What is a short-term let?
Whilst there's no statutory definition of a short-term let, the market is primarily geared around marketplaces such as Airbnb, that allow investors (or 'hosts' in Airbnb terms) to let individual rooms or entire properties on a short-term basis. Hosts range from individuals looking to let their family residence for additional income, through to professional investors with multiple units available to let.
Short-term let tax considerations
Tax allowances are available for those with limited lettings income. If your total rental income is less than £1,000 per year, this will be free of tax. If you're letting out a room in your home then you can earn up to £7,500 per year, free of tax.
Above this point, it is likely that income tax will be due on the rental income, which will need reporting each year via a Self Assessment Tax return.
Investors may wish to consider if their short-term lets achieve the criteria to be deemed a 'furnished holiday let' (FHL), as the tax position may be more favourable. In addition, for more flexibility, short-term lets can be operated via a limited company. We can support you with both of these aspects.
With the increasing popularity of short term lettings, HMRC's compliance teams have turned their attention to these income sources. In October 2020, Airbnb provided HMRC with income details for 225,000 UK-based hosts and we expect HMRC to now increase investigations to ensure that income tax has been paid where due. Here at Provestor, we can ensure that your Airbnb or short-term let is operating compliantly.
Our accountancy service
How we help short-term lettings operators
Our expert accountants are here to help ensure that your lettings are both compliant with tax law, and also working as hard as possible for you. We will advise you on different operating models for short-term lettings, and help you to understand how short-term lettings can play a part in your property portfolio.
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