Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Uk tax professional before filing.
London, UK · United Kingdom · Short-term rental taxes
Short-Term Rental Taxes in London, UK
STR income in London is taxed as UK property income under Self Assessment, with two key allowances — the £1,000 Property Trading Allowance and the £7,500 Rent a Room Scheme — and no city-wide tourist tax as of mid-2025, though a visitor levy is under active consideration.
The 30-Second Answer
- All STR income above £1,000 must be declared to HMRC via a Self Assessment tax return (form SA100 + supplementary page SA105 UK Property).
- If you rent a furnished room in your own home, the Rent a Room Scheme lets you earn up to £7,500 tax-free per year; for a separate property, the £1,000 Property Income Allowance may apply instead.
- Since 6 April 2025, the old Furnished Holiday Lettings (FHL) regime has been abolished — all London holiday lets are now taxed as ordinary residential rental income, losing previous CGT and pension-contribution advantages.
- London has no tourist/visitor tax currently in force, but the UK Government is consulting on a national visitor levy; Airbnb does not automatically collect a local lodging tax for London bookings.
Deductions
What London STR Hosts Can Deduct
HMRC allows expenses incurred 'wholly and exclusively' for the rental business to be offset against rental income — reducing the profit on which Income Tax is charged.
Capital items (furniture, appliances) are not deductible as repairs; instead, claim Replacement of Domestic Items Relief when you replace like-for-like. Mortgage interest is no longer fully deductible — you receive a 20% tax credit on the interest amount instead. The £1,000 Property Income Allowance cannot be combined with expense deductions; choose whichever is more beneficial.
Filing Calendar
Key Dates & Filing Calendar
UK tax year runs 6 April to 5 April. Miss these HMRC deadlines and automatic penalties apply.
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 (2025)
Tax Treatment
Which Income Tax Approach Applies to Your London STR?
There is no French-style micro/réel choice in the UK. Instead, hosts choose between the applicable allowance or claiming actual expenses — and the old FHL regime was abolished from April 2025.
Property Income Allowance
£1,000 tax-free — zero paperwork below the threshold
- Gross rental income up to £1,000 per tax year is completely tax-free — no need to register for Self Assessment.
- If income exceeds £1,000, you can still elect to deduct the £1,000 allowance instead of actual expenses — useful when expenses are very low.
- You cannot claim both the allowance and actual expenses in the same year.
- Applies to income from a property you do not live in (separate let).
£1,000 gross income
Rent a Room Scheme
Up to £7,500 tax-free for renting a room in your own home
- Automatically applies if gross receipts are below £7,500 — no tax, no return needed for this income.
- If income exceeds £7,500, choose between: (a) paying tax only on receipts above £7,500 with no expense deductions, or (b) opting out and declaring full profit after actual expenses.
- Only applies to furnished rooms in your main home — not to whole-property lets or second properties.
- Cannot be combined with the Property Income Allowance.
£7,500 gross receipts (£3,750 each if jointly owned)
Standard Rental Income (Actual Expenses)
Deduct real costs against rental profit — taxed at your marginal rate
- Declare gross rental income on SA100 + SA105; deduct allowable expenses to arrive at taxable profit.
- Mortgage interest is restricted to a 20% tax credit (not a full deduction) — same rule as all residential landlords since April 2025.
- Losses from the rental business can be carried forward against future rental profits.
- The abolished FHL regime no longer provides CGT Business Asset Disposal Relief or pension contribution advantages — all London STRs are now taxed under this standard approach.
No ceiling — all income declared
Depreciation
Capital Allowances & Replacement Relief for London STR Hosts
UK residential landlords cannot claim capital allowances on furniture or fittings in the traditional sense. Instead, Replacement of Domestic Items Relief applies when you replace like-for-like items.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Furniture (sofas, beds, tables) | Replacement cost deducted when replaced | Claim Replacement of Domestic Items Relief — cost of the replacement item (not the original purchase) is deductible. |
| White goods (fridge, washing machine) | Replacement cost deducted when replaced | Same RDI Relief applies; if you upgrade to a superior model, only the equivalent replacement cost is deductible. |
| Carpets & curtains | Replacement cost deducted when replaced | Covered under RDI Relief as soft furnishings. |
| Structural improvements / extensions | Not deductible as revenue expense | Capital improvements are not deductible against rental income; they may reduce CGT on eventual sale. |
The old 10% Wear and Tear Allowance was abolished in April 2016 and replaced by Replacement of Domestic Items Relief. You cannot claim RDI Relief for the initial purchase of furnishings — only replacements qualify.
No depreciation recapture mechanism applies under UK residential rental rules. However, capital improvements that were not deducted as expenses can be added to the property's base cost for CGT purposes on sale.
Visitor / Tourist Tax
London Has No Tourist Tax — Yet
As of mid-2025, London and England have no mandatory visitor levy or tourist tax on STR guests. A national scheme is under active government consultation.
Unlike many European cities, London currently imposes no city-wide bed tax, tourist tax, or transient occupancy tax on short-term rental guests. The UK Government launched a consultation in 2024 on a potential national visitor levy, but no legislation has been enacted. Hosts do not need to collect or remit any local lodging tax for London bookings at this time.
£0 local lodging tax currently applicable in London
UK Government visitor levy consultation: gov.uk/government/consultations/visitor-economy-visitor-levy (2024); VAT threshold: gov.uk/vat-registration/when-to-register (2025)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| No tourist/visitor tax (current) | N/A — no tax to collect | No line item needed on guest invoices for a local lodging tax in London. |
| VAT (if turnover > £90,000) | Host registers and remits to HMRC | Most individual STR hosts fall well below the VAT threshold; if you exceed it, charge 20% VAT on accommodation and file VAT returns. |
The UK Government's 2024 consultation on a visitor levy could introduce a per-night charge in future. Monitor gov.uk for updates. Scotland has separately introduced an Visitor Levy (Visitor Levy (Scotland) Act 2024) but this does not apply to London/England.
Platforms
How Airbnb & Other Platforms Handle UK Tax Reporting
Under the OECD DAC7-equivalent UK rules, digital platforms must report host earnings to HMRC — this is a reporting obligation, not 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 — no London tourist tax to collect | Annual earnings summary available in your Airbnb account under Transaction History |
| Vrbo / Booking.com | Yes — subject to same UK digital platform reporting rules | No — no London tourist tax to collect | Download annual income statements from your host dashboard |
| Direct bookings | No automatic reporting — host's own responsibility | N/A | Keep your own records; no platform summary provided |
Using Multiple Platforms?
If you list on Airbnb, Vrbo, and take direct bookings, you must aggregate all rental income yourself and declare the total on your SA105. Each platform may report independently to HMRC, so ensure your Self Assessment return matches the combined total to avoid HMRC queries.
UK Digital Platform Reporting Rules (DAC7 Equivalent)
From January 2024, UK-registered digital platforms (including Airbnb) must report seller income to HMRC annually under the OECD Model Reporting Rules for Digital Platforms, implemented in the UK via SI 2023/817. HMRC may cross-reference this data against your Self Assessment return. This is a reporting obligation only — it does not create a new tax.
HMRC: Reporting rules for digital platforms — gov.uk/guidance/reporting-rules-for-digital-platforms (2024); Airbnb UK Tax Guide 2026 — assets.airbnb.com/help/Airbnb_TaxGuide2026_UnitedKingdom_ENGLISH.pdf
Illustrative P&L: London STR (Separate Property, Standard Expenses Route)
Example only — a London host earning £18,000/year gross with typical costs. Not tax advice.
Record-Keeping
Stay Audit-Ready: What London STR Hosts Must Keep
HMRC can open an enquiry into your Self Assessment return up to 4 years after filing (12 months for a standard enquiry window, longer if HMRC suspects fraud). Keep these records safe.
| Keep | How long | Why |
|---|---|---|
| Booking records (dates, guest names, nightly rates) | At least 5 years after 31 January filing deadline | Proves gross income declared on SA105 matches actual bookings |
| Platform payout statements (Airbnb, Vrbo, etc.) | At least 5 years after 31 January filing deadline | HMRC may cross-reference platform-reported figures against your return |
| Receipts for all claimed expenses (repairs, cleaning, insurance, fees) | At least 5 years after 31 January filing deadline | Required to substantiate deductions if HMRC opens an enquiry |
| Mortgage statements (to calculate 20% interest tax credit) | At least 5 years after 31 January filing deadline | Documents the interest amount on which the 20% credit is based |
| Records of property purchase price, improvement costs, and sale proceeds | Permanently (until 5 years after sale) | Needed to calculate Capital Gains Tax on eventual disposal |
HMRC's standard enquiry window is 12 months from the filing date, but can extend to 4 years for careless errors and 20 years for deliberate non-disclosure. Keeping records for at least 5 years after the 31 January deadline is the safe minimum.
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
All figures are based on UK law and HMRC guidance current to mid-2025. Tax rules change — 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 — last updated March 2025
- HMRC — Rent a Room Scheme — gov.uk/rent-room-in-your-home/the-rent-a-room-scheme — £7,500 threshold confirmed for 2024/25
- HMRC — Furnished Holiday Lettings abolition — gov.uk/guidance/furnished-holiday-lettings — FHL regime abolished from 6 April 2025
- Propertymark — HMRC issues reminder about short-term let tax changes — propertymark.co.uk/resource/hmrc-issues-reminder-about-short-term-let-tax-changes.html — 2025
- Airbnb — UK Tax Considerations for Short Term Lettings 2026 — assets.airbnb.com/help/Airbnb_TaxGuide2026_UnitedKingdom_ENGLISH.pdf — November 2025
- HMRC — Reporting rules for digital platforms (DAC7) — gov.uk/guidance/reporting-rules-for-digital-platforms — SI 2023/817, effective January 2024
- UK Government — Visitor economy: visitor levy consultation — gov.uk/government/consultations/visitor-economy-visitor-levy — 2024 consultation, no legislation enacted as of mid-2025
- HMRC — VAT registration thresholds — gov.uk/vat-registration/when-to-register — £90,000 threshold from April 2024
- Pauzible — Tax Relief for Furnished vs. Unfurnished Rental Properties — pauzible.com/knowledge-hub/tax-relief-furnished-vs-unfurnished-rentals — Replacement of Domestic Items Relief explained
- GoSimpleTax — How To Take Airbnb Tax Deductions As A Host — gosimpletax.com/blog/tax-deductions-as-an-airbnb-host/ — last updated July 2025
Questions
Frequently Asked Questions: London STR Taxes
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