Airbnb hosts are not affected by the new buy-to-let tax rules

Have you heard of the new rules regarding the tax deduction on mortgage interest for buy-to-let (otherwise known as an investment property to the rest of the planet)  in the UK? The recent announcement by the UK government that tax relief is going to be limited to 20% has just been made clearer by some of the details. You can read this article in the Telegraph for further details:

The main point is Airbnb hosts could be exempt from the new rules and still be able to claim the full tax deduction. This will come as some relief for many an airbnb host including me. The general reason for this is that the government is considering “furnished holidays lettings” as a business and not just and investment. To qualify as a furnished holiday let the government has provided some criteria:

  • The accommodation must the in UK or EEA (part of the Eurozone) and be commercially let
  • It has to be furnished
  • It must be available for let at least 210 days of the year
  • It must have been let for at least 105 days
  • It cannot be let for a single trip of more than 155 days

For most hosts the above criteria will be no issue at all. The new rules do make some sense. Those hosts who are letting for less than 105 days of the year will most likely be claiming the rent-a-room scheme allowance and not be claiming any deductions anyway.

These changes only take partial effect in 2017 and not fully implemented until 2020 so a little planning should see you right.

8 comments On Airbnb hosts are not affected by the new buy-to-let tax rules

  • Hi, great to find your Blog thanks! Airbnb mind field. Despite several phone calls no one at Airbnb can explain UK tax to and the department that can seem to only have standard email responses. Last year the IRS took 28%!!!!! Although, I am not a US citizen and do not have a US social security number but something to do with Airbnb being a US company and me misunderstanding to fill out the W8 (and why would I when I thought that living in the UK, having a property in the UK would have nothing to do with US TAX!, WRONG!). Ok, I have 2 questions how the heck can I get that money back front he IRS (I think it is about $20,000US). 2. What do I do this year with tax in the UK? I made about £40,000 in the last 12 months before any costs. HELP!

    • I think you need a professional tax accountant. Did you received you Airbnb payments in US dollars? Was this sent to your Paypal or your bank account? Don’t assume that Airbnb knows where your country of residence is. Fill out your personal details correctly.

      • All my payments were paid in £’s and and it went into Paypal. I have spoken with a Tax Expert in the US and their advice was to sort it out with the UK Tax. My issue is that I can’t seem to get the correct or understandable information regarding the UK Tax and the UK system.
        Do you know a Tax firm in the UK that properly understands the Airbnb tax situation? It seems a rather vague area.
        Thanks again.

        • You can claim back tax paid in the US in your UK tax as the UK and US have a double taxation treaty. Airbnb tax is no different to tax on any other form of holiday let taxation so finding a Airbnb specialist is not necessary but I would think there must be some accountants who are very familiar with Airbnb income. I would look into making a claim for tax paid in you next UK tax return.

  • Hi there , I am confused by the latest tax for Airbnb In the UK. I can earn more before tax if I have a long term guest/ lodger but less if they are short term ? What constitutes a long term ? A few weeks,months or more ?!!

    • Hi Francesca, i’m not sure which tax in relation to short term rental you are referring to. The new tax rules in regards to mortgage relief tax deductions apply for any rental short or long term. It is currently believed that airbnb rentals will qualify as a business (holiday let) and therefore not affected by the upcoming tax changes.

  • Hi.

    I just recieved an Airbnb reminder about paying tax.

    When I first started in april 2014 I did a quick research and I read that you didn’t have to pay tax so I started to earn some money and now im quite scared as I’ve earned loads of money this year.

    Do you recommend me hiring a tax advisor? What could happen If I do nothing? Will they found out how much i’ve earned and demand sharings?


    • Hiring a tax advisor is what most people would tell you to do. I suggest learning the art yourself so you can plan better. Many expenses can be deducted from your income. Take full advantage of the rent a room allowance.

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