Short‑let hosting is booming in East Shropshire, from Shrewsbury to Market Drayton and Ludlow, with property owners taking advantage of tourism, festivals, and weekend visitors. But with rental income comes tax responsibility, and one of the most common questions hosts ask is: “Can I deduct expenses from my short-let income to reduce my tax bill?”

In this blog, we break down how expense deductions work for UK short-let hosts, what counts as allowable expenses, and what East Shropshire hosts should consider when reporting income to HMRC.

Understanding Short-Let Income Tax in the UK

Income from short-lets (Airbnb, Booking.com, Vrbo, etc.) is considered rental income for UK tax purposes. Hosts are required to declare it to HMRC via the Self Assessment system, unless it falls under specific thresholds like the Property Allowance (£1,000 per year).

Once you declare your income, HMRC allows you to deduct allowable expenses - but only those that are wholly and exclusively for the purpose of letting the property. This is crucial for East Shropshire hosts who want to ensure compliance while minimising tax liability.

Common Allowable Expenses for Short-Let Hosts

Here are the main categories:

1. Mortgage Interest

• Only the interest portion of mortgage payments is deductible, not the capital repayment.

• For example, if you pay £6,000/year in mortgage payments and £4,000 is interest, only £4,000 is allowable.

2. Utilities and Bills

• Gas, electricity, water, broadband - if these are included for guests.

• Keep accurate records separating personal use from guest use.

3. Repairs and Maintenance

• Costs to maintain the property in a rentable condition are deductible.

• Examples: repainting rooms, fixing leaking taps, replacing broken furniture.

• Important: Improvements (like extensions or renovations) are not immediately deductible; they are capital expenses.

4. Insurance

• Buildings and contents insurance for the rental property.

• Ensure your insurance covers short-term lets specifically, as regular homeowner policies may not.

5. Cleaning and Management

• Professional cleaning, laundry, and property management fees.

• Platforms like Airbnb allow cleaning fees to be passed on, but the cost is still deductible for tax purposes.

6. Supplies and Guest Amenities

• Consumables provided for guests: toiletries, kitchen supplies, coffee, tea, etc.

7. Advertising and Listing Fees

• Airbnb, Booking.com, Vrbo service fees, and other marketing costs.

Expenses That Are Not Deductible

• Personal use expenses unrelated to the let.

• Capital improvements (extensions, new kitchens).

• Non-rental insurance unrelated to the property.

Keeping clear records is critical. HMRC can challenge expenses if they appear to benefit the owner personally.

Special Considerations for East Shropshire Hosts

1. Property Allowance (£1,000)

   • If your total short-let income is under £1,000 per year, you don’t need to declare it or deduct expenses — HMRC considers it covered by the property allowance.

2. Mixed-Use Properties

   • If you rent only part of a property (like a room), expenses must be apportioned.

   • Example: You rent 2 of 4 bedrooms; 50% of mortgage interest, utility bills, and cleaning costs can be claimed.

3. Local Tourism Considerations

   • In high-demand periods (Shrewsbury festivals, Ludlow food events), accurate income and expense tracking ensures you don’t overpay tax while remaining compliant.

FAQ - Deducting Expenses for Short-Lets in East Shropshire

Q1: Can I claim mortgage interest if I live in the property too?
Yes - but only the portion related to the rental area. You must apportion expenses if the property is partially your home.

Q2: Are cleaning fees deductible?
Yes - professional cleaning costs or even your own cleaning supplies used for guest turnover are allowable expenses.

Q3: Can I deduct furniture and appliances?
Minor replacements or repairs are deductible. Large-scale purchases are treated as capital expenses and may need to be capitalised and claimed via capital allowances.

Q4: What about Airbnb service fees?
Yes - platform service fees and commissions are fully deductible.

Q5: Do I need receipts?
Absolutely - HMRC requires evidence for all expense claims. Keep invoices, statements, and digital records.

Q6: What if I also rent long-term?
The same rules apply, but you must separate income and expenses between short-term and long-term rentals to avoid disputes.

Conclusion: How Pass the Keys Helps East Shropshire Hosts

Deducting expenses correctly can save East Shropshire hosts hundreds or even thousands of pounds in tax, but mistakes can trigger penalties.

Pass the Keys helps hosts by:

• Keeping accurate income and expense records for HMRC reporting

• Advising on allowable expenses for both partial and full property lets

• Optimising listings to maximise revenue while remaining compliant

• Managing bookings, cleaning, and maintenance so you can focus on hosting stress-free

Whether your short-let is in Shrewsbury, Market Drayton, or Ludlow, Pass the Keys ensures you maximise tax efficiency, stay compliant, and manage your property professionally.