Autumn Budget 2025: Tax Changes for Airbnb & Short-Term Let Owners
Focus: These Autumn Budget 2025 changes will directly affect how profitable Airbnb management, short-term let management, and holiday letting businesses are across the UK. For property owners self-managing or using a professional short-let management company, un
What the Autumn Budget 2025 Means If You Use an Airbnb or Holiday Let Management Company:
1. Income Tax on Property Profits to Rise from 2027
From April 2027, the government will apply higher income tax rates on profits from letting residential property.
New Rates (England, Wales, NI only):
Basic rate: 22% (up from 20%)
Higher rate: 42% (up from 40%)
Additional rate: 47% (confirmation pending from HMRC)
Important context:
This only affects property income (your wages and business income keep current rates).
You still won’t pay tax if total income remains under the personal allowance (£12,570).
Applies to unincorporated landlords — limited companies are not affected by these new rates.
2. Furnished Holiday Let (FHL) Tax Regime Abolished in April 2025
The FHL regime, which gave tax perks to landlords letting qualifying holiday homes, is being scrapped.
Key consequences:
No more capital allowances on furnishings.
Mortgage interest will only be deductible as a basic rate tax reducer (22% from 2027).
Rollover relief and capital gains tax reliefs will no longer apply.
This move will mean holiday lets are now taxed the same way as long-term residential properties.
3. Dividend Tax Increase for Landlords Operating via Limited Companies
For those running their short-term lets through a limited company, the company’s tax rate stays the same — but withdrawing profits will cost more.
From April 2026:
Basic rate: 10.75% (was 8.75%)
Higher rate: 35.75% (was 33.75%)
Additional rate: 39.35% (unchanged)
Also:
Income tax thresholds will remain frozen until 2031, so many landlords may slip into higher tax bands over time.
4. Business Rates: Some Relief for Holiday Let Owners in England
There’s good news for small operators running short-term lets as a business:
Small Business Rates Relief (SBRR) will now apply to a second property (for up to 3 years).
Retail, Hospitality & Leisure (RHL) Relief multipliers reduced:
Small businesses: 0.382 (down from 0.499)
Standard rate: 0.43 (down from 0.55)
A £4.3bn sector support package was also announced.
5. Visitor Levy (Tourism Tax) – Possibly from 2027
Local authorities (via elected mayors) will soon have powers to introduce a visitor levy on overnight stays. This may apply to holiday lets, glamping sites, and B&Bs.
Region-by-region opt-in (not automatic)
Earliest introduction expected in mid-2027
Cities expected to be first movers
6. Labour Cost Pressures: Minimum Wage Rises in April 2026
Running a holiday let involves cleaning, key exchange, changeovers, and maintenance — all of which may become more expensive.
New National Minimum Wage rates:
Age 21+: £12.71/hour (up from £12.21)
Age 18–20: £10.85/hour (up from £10)
Under 18 & apprentices: £8/hour (up from £7.55)
Employers will also be affected by frozen National Insurance thresholds.
7. Council Tax Surcharge on High-Value Properties (from 2028)
From April 2028, owners of high-value homes will face a council tax surcharge:
£2,500/year for homes valued over £2m
£7,500/year for homes valued over £5m
These are based on property values as assessed in 2026.
8. Other Changes for Property Investors and Landlords
Writing-down allowances on capital investments reduced from 18% to 14%
New 40% First Year Allowance for main rate expenditure
Stamp Duty Reserve Tax (0.5%) suspended for UK stock listings for 3 years — not directly STR-related, but of note for company investors
What This Means for Short-Term and Holiday Let Owners
Costs likely to rise:
Income tax on rental profits (especially for sole traders/unincorporated landlords)
Dividend tax for company owners
Staff wages and contractor costs
Potential future visitor levy or council tax surcharge
Support or mitigation:
Business rates relief extended (especially helpful for multi-property operators)
Mortgage interest tax reducer rising to 22%
No immediate changes to property income inside limited companies
Hospitality support funding continues
Looking Ahead: Prepare Early and Get Expert Advice
With rising taxes, wage costs, and compliance complexity, many owners are turning to professional Airbnb management and holiday let management services to protect profitability.
Pass the Keys helps short-term let owners navigate tax changes, pricing strategy, local regulations, and day-to-day operations without the stress.
Disclaimer: This summary is intended for general information purposes only and does not constitute tax or legal advice. Always consult a qualified tax professional for advice specific to your circumstances.
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