If you let property on Airbnb, Booking.com or any other short-term let platform, Making Tax Digital for Income Tax applies to you if your qualifying income is above the threshold. Airbnb income is UK property income for most hosts, which means it counts toward your MTD qualifying income in the same way as long-term rental income.
This guide covers whether MTD applies to your Airbnb income, what counts as qualifying income, and how your software handles quarterly updates. For the practical step-by-step on recording Airbnb payouts in Xero (splitting gross income, fees, cleaning costs and occupancy taxes), see our detailed how to record Airbnb income guide.
What Is MTD for Airbnb Hosts?
MTD for Airbnb hosts is Making Tax Digital for Income Tax applied to short-term let income. Airbnb income is classified as UK property income for most hosts, so it counts toward your MTD qualifying income alongside any self-employment income. If your gross property income (the gross booking value, not the net payout Airbnb deposits) exceeds the threshold, you must keep digital records and send quarterly updates through MTD-compatible software.
Does MTD Apply to Airbnb Hosts?
Yes, if your qualifying income is above the MTD eligibility threshold. Qualifying income is your UK property income plus any self-employment income you have.
| Phase | Start date | Qualifying income threshold |
|---|---|---|
| Phase 1 | 6 April 2026 | Over £50,000 |
| Phase 2 | 6 April 2027 | Over £30,000 |
| Phase 3 | 6 April 2028 | Over £20,000 |
If your gross Airbnb income alone is over £50,000, you must use MTD from April 2026 — even if you have no other self-employment income. If you also have self-employment income (e.g. you are a sole trader in another business), your property income and self-employment income are combined for the threshold test.
For the full threshold rules, see our MTD qualifying income thresholds guide. For property-specific MTD rules including joint ownership and non-resident landlords, see our MTD for landlords guide.
What Counts as Qualifying Income for Airbnb Hosts
This is the same principle that catches out online sellers: gross, not net.
Airbnb pays you a net amount — the booking value minus their host service fee, plus or minus cleaning fees and occupancy taxes. But your qualifying income is the gross booking value — what the guest paid before any deductions.
Example: a guest books a 3-night stay for £300. Airbnb’s host service fee is 3% (£9). Your payout is £291.
| Entry | Amount | What it is |
|---|---|---|
| Gross booking value | £300 | Your income (qualifying income) |
| Airbnb host service fee | -£9 | An expense |
| Net payout | £291 | The result, not the starting figure |
Your qualifying income from this booking is £300, not £291. Recording only the net payout understates both your income and your expenses.
For the full breakdown of how to split Airbnb payouts (including cleaning fees and occupancy taxes), see our how to record Airbnb income guide — specifically the “anatomy of an Airbnb payout” section.
Rent-a-Room and qualifying income
If you let in your own home and your gross receipts are under £7,500, the Rent-a-Room scheme makes the income tax-free. If you are over £7,500 and choose to declare the income, it counts toward your qualifying income. If you are under £7,500 and exempt, it does not count.
For the full Rent-a-Room rules, see our Airbnb income recording guide.
Multiple properties
If you let multiple Airbnb properties, your qualifying income is the combined gross rents from all of them. If you jointly own a property with someone else, each person’s share counts toward their own threshold. See our MTD for landlords guide for joint ownership rules.
Property Income vs Trading Income Under MTD
This matters because it determines which quarterly updates you send.
Most Airbnb hosts: property income
For the vast majority of Airbnb hosts, income is UK property income reported on the SA105 pages of your Self Assessment, following HMRC’s property income rules. You send quarterly updates for your property business.
You are in this category if you:
- Hand over the keys and the guest looks after themselves
- Clean between bookings, not during stays
- Communicate with guests by message for logistics
- List on Airbnb rather than running a direct-booking website at scale
Hotel-level operations: trading income
If your Airbnb operation provides hotel-level services — daily housekeeping during stays, provided meals, on-site staff, concierge services — your income may be trading income reported on the SA103 pages. In that case, you send quarterly updates for your self-employment trade instead.
The test comes from the Pawson v HMRC case and is about the level of service, not the number of nights let. For the full test, see our Airbnb income recording guide — specifically the “property income vs trading income” section.
Quarterly Updates for Airbnb Hosts
If you are in MTD, you send quarterly updates for your property income. The deadlines are:
| Quarter ends | Update due by |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
The final declaration is due by 31 January after the tax year ends.
How your software handles it
If your accounting software is set up with:
- A bank feed from the account Airbnb pays into
- Correct categorisation of gross income, platform fees, cleaning costs and property expenses
…then your quarterly update is largely automatic. Your software totals the digital records for the quarter and submits them to HMRC. You review the figures and click submit.
The setup is the important part. For the step-by-step Xero setup (which applies in principle to FreeAgent, QuickBooks and other software), see our how to record Airbnb income guide — specifically the “how to set it up in Xero” section.
Software That Fits Airbnb Hosts
Airbnb hosts need software that can split a single bank payout into multiple categories — gross income, platform fee, cleaning cost, occupancy tax. Not all software does this equally well.
Xero
Xero is the strongest option for Airbnb hosts because its bank reconciliation includes a split transaction function that makes breaking down an Airbnb payout straightforward. You can set up tracking categories to separate property income from any self-employment income. Xero costs from £15/month.
FreeAgent
FreeAgent is free with NatWest, RBS, Mettle or Ulster Bank business accounts. It handles property income and has bank feeds, but the payout-splitting workflow is slightly less refined than Xero’s.
QuickBooks
QuickBooks handles property income and has good bank feed support. The transaction splitting works but is less intuitive than Xero for multi-component payouts.
Spreadsheet bridging
Spreadsheet bridging software (123 Sheets, VitalTax, Acxite) is less suitable for Airbnb hosts because splitting payouts manually in a spreadsheet is error-prone. Unlike online sellers (whose platform exports are already itemised), Airbnb payouts arrive as a single bank transaction that you have to break down yourself. For more on spreadsheet bridging, see our can I use spreadsheets for MTD guide.
For the full cost comparison, see our cheapest MTD software for sole traders guide.
FHL Abolition and MTD
From 6 April 2025, the Furnished Holiday Lettings (FHL) regime was abolished. This does not change how MTD works — you still send quarterly updates and a final declaration — but it changes the tax treatment of your Airbnb income:
- Mortgage interest is now restricted under Section 24 (20% tax credit, not full deduction)
- No capital allowances on furniture — use the replacement of domestic items relief instead
- Profits no longer count as relevant earnings for pension contributions
- No Business Asset Disposal Relief on disposal
For MTD purposes, former FHL hosts now report as standard UK property income. If you previously had an FHL category in your software, merge it into your standard property income category.
For the full FHL abolition details, see our Airbnb income recording guide and our FHL abolition guide.
The Bottom Line
MTD for Airbnb hosts is about getting your software set up correctly — once your bank feed and categorisation are in place, quarterly updates are largely automatic. The key steps are:
- Check your qualifying income — gross booking value, not net payouts
- Choose software that can split payouts — Xero is the strongest option
- Set up your categories — property income, platform fees, cleaning costs, occupancy tax liability, property expenses
- Connect your bank feed and split each Airbnb payout as it arrives
- Submit quarterly updates by 7 August, 7 November, 7 February and 7 May
For the practical step-by-step on recording Airbnb income in Xero (including the payout splitting workflow), see our how to record Airbnb income guide.
For the complete MTD overview, see our Making Tax Digital guide. For property-specific MTD rules, see MTD for landlords and non-residents. For threshold details, see MTD qualifying income thresholds. For the full profession hub, see MTD by profession.