How to Calculate Airbnb Profit for HMRC

Your profit isn’t just what you earned. It’s what you earned minus what you can deduct. Here’s how to calculate it correctly.

The Basic Formula

Total Income - Allowable Expenses = Profit

Simple in theory. Important in practice.

Step 1: Calculate Total Income

Add up ALL income for the tax year:

• Airbnb earnings — From platform statements
• Booking.com, Vrbo — Other platforms
• Direct bookings — Cash, bank transfer
• Cleaning fees kept — If you keep them
• Any other rental income — Related to property

Important: Gross income before platform fees.

Where to Find Numbers

• Airbnb: Dashboard → Earnings →Export
• Bank: Review statements
• Other platforms: Respective dashboards

Step 2: Calculate Allowable Expenses

Deductible expenses reduce your profit:

Running Costs

• Cleaning (between guests)
• Linen and towels
• Utilities (when let)
• Insurance
• Agents fees

Maintenance

• Repairs (not improvements)
• Gardening
• Equipment replaced

Professional

• Accountant’s fees
• Software subscriptions
• Marketing ( flyers, photos)

Financial

• Mortgage interest (for lettings, not Airbnb in some cases)
• Bank fees

What You CANNOT Deduct

• Personal expenses
• Capital improvements (replacement windows, extensions)
• Decorating for personal use
• Food and drink for guests (unless part of service)

Step 3: Calculate Your Profit

Total Income
- Total Allowable Expenses
= Taxable Profit

Example Calculation

Two Ways to Calculate

Option 1: Cash Basis

Income when actually received, expenses when actually paid. Most common for individuals.

Option 2: Accruals Basis

Income when earned, expenses when incurred. More accurate for businesses.

Stick with cash basis unless advised otherwise.

Common Mistakes

Over-claiming expenses

• Including personal costs
• Capital items as revenue
• No receipts

Under-claiming

• Not tracking properly
• Missing deductions
• Fear of audit

Wrong calculations

• Using gross fees instead of net
• Forgetting platform fees
• Mixing tax years

FAQ

Are host fees deductible?

Yes. Platform fees (Airbnb, etc.) are allowable.

Can I deduct my mortgage interest?

Only for standard lettings. Airbnb is usually considered Furnished Holiday Let — rules differ.

What about capital improvements?

These are not deductible. They’re added to your cost base for Capital Gains Tax.

Get the numbers right. Use software to track.

Try HMRC Reporter: https://hmrcreporter.com

Related: “How to File Property Income on Self Assessment” covers filing.