UK Rent a Room £7500 + wage earnings enquiry

Hi all. I’m new to Airbnb and this forum. Have been renting out my own flat with Airbnb since July. It is my only home and my only residence. When the flat isn’t booked I go home. I’m nearly at the £7500 limit for tax free and I also earn a decent income from my job. I was concerned that if I carry on renting out my home I’ll hit the 40% tax rate this year which would make Airbnb unviable what with labour for cleaning, and energy bills. I have spent all my savings on upgrading my home for Airbnb so want to build this up a bit. But, I went onto a tax site: Rental Income Tax Calculator for Landlords - TaxScouts
This site indicates that the 1st £7500 is completely ignored and not even counted as income, meaning that it takes longer to hit the 40% tax. Does anyone have an experience with this issue?
Thank you

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Welcome to this forum and congratulations on your AirBnB hosting!

You’re running a small business now. May I suggest you call an accountant with business expertise and set up a 30 minute meeting with them. Discuss this issue and also let this accountant advise you about being a business owner generally. It might be money well spent toward your future success.


Have you considered making it a LLC? This way the income is for the LLC and not included in your personal taxes. You would need to file twice, one for the LLC and the other for your personal returns. Here in the states I file in March for my LLC and then in April for my personal tax return.

I believe KazYork is outside the United States. As far as I know, the Limited Liability Company (LLC) is particular to the US. Perhaps other countries have something comparable. I don’t know.

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I think in England it would be a Ltd which should be comparable to LLC.

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Yes I think you need some local professional advice.

I’m guessing 40% would be your marginal tax rate, so it would only apply on the new money you earn that is over the limit, not on the money you’re currently earning. Also you’d only be taxed on the net earnings, after you’ve already deducted the cleaning and electricity costs. Taxes are not pleasant, but they’re not going to make you go backwards in your earnings.

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  1. You can’t use the government ‘rent a room scheme’ if you move out when you have guests. It’s only available for hosts who physically share space with a guest

  2. I agree with @SleepingCoyote it would have been better to speak to an accountant when you set up your STR business .

  3. I was already a 40% tax payer before I set up my STR business and it hasn’t stopped me from running a successful, profitable STR business

  4. Please go and see an accountant about how best to structure your STR business and tax allowances . I don’t agree you need to set up a limited company (in the US LLC) . You just need to file a tax return declaring ALL the income you have made from STR and you can claim allowable expenses

you should have increased your prices back in March this year when we were told in the UK about utility price hikes

Have you installed something like NEST so you can set maximum heating temperatures and times heating is on

We don’t have LLC’s in the UK

I think that a LTD would be comparable to a LLC.

Most people in the UK who have one listing don’t need to run it through a limited company.

Our tax system works differently than yours . @Ritz3

You pay personal tax whether you run your business through a limited company or declare earnings through your tax return. In addition with a limited company the company has to pay corporation tax.

The biggest issue for the OP is that they have mistakenly assumed they can use our rent a room scheme when in fact from their post they move out when doing STR so it will be a whole listing and therefore they can’t use the scheme.

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Thanks all for the advice. I’m pretty sure that I do qualify for the rent a room scheme even if Im away when I Airbnb. see below
Letting rooms in your home: a guide for resident landlords - GOV.UK (
It is my home and I’m at home more than I’m not at home, pay council tax, have belongings at home etc.
From what people say it does sound like some advice from an accountant might be a good idea. Ive always just had one job so my only experience of tax is paying my 20% deducted at source.

Thank you! It feels good to have a small business!

I’m confused about these two statements. If your flat is your only home and only residence, where is “home” when you go home because the flat isn’t booked? Sounds to me like you have two properties.


@KazYork It sounds to me like what they are considering a resident landlord is if you go on holiday occasionally when you have guests, or leave for a few days during a longer guest stay when you have guests, not that you always rent out the entire place and go stay elsewhere for all bookings. If I were you, I would consult a lawyer, not just interpret the law as you would like it to be.

I’m a bit surprised by some of the replies. I stay at my partners and I have a caravan. I came on here with genuine questions as I’m an honest person trying to find the right way in a context I’m not familiar with. I didn’t expect people to be suggesting I have two properties, or needing a lawyer due to interpreting the law my own way. I’m researching government sites and trying to seek advice properly and sensibly.

How do you interpret suggesting you consult a lawyer to make sure that you don’t interpret the tax law incorrectly to be offensive? It’s meant to be helpful.

And there’s no need to bristle because someone asks where you live when you don’t have guests and saying it sounds like you have 2 properties. It’s easier to give on-point advice when someone explains their situation more fully.


I just thought I’d be taken at face value that’s all. I did explain my situation. It’s not really relevant where I stay, I have one home. Some people have suggested an accountant - that is a good idea, a lawyer seems a bit over the top. If you are in the US maybe it’s different over there.

I only suggested a lawyer because of the tax law re classification of “resident owner”, which I would want to be sure of, rather than get hit with some fines or back taxes you supposedly owed. An accountant would not necessarily be able to, nor want to, definitively say whether your situation qualified or not.

Sorry you’re not looking at the right legislation @Ritz3

You need to look at the rent a room scheme. The point is not whether you are at home more than you’re not.

The scheme is for those who rent out a room/s in your home while you’re in residence. Not that you move out and rent your place out as a whole listing when you’re not there. So it’s absolutely relevant where you stay when you have guests.

You don’t need to consult a lawyer the legislation is clear. You CANNOT claim a tax allowance through the rent a room scheme when you are letting out a whole listing. If you want to let out a whole listing you need to list the income on your tax return and you can also claim expenses associated with running your STR business to offset your profits.

Hi Helsi
I’ve looked into it a bit further and it seems that the rules changed in 2019 and you are correct, since then the resident needs to be in the home for at least part of the guests stay. So thanks. I think what I need to do is consult an accountant that specialises in supporting Airbnb hosts so I can be absolutely clear on rules and regulations. For example I don’t know if I can count as a STR if it is my residence on which I pay Council Tax etc. Or claim back expenses on expenses on the home in which I live. So posting on this site has made me realise I do need professional advice, whereas before my limited research led me to think it was simpler.
So thanks