Whether you are a resident of the UK depends on how many days you spend in the UK per year. You are automatically considered as a UK resident if either:
- You spent 183 or more days in the UK in the tax year.
- Your only home was in the UK – you must have owned, rented or lived in it for at least 91 days in total – and you spent at least 30 days there in the tax year.
You are automatically considered as a non-resident if either:
- You spent less than 16 days in the UK (or 46 days if you haven’t been classified as UK resident for the 3 previous tax years).
- You work abroad full-time (averaging at least 35 hours per week) and you spent less than 91 days in the UK, of which no more than 30 days were spent working.
If you live abroad for 6 months or more per year, you are classified as a ‘non-resident landlord’ by HM Revenue and Customs (HMRC), even if you’re a UK resident for tax purposes. A company is a classified as a ‘non-resident landlord’ if it receives income from renting UK property and either the company is incorporated outside of the UK or its principal office is outside of the UK.
An important difference to note is that the UK tax year runs from April 6th to April 5th of each year, unlike the January to December US tax year.
When you start renting out your property on Airbnb, you must tell HMRC and you may have to pay tax. If you don’t notify HMRC, you may be charged a penalty.
If permitted by HMRC, you can receive your rental payments from your Airbnb guests in full and pay tax through Self Assessment. Otherwise, you must receive the rent with the basic rate tax (after allowing for any expenses they’ve paid) already deducted by your letting agent (property management company) or Airbnb guest.
At the end of the tax year, the letting agent or Airbnb guest must provide a certificate at the end of the tax year specifying the exact amount of tax that was deducted from your rental payments.
If you plan to use the Self Assessment method, you must first completed form NRL1i and have it approved by HRMC. Companies should use form NRL2i to ask HMRC to get rental income in full. Trusts should use form NRL3i.
Unless you have been explicitly told by HMRC not to, you must declare your Airbnb rental income via a Self Assessment tax return. The deadlines can be found here.
UK residents are required to report income from Airbnb property rental on a Self Assessment tax return if you’ve earned:
●£2,500 to £9,999 after allowable expenses
●£10,000 or more before allowable expenses
The costs you can claim in order to reduce your income tax depend on whether your property is a residential, property, furnished holiday rental, or a commercial property.
If your profits from your Airbnb rental activity are over £5,965 and all of the following apply:
●being a landlord is your main job
●you rent out more than one property
●you plan to additional new properties to rent out
You also have to pay Class 2 National Insurance. If you are not a business owner, you are not required to pay National Insurance, even if you do work in order to earn your rental income, such as arranging repairs, advertising for tenants, and arranging rental agreements.