Top Tax Deductions Airbnb Hosts Often Miss

Furnished Holiday Lettings (FHL): A Valuable Option for Active Hosts

Furnished Holiday Lettings used to be a popular option for Airbnb hosts, offering generous tax benefits including capital gains relief and the ability to claim wear and tear on furniture. However, as of April 2025, the FHL scheme was abolished. This change means new FHL benefits no longer apply.

Nevertheless, if you held properties qualifying as FHLs before this date, transitional reliefs may affect your tax calculations for a few years. For most hosts, this means approaching their Airbnb income like any other residential rental income, paying tax after allowable deductions without the additional FHL advantages.

Deductible Expenses to Watch Out For

One of the most common reasons Airbnb hosts overpay tax is failing to claim all the expenses they’re entitled to. Expenses must be “wholly and exclusively” for your Airbnb business, but in a home-sharing environment, some apportionment is needed. Here are several deductions Airbnb hosts often overlook or under-claim.

Cleaning costs are a prime example. Whether you hire professional cleaners or buy your own supplies for bathroom and kitchen upkeep, these expenses directly relate to maintaining the property for guests. You can claim these costs in full where they relate to Airbnb use.

Consumables like fresh towels, bedding, soap, and even a welcome basket with small treats for your guests count as deductible expenses. Many hosts don’t realise that continually replenishing guest supplies throughout the year is a valid claim.

Airbnb charges including the percentage fee Airbnb takes per booking, payment processing fees, and costs related to managing your listing online all qualify as expenses. These charges reduce your overall taxable income.

If you have a mortgage on your property, you can claim the interest portion of the mortgage interest payments, but not the capital repayments. This relief can result in significant savings, especially for hosts letting out entire properties. Similarly, any council tax, water rates, or insurance premiums that relate to the rental accommodation—either whole property or just rental space—can be claimed, but an accurate apportionment method should be used when the property is your main residence.

Utilities like electricity, gas, and water bills related to the rental use of your property are reclaimable expenses. If you rent out a room in your home, you need to calculate the percentage that room takes of the total space and only claim that proportion of your bills.

Repairs and maintenance are allowable expenses, but it’s important to differentiate them from improvements. Repairs involve fixing things to keep them in their existing state, like patching a leak or repainting walls. Improvements, which enhance the property’s value or functionality—such as installing a new kitchen or adding a conservatory—are capital expenditures and not deducted in the year incurred. Instead, they are capitalised and may be relevant in capital gains tax calculations when you sell the property.

While the UK doesn’t allow depreciation to be deducted directly, you can claim capital allowances on certain qualifying items like furniture, appliances, and equipment used in your Airbnb business. This enables you to gradually reduce your taxable profits by accounting for wear and tear in a tax-compliant way over several years.

Professional fees related to your Airbnb hosting, such as accountancy services for preparing your tax returns or legal advice regarding tenancy agreements, are also deductible. Many hosts overlook these expenses, but claiming them can help offset costs of maintaining compliance.