Renting out a furnished room in the home you live in? The Rent-a-Room scheme makes the first £7,500 a year tax-free — most spare-room Airbnb hosts owe HMRC nothing. Letting a whole property, or somewhere that isn't your main home, is ordinary property income: you get a £1,000 property allowance (or actual expenses) and pay Income Tax on the rest at your marginal rate. Either way there's no National Insurance on letting income. Pick your situation above to see your number.
- Room in your own home: first £7,500 tax-free (£3,750 each if the income is shared). Under the threshold, the relief applies automatically — nothing to file.
- Whole property / not your main home: £1,000 property allowance or actual expenses, then Income Tax at 20%/40%/45% on the profit.
- No Class 2 or Class 4 NI — letting is property income, not self-employment.
- Airbnb reports host earnings to HMRC under the platform-reporting rules, so undeclared hosting income is visible.
- Gross property income counts towards the £50,000 Making Tax Digital threshold that went live in April 2026.
- The old furnished-holiday-lettings (FHL) tax advantages were abolished in April 2025 — short lets now follow the normal property rules.
Which rules apply to me?
| Your situation | Regime | Tax-free amount |
|---|---|---|
| Spare room (or rooms) in the home you live in, furnished | Rent-a-Room scheme | £7,500 (£3,750 each if shared) |
| Whole flat/house that isn't your main home; second homes; buy-to-let short lets | Ordinary property income | £1,000 property allowance (or actual expenses) |
| Hosting with meals, cleaning during stays, guest services at B&B level | May count as a trade | £1,000 trading allowance — see the sole trader calculator |
How Rent-a-Room works when you're over £7,500
Going over the threshold doesn't cliff-edge you into tax on everything. You choose between two methods: pay tax on gross income minus £7,500 (the Rent-a-Room election, no expense deductions), or the normal method of gross income minus actual expenses. The calculator above compares both and applies whichever leaves you better off — for most hosts with modest costs, the £7,500 relief wins comfortably.
Worked example — spare room, £9,500 of bookings
| Step | Calculation | Amount |
|---|---|---|
| Gross hosting income | payouts + cleaning fees charged | £9,500 |
| Rent-a-Room relief | beats £700 of actual expenses | −£7,500 |
| Taxable profit | £9,500 − £7,500 | £2,000 |
| Income Tax (basic-rate employee) | £2,000 × 20% | £400 |
| National Insurance | none on property income | £0 |
| Owed via Self Assessment (31 Jan 2028) | £400 |
When do I need to file?
Under the relevant tax-free amount (£7,500 room / £1,000 other): usually nothing to file — the relief is automatic. Over it, register for Self Assessment by 5 October 2027 for 2026/27 income, and file and pay by 31 January 2028. If you're over £7,500 and want the Rent-a-Room method, you make the election on the return itself.
Frequently asked questions
Do I pay tax on Airbnb if I earn under £7,500?
Not if you're letting furnished space in the home you actually live in — the relief applies automatically and there's normally nothing to report. The threshold is per household letting, not per guest or per room, and it halves to £3,750 each if you split the income with someone else.
Does Airbnb tell HMRC about my earnings?
Yes. Platform-reporting rules require Airbnb to send HMRC annual data on hosts' income, and Airbnb has also shared historic earnings data with HMRC in the past. Being reported doesn't create tax that isn't due — but it does mean undeclared taxable income gets noticed.
Can I use Rent-a-Room for a whole flat I rent out?
No — the scheme only covers furnished accommodation in your only or main home. A separate flat, a second home or a property you don't live in falls under ordinary property income: £1,000 allowance or actual expenses, then your marginal rate.
What expenses can whole-property hosts claim?
Cleaning, Airbnb host service fees, utilities and council tax for the let period, repairs (not improvements), replacement furnishings, insurance — apportioned if you also use the property yourself. If your mortgage interest is significant, note relief on finance costs is restricted to a 20% credit; this calculator doesn't model that.
Do I pay National Insurance on Airbnb income?
Normally no — letting is property income, outside Class 2 and Class 4 NI. The exception is hosting so serviced it amounts to a trade (a B&B in all but name), which switches you to the self-employed rules.
Will hosting affect Capital Gains Tax when I sell my home?
It can. Letting part of your main home can restrict Private Residence Relief for the let portion, though lodger-style sharing usually doesn't. If you're planning a sale, run the numbers in our CGT calculator and take advice.