Are you in? It’s your rent, not your profit
Add up what guests paid for stays in the 2025/26 tax year – including cleaning fees you charged – before the platform’s service fee, cleaning costs or bills. Only your share counts if you own jointly. Add any other rental and self-employed income. If the total is over £30,000, MTD applies from 6 April 2027; over £50,000 and you’ve been in since April 2026.
Over £50,000
Over £30,000
Over £20,000
planned
Your work in accountant language
What actually happens in your working life, what your accountant and HMRC call it, and what to do about it.
| What happens | Accountant calls it | What you do |
|---|---|---|
| A guest books three nights and pays £540 including a £60 cleaning fee | Property income (gross booking value) | Record the full £540 as income – check the platform’s earnings report, not just the payout. |
| Airbnb pays you out after deducting its host service fee | Gross income + an expense (platform fees) | Record the host fee as a separate expense. |
| You pay your cleaner and laundry service between stays | Allowable expense – cleaning and changeovers | Keep invoices or a record of cash payments. |
| You buy new towels, bedding and toiletries for guests | Allowable expense – guest supplies | Consumables are deductible. Replacing furniture uses replacement of domestic items relief. |
| You pay the electricity, broadband and council tax or business rates | Allowable expense – running costs | If you also stay there yourself, only claim the share that relates to letting. |
| Your mortgage payment goes out | Finance costs – 20% tax credit, not an expense | Record the interest part separately; it’s used in the final declaration. |
| You use the cottage yourself for a week | Private use – restrict expenses | Note the dates; costs for those weeks aren’t claimable. |
| Every three months | Quarterly update | Your software sends HMRC your property income and expense totals. |
| After 5 April | Final declaration | Confirm the year’s figures, including mortgage interest; tax is due by 31 January. |
What can you claim?
✓ Usually allowable
- Platform host fees (Airbnb, Vrbo, Booking.com) and channel manager software
- Cleaning, laundry and changeover costs
- Guest supplies: toiletries, tea and coffee, welcome packs
- Utilities, broadband and TV licence for the let
- Council tax or business rates
- Holiday let insurance
- Repairs, maintenance and garden upkeep
- Replacing furniture, linens and appliances like-for-like
- Key safe, smart lock and listing photography
- Management or co-host fees
✗ Not allowable
- Mortgage interest as an expense (it gets a 20% tax credit instead)
- Costs for weeks when you or family use the property
- Furnishing the property for the first time
- Improvements such as a hot tub installation or extension
- Your own time spent cleaning or managing
Rules that matter for airbnb and holiday let hosts
FHL rules have gone
From 6 April 2025, the Furnished Holiday Lettings regime was abolished. Holiday lets are now ordinary property income: mortgage interest gets a 20% tax credit instead of being deducted in full, capital allowances on new furniture and equipment are replaced by replacement of domestic items relief, and the profits no longer count as earnings for pension contributions.
Platforms report to HMRC
Airbnb, Vrbo and Booking.com have shared hosts’ earnings with HMRC since 1 January 2024. HMRC can compare their figures with your return, so make sure your income matches the gross booking values.
Spare room in your own home
If you let furnished rooms in your main home, Rent a Room relief lets you earn up to £7,500 a year tax-free (£3,750 each if the income is shared with someone else). Above that, you can either pay tax on the amount over £7,500 or claim actual expenses instead – whichever is better. Check gov.uk for how exempt Rent a Room income is treated for the MTD threshold.
Private use
If you or your family use the property, only costs relating to the let periods are allowable. A common approach is to split costs by the number of nights let versus nights used privately.
Worked example
Tom and Sarah’s holiday cottage in Cornwall – Sarah’s 50% share; mortgage interest is handled as a 20% tax credit, not an expense (illustrative example)
| Rent received | £33,000 |
| less Airbnb and Vrbo host fees (her share) | −£1,650 |
| less Cleaning and laundry | −£5,400 |
| less Utilities, broadband and business rates | −£2,900 |
| less Holiday let insurance | −£450 |
| less Repairs, garden and maintenance | −£1,800 |
| less Replacement linens and guest supplies | −£1,100 |
| Profit | £19,700 |
| Income tax (estimate) | £1,426 |
| Total tax for the year | £1,426 |
| Put aside each month | £119 |
Estimate for 2026/27 using England, Wales & NI rates, assuming no other income and before any 20% mortgage interest credit. Scotland has different income tax bands.
What a quarterly update looks like
A typical quarter for a holiday let host: download each platform’s earnings report, record gross bookings and host fees separately, add cleaner invoices, bills and any repairs, and note the mortgage interest – then submit. Summer quarters are busy; winter ones may be mostly costs, which is fine.
| Quarter | Period | Submit by |
|---|---|---|
| Q1 | 6 Apr – 5 Jul | 7 Aug |
| Q2 | 6 Jul – 5 Oct | 7 Nov |
| Q3 | 6 Oct – 5 Jan | 7 Feb |
| Q4 | 6 Jan – 5 Apr | 7 May |
| Final declaration | The whole tax year | 31 Jan following |
Quarterly updates are summaries – they don’t change when you pay. Tax is still due by 31 January (plus payments on account on 31 January and 31 July if they apply to you).
What will an accountant cost?
Typical monthly fees under MTD for Income Tax for: Landlord, 1–3 UK properties.
| Option | What you get | Per month |
|---|---|---|
| You do it yourself | MTD-compatible software. You keep the records and send the updates. | £0–£15up to £180 a year |
| Accountant files for you | You keep records in an app; they check them, send the 4 quarterly updates and the final declaration. | £25–£50about £300–£600 a year |
| Full service | They do the bookkeeping too – you share receipts and bank feeds, they handle the rest. | £50–£90about £600–£1,080 a year |
What pushes the price up: more properties, joint ownership or several mortgages; records kept on paper rather than in an app; being VAT-registered; catching up on missed updates or late returns.
What a fixed-fee quote should include
- All 4 quarterly updates and the final declaration (your tax return)
- The MTD software licence – or whether you pay for it separately
- Whether they do the bookkeeping or only check what you’ve recorded
- A reminder before each deadline and an estimate of the tax to put aside
- Whether VAT (20%) is added on top – not every practice charges it
Accountancy fees for your lettings are an allowable expense, so they reduce your tax bill.
Indicative ranges from published UK price lists, checked October 2026. Not a quote – your fee depends on how many transactions you have, how tidy your records are and where you live.
Questions airbnb and holiday let hosts ask
Is my holiday let still an FHL?
No. The regime ended on 5 April 2025 for Income Tax. It’s now taxed as ordinary property income.
Airbnb pays me less than the guest paid. What do I record?
What the guest paid you (the booking value, including any cleaning fee you charged) as income, and the host service fee as an expense.
I rent out a room in my house on Airbnb. Is that Rent a Room?
It can be, if it’s furnished accommodation in your main home. Up to £7,500 a year can then be tax-free. Check gov.uk for the details that apply to short stays.
Do I still need to file if the let made a loss?
Yes. If you’re in MTD you still send quarterly updates and a final declaration. A property loss can be carried forward against future property profits.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax – GOV.UK
- Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK
- Send quarterly updates using Making Tax Digital for Income Tax – GOV.UK
- Find software that works with Making Tax Digital for Income Tax – GOV.UK
- Penalties for Making Tax Digital for Income Tax – GOV.UK
This guide is general information about HMRC’s Making Tax Digital rules as of 26 October 2026, not tax advice. MTD Match is an independent introduction service and is not affiliated with HMRC. Check gov.uk or speak to an accountant about your own situation.