_TaxGuide2026_UnitedKingdom_ENGLISH.pdf (November 2025)
- Anlofin — Big Tax Changes for Short-Term Lets Across the UK — anlofin.com/big-tax-changes-for-short-term-lets-across-the-uk/ (May 2025)
- HMRC — PIM3210 Replacement of Domestic Items Relief — gov.uk/hmrc-internal-manuals/property-income-manual/pim3210
- HMRC — Self Assessment tax returns — gov.uk/self-assessment-tax-returns/deadlines
Questions
Frequently Asked Questions: UK STR Taxes
Mr Props Team
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