MTD for Serviced Accommodation & Rent-to-Rent —
Guest Income, Landlord Rent and Your Threshold
Use gross guest payments before platform fees, landlord rent, cleaning and utilities. Deposits you return are not income.
- You do not own the property, but the guest income still counts. The test uses gross booking income before the rent you pay the landlord.
- Short-let operators providing normal landlord services are usually treated as running a property business. Hotel-style services can make it a trade. Both count towards the threshold.
- Landlord rent, platform fees, cleaning, linen and utilities are expenses. They lower your profit and are never taken off the threshold figure.
Serviced accommodation and rent-to-rent operators lease property from a landlord and let it on to guests or tenants, often through Airbnb and Booking.com. You may never own a bedroom, but the income is yours, and the Making Tax Digital threshold is measured on the gross money guests pay before the rent you owe the landlord. This guide explains how HMRC classes the income, what counts, and which records protect you when several units and platforms feed one business.
Are Serviced Accommodation Operators in MTD?
Yes, if your gross income from the units you operate (plus any other property or self-employed income) is over the threshold for the relevant tax year. The first line was £50,000, tested on your 2024–25 return:
| Tax Year Tested | Gross Income Over | MTD Start Date |
|---|---|---|
| 2024–25 | £50,000 | 6 April 2026. Live now |
| 2025–26 | £30,000 | 6 April 2027 |
| 2026–27 | £20,000 | 6 April 2028 |
Operators often assume the threshold uses profit, because landlord rent takes so much. It does not. Ten units each paying £1,200 of monthly rent can produce £150,000 of guest income while leaving a modest profit, and the £150,000 is what HMRC tests. If your units are held through a limited company, the company is outside Making Tax Digital for Income Tax.
Property Income or Trading Income?
HMRC draws a line between a property business and a trade, and operators sit near it. A person who lets accommodation and provides only the normal landlord services, such as cleaning between stays and supplying linen, is usually treated as running a property business. A person who provides hotel-style services, such as daily housekeeping, meals and a concierge, may be running a trade.
This is different from an Airbnb host who rents out their own home, covered in the Airbnb hosts guide, and from a landlord with a tenancy, covered in the landlords guide. An operator typically has a lease on the unit, not ownership, and a stream of short bookings on top.
What Counts as Income and What Does Not
| Item | Counts towards the threshold? |
|---|---|
| Nightly guest payments through Airbnb, Booking.com and Vrbo | Yes, gross amount |
| Direct bookings through your own website | Yes |
| Contractor and corporate stays | Yes |
| Cleaning fees charged to guests | Yes |
| Guaranteed rent or sourcing fees you earn from landlords | Yes |
| Security deposits you return | No |
| VAT collected on stays | No |
| Platform host fees and commission | Expense, not a deduction from income |
Platform payouts arrive net of fees, so recording only the payout understates your income. Use the platform’s earnings report to record the gross booking and the fee separately.
Landlord Rent, Setup Costs and Other Expenses
| Cost | Notes |
|---|---|
| Rent paid to the landlord | The largest cost; keep the lease and every payment |
| Utilities, council tax and broadband | Whatever you pay for each unit |
| Cleaning, laundry and linen | Per-stay cleaner invoices and linen supplies |
| Platform and channel-manager fees | Host commission and software subscriptions |
| Furnishing and setup | Tax treatment depends on the item; keep invoices |
| Repairs and maintenance | Items you pay for under the lease |
| Insurance, licences and safety checks | Contents, public liability, gas and electrical certificates |
Setup spending needs care. Furniture, appliances and refurbishment can be treated differently from running costs, so keep every receipt and ask your accountant how each is treated before you enter it as an expense.
Keeping Records Across Several Units and Platforms
The risk for operators is losing track of which unit earned and cost what. Keep one record per unit if you can, and a single overall business record that totals them.
- Download the platform earnings report each month and record gross bookings, fees and payouts as separate lines.
- Record each unit’s rent and bills against that unit, so you can see which are profitable.
- Keep the lease, guarantor paperwork and any landlord correspondence with your records.
- Record cleaners as expenses with an invoice each time, or a monthly statement if they invoice monthly.
| Update | Period (standard) | Deadline | 2026–27 |
|---|---|---|---|
| Q1 | 6 Apr – 5 Jul 2026 | 7 Aug 2026 | No points if late |
| Q2 | 6 Jul – 5 Oct 2026 | 7 Nov 2026 | No points if late |
| Q3 | 6 Oct 2026 – 5 Jan 2027 | 7 Feb 2027 | No points if late |
| Q4 | 6 Jan – 5 Apr 2027 | 7 May 2027 | No points if late |
No penalty points apply to late quarterly updates this tax year. From 6 April 2027 a point is added for every update missed, and reaching four triggers a £200 fixed penalty. HMRC started signing up eligible customers in September 2026, so do not wait for a letter. See the registration guide and the software comparison.
Worked Example
Marcus, operating six leased units for short stays
Marcus keeps roughly £19,000 after landlord rent, fees, cleaning and utilities, but his threshold figure is the £84,200 of gross guest income. He has been in MTD since April 2026, and he needs to ask his accountant whether his income is property or trading.
Frequently Asked Questions
Do serviced accommodation operators have to use Making Tax Digital?
If your gross booking income plus any other property or self-employed income was over £50,000 in 2024–25, yes, from 6 April 2026. Over £30,000 in 2025–26 means April 2027, and over £20,000 in 2026–27 means April 2028.
Does the landlord rent I pay reduce the threshold figure?
No. The threshold is tested on the gross income guests pay you. Landlord rent, fees and cleaning are expenses that reduce your profit, not the figure compared with the threshold.
Is rent-to-rent income property income or trading income?
It depends on the services you provide. Normal landlord services usually point to a property business, while hotel-style services can make it a trade. Both count toward the threshold, and your accountant should confirm which applies.
What if my units are in a limited company?
The company is outside Making Tax Digital for Income Tax. Dividends are not qualifying income, but any separate property or self-employed income in your own name still counts.
Do I record the gross booking or the platform payout?
Record the gross booking as income and the platform fee as an expense. The payout is already net of fees, so using it alone understates your income.
Do I need one record per property?
You should be able to see income and costs per unit, but quarterly updates are sent for the business as a whole. Good software lets you tag each unit and total them for the update.
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