We asked our partners at TaxScouts to share their top tips and resources to help Hosts on Airbnb better understand their tax obligations. Read their guide on paying tax as an Experience Host.*
For many people, being an Experience Host on Airbnb is a side hustle alongside another full-time job. But this can come with tax implications in the UK. If you’re a Host and have a salaried job, HMRC will see you as being both employed and self-employed. If you have several streams of income (e.g. earning money from property, self-employment, investments etc.) including that from hosting Airbnb Experiences, you’ll also need to declare this to HMRC.
In most cases, you’ll have to file a Self Assessment tax return and potentially pay tax on your earnings. In this guide, we’ll go through when you might be liable to pay tax, why and how to go about it.
Does tax change depending on my Airbnb Experience?
No! Whether you’re hosting surfing lessons, wine tasting, candle making or anything else, you’ll pay the same taxes across the board.
The only potential exception would be if you’re also selling items within the Experience – i.e. if you were hosting vintage car test rides and you also offered guests the option to buy the cars, you could be liable to pay Capital Gains Tax on your profits. But you’d need to earn more than £12,300 profit before you were liable to owe tax.
How do I calculate my earnings for the tax year?
The tax year in the UK runs from 6th April to 5th April the following year. And it’s between these dates that your income should be calculated.
The 2021-22 tax year runs from 6 April 2021 – 5 April 2022. If you have a tax return to file and a bill to pay, this needs to be done by 31 January 2023. For Experience Hosts, you’ll potentially pay two types of tax:
- Income Tax
- National Insurance (although if you work PAYE, this will most likely be a voluntary contribution)
Then, use the TaxScouts employed and self-employed tax calculator to work out what you might owe.
How much can I earn before I pay tax on my profits as an Experience Host?
As a general rule, you can earn up to £1,000 tax-free alongside employment income. So until you earn £1,000 from hosting Airbnb Experiences, you won’t need to file a tax return. As soon as you do earn more than this, you should declare this income to HMRC.
The first step to do this is registering for a process called Self Assessment. This basically lets HMRC know that you’re earning untaxed income. Make sure that you do this by 5th October the year after you start earning. So, if you earn money in the 2021-22 tax year, the deadline to register for Self Assessment is 5 October 2022.
Can I claim expenses as an Experience Host on Airbnb?
Yes and no.
First things first, how do expenses work? Basically, anything that you spend “wholly, exclusively and necessarily” from hosting an Airbnb Experience can be deducted from your income total. This way, you’re only paying tax on your profits.
When it comes to claiming though, there’s something to bear in mind. If you earn less than £1,000 income from hosting your Airbnb Experience, you earn this tax-free because you’re covered by a relief called the Trading Allowance. But you’re not allowed to claim the Trading Allowance and deduct expenses. This means it’s only worthwhile deducting expenses if they’re more than £1,000 during the tax year.
What if I host my space and an Airbnb Experience on Airbnb?
If you host your space on Airbnb as well as an Airbnb Experience, you’ll be liable to pay tax on both your self-employed (Experience Host) income and property rental income. In this case, your tax return can become a little complicated if you file it yourself. There are the following tax allowances to take into account:
And your overall income will be calculated (including your salary, Airbnb earnings plus anything else) to calculate the tax rate you should pay at.
Need a hand?
If you want support calculating, understanding or filing your tax return, you can contact TaxScouts – a proud partner of Airbnb. An accredited accountant will file your tax return for £107, no matter how complicated your situation.
TaxScouts is offering Hosts a 10% discount on TaxScouts services, like completing your first tax return with them or scheduling a personalised tax advice consultation with one of TaxScouts’ accredited UK accountants. TaxScouts offer expires 31 January 2022.
*We recommend that you do your own research as the information isn’t comprehensive, and does not constitute legal or tax advice. Also, as we don’t update the articles in real time, please check each source and make sure that the information provided hasn’t recently changed.