MTD for B&B & Guesthouse Owners —
Trading Income, Not Rental Income
Use gross booking income before food, laundry, and cleaning costs are deducted.
- Running a B&B or guesthouse with services, breakfast, daily cleaning, fresh linen, is generally treated by HMRC as a trade, not as UK property income, this is a different category from simply letting a room or a whole property.
- The same £50k / £30k / £20k phased MTD thresholds apply as any self-employed sole trader.
- Food, laundry, cleaning products, and breakfast ingredients are all standard allowable expenses, on top of the usual property running costs.
If you run a bed and breakfast or guesthouse, providing rooms along with breakfast, cleaning and fresh linen, Making Tax Digital applies to you the same way it applies to any self-employed sole trader. This is worth being clear about, because it's genuinely different from simply letting out a property, which our landlords guide covers.
Are You Affected by MTD as a B&B or Guesthouse Owner?
Yes, if your gross trading income, plus any other self-employment income, exceeds the relevant threshold:
| Tax Year Assessed | Threshold | MTD Start Date |
|---|---|---|
| 2024–25 | Over £50,000 | 6 April 2026. Live since April 2026 |
| 2025–26 | Over £30,000 | 6 April 2027 |
| 2026–27 | Over £20,000 | 6 April 2028 |
Your gross income is your total booking income before expenses, food, laundry, and cleaning costs are all deducted afterwards, not before, when checking your threshold.
Why This Is Trading Income, Not Property Income
If you're unsure whether your setup counts as trading or property income, the level of personal service you provide is the key factor, a full cooked breakfast and daily room servicing looks like a trade; a self-check-in cottage with no services looks like property income.
What You Can Claim
| Expense Category | Examples |
|---|---|
| Breakfast and food | Ingredients and supplies for guest breakfasts |
| Laundry and linen | Washing, replacement linen, and towels |
| Cleaning | Cleaning products, or a cleaner's wages if you employ one |
| Property running costs | Heating, utilities, and maintenance for guest areas |
| Booking platform fees | Commission paid to Booking.com or similar platforms |
Records for Rooms, Breakfasts and Booking Platforms
A B&B earns from room nights, extras and breakfast, usually through Booking.com or direct bookings. This is trading income, so records follow a business pattern.
- Record gross room income from each booking source, before platform commission.
- Record the commission as a cost, not as a deduction from income.
- Keep food, laundry, cleaning and consumables as their own costs.
- Keep utilities, insurance and repairs, and apportion where part of the property is private.
- Keep furniture and refurbishment invoices with the date.
Common MTD Mistakes for B&B Owners
- Treating it as rental income. A B&B with services is usually a trade, not a property business.
- Recording the net payout. Booking commission is an expense, and the gross booking is income.
- Forgetting breakfast and extras. They add to the booking.
- Skipping private-use apportionment. If you live there, split shared costs sensibly.
- Ignoring refurbishments. Larger works need separate treatment, so keep invoices.
A Sample Quarter: What the Update Looks Like
A sample quarter for a six-room B&B at the height of the season.
| Q2: 6 July to 5 October 2026 | Amount |
|---|---|
| Direct bookings | £8,200 |
| Booking platform stays (gross) | £7,600 |
| Extras and events | £900 |
| Total income | £16,700 |
| Platform commission | £1,300 |
| Food, laundry and cleaning | £3,100 |
| Utilities and insurance | £2,400 |
| Repairs and supplies | £950 |
| Total expenses | £7,750 |
| Profit for the quarter | £8,950 |
Commission is an expense. Gross room income is what counts towards the threshold.
Worked Example
Fiona — Self-employed guesthouse owner, five rooms
Fiona's £62,000 gross booking income exceeds the £50,000 Phase 1 threshold. Platform commission is claimed separately as an expense, it isn't deducted from the gross figure used for her threshold check.
Frequently Asked Questions
Is my B&B income treated the same as a landlord's rental income?
Not usually. A genuine B&B with services, breakfast, cleaning, fresh linen, is generally treated by HMRC as a trade, reported as trading income, not as UK property income. A self-check-in let with minimal services is more likely to be treated as property income instead.
What's the MTD threshold for B&B and guesthouse owners?
The same as any self-employed sole trader: over £50,000 gross income in 2024–25 means MTD from April 2026, over £30,000 in 2025–26 means April 2027, over £20,000 in 2026–27 means April 2028.
Do I use my gross booking income or the amount after platform commission?
Your gross booking income, before any commission a booking platform deducts. The commission is then claimed back separately as a business expense.
Can I claim the cost of breakfast ingredients and laundry?
Yes, food and breakfast supplies, laundry and linen costs, and cleaning products or a cleaner's wages are all standard allowable expenses for a B&B or guesthouse business.
What software do I need as a self-employed B&B owner?
Any HMRC-recognised MTD software works. The main practical need is recording gross booking income and platform fees separately, which most hospitality-focused accounting apps handle well.
Check Your Full MTD Position
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