As a Host on Airbnb, you must ensure that you are paying the relevant taxes correctly. You may need to pay business rates on the property that you host on Airbnb.
What are Business rates?
Business rates are taxes you must pay for non-commercial properties such as holiday homes or guest houses. These taxes are payable to the local council where your property is located and are used to fund services within the community including waste disposal, recycling, planning services, road maintenance and more.
Business rates on your Airbnb listing
If your Airbnb listing is available to let for more than 140 days per year, you may have to pay business rates.
The business rate that you may need to pay is based on the rateable value of the property you list on Airbnb and its location.
According to HMRC, whether or not you have to pay business rates depends on two things:
- How many nights the property is available to let each year; and
- How many nights the property was actually let out
The rules until March 2023 indicate that business rates must be paid on properties:
- Available to short-term let for at least 140 nights per year (England); or
- Available for short-term let for at least 140 nights per year and actually let out 70 days per year (Wales)
However, the rules changed from 1 April 2023, and are now as follows:
If your Airbnb listing is located in England and fits the following criteria, you will be required to pay business rates:
- Available as a short-term let for at least 140 nights in total over the current and previous tax years;
- Let for at least 70 nights in the last 12 months
If your Airbnb listing is located in Wales and fits the following criteria, you will be required to pay business rates:
- Available as a short-term let for at least 252 nights in total over the current and previous tax years;
- Let for at least 182 nights in the last 12 months
Exemptions and discounts
There are some circumstances in which you may be able to receive a discount or claim relief for your business rates.
If the property you list on Airbnb is vacant (unoccupied) for three months, you might be exempt from paying business rates. You might also be eligible for small business rates relief if your property is considered a Furnished Holiday Let (“FHL”).
For your property to qualify as a FHL it has to:
- Be available to let for at least 210 days of the first tax year during which you start trading (with or without guests)
- Only permit stays of less than 31 days
- Be commercially let as a holiday property for at least 105 days (days that either you or your friends/family are occupying the property for free or cheaper do not count)
- Be furnished by you, not your guests
You can claim small business rates relief and other reliefs available to FHLs through your Self Assessment tax return.
You can pay any business rates you owe to your local council. You must also report your earnings from hosting on Airbnb and pay any tax you owe to HMRC by filing a Self Assessment tax return.
To view your Airbnb earnings, visit your Transaction History page.
If you’d like support calculating, understanding or filing your tax return, you can contact TaxScouts. Hosts on Airbnb can claim a 10% discount on their first TaxScouts tax return or tax consultation. Offer expires 31 January 2024.
*While this article focuses on business rates which may not be applicable to all Hosts, you may be subject to other taxes in respect of your property e.g. council rates. We strongly recommend that you do your own research as the information in this article is not comprehensive and does not constitute legal or tax advice. As we do not update the articles in real-time, please check each source and make sure that the information provided has not recently changed.