A practical chart of accounts for holiday lets

In short: A platform payout is not always the same as your booking income. Fees, refunds and adjustments can change the amount that reaches your bank. Your records should show how the booking charge becomes the payout and which property each cost belongs to. A small, consistent chart of accounts makes that easier — start with the categories you need for your returns and management reports, and add detail only where it helps you make a decision.

The bookkeeping is the layer everything else sits on: tax returns, VAT returns, mortgage applications, sale-price analysis, HMRC enquiries, lender reviews. This piece walks through the categories that work for a small STL business, and where the common misclassifications sit.

A compact chart of accounts

Below is a compact starting-point chart of accounts for a single-owner STL business. Property dimension (tracking category / class / project) is applied on top of each account so per-property reporting is available on the same accounts.

Each account is tagged with a property dimension so a per-property P&L can be produced without duplicating the chart of accounts per unit.

Income: check the contractual relationship, then record gross

Airbnb pays you net. Booking.com pays you net. Vrbo pays you net. The temptation to book the net payout as your income line is common. The right treatment depends on the contractual relationship in each case — for the standard disclosed-agent model that Airbnb and most Booking.com listings use, the gross booking value is the operator's turnover and the platform commission is a separate deductible expense. For merchant / reseller arrangements (see the note below) the position can differ. Where the operator is the underlying supplier and the platform is a disclosed agent, record gross booking value as income and book the platform fee as a separate expense. This gives you three things:

1. A turnover figure that matches the VAT threshold test. The threshold looks at gross turnover, not net receipts. Operators who book net commonly discover they crossed the VAT registration threshold months before they registered — see our VAT threshold piece.
2. A correct reverse-charge position on platform fees. This is the trap most generalist accountants miss. Airbnb Ireland UC and Booking.com Netherlands invoice UK hosts without UK VAT — the host is required to account for VAT on the fee under the reverse charge on their own VAT return (output VAT charged to themselves, input VAT reclaimed on the same return; net nil where fully recoverable). Airbnb only charges 20% UK VAT to hosts who have not supplied a valid VAT number. The real trap for unregistered operators: the reverse-charge value of platform fees counts towards the £90,000 VAT registration threshold, which is the single most common cause of accidental crossings we see. The chart of accounts needs a separate ledger line for platform fees and a linked VAT tag that supports the reverse-charge treatment. (See VAT Notice 741A section 5.)
3. A comparable measure of trading performance across platforms. A property that grosses well but pays high fees looks different from a property that grosses less but keeps more of the top line.

Each property gets its own class, tracking category, or dimension - depending on which accounting software you use. Xero calls it a tracking category. QuickBooks calls it a class. FreeAgent's landlord account has a property dimension built in.

Note on "always gross". Where the operator supplies the accommodation to the guest and the platform acts as a disclosed agent (Airbnb operates on this basis for most listings), the gross amount the guest paid is the operator's turnover and the platform commission is a deductible expense. Where the arrangement is a merchant / reseller model (some Booking.com corporate arrangements, some rent-to-rent structures), the amounts involved and who is the underlying supplier can be different — do not assume every platform payment can be booked identically. Check the actual supplier invoice and the contractual position. For a VAT-registered operator, the accounting turnover figure normally excludes output VAT — the numbers on a VAT-registered P&L are shown net of VAT.

A worked payout walkthrough

For a VAT-registered STL operator, taking a £600 (VAT-inclusive) Airbnb booking (agent-model, Airbnb Ireland charging reverse-charge service to a UK VAT-registered host). Assumed platform fee £75 — Airbnb's host-only fee is applied to the accommodation subtotal (net £500 × 15% = £75), not to the VAT-inclusive £600 the guest pays. Actual platform-fee bases and rates should be checked on the specific platform statement.

Net cash effect: bank up £525, income £500, expense £75, VAT position captured. The reverse-charge entry nets to nil in cash but keeps the platform-fee value in the operator's taxable turnover for VAT threshold purposes (see our VAT threshold piece).

Expenses: split cleanly by what generates them

Group STL expenses by which category of activity they arise from. A workable structure:

• Direct property costs — cleaning, laundry, key handovers, restocking. Variable with bookings.
• Property standing costs — insurance, council tax / business rates, utilities, broadband. Fixed regardless of bookings.
• Mortgage interest — booked as an expense in the P&L, but tag it separately: for individual property owners the interest is relieved only as a 20% basic-rate tax credit on the tax return, not as a deduction against income. Ltd companies deduct in full against corporation tax. The chart of accounts needs to make the treatment visible on the face of the accounts.
• Platform and marketing — Airbnb service fees, Booking.com commission, Vrbo fees, direct-booking site subscriptions, professional photography. Reverse-charge treatment applies to overseas platform invoices.
• Repairs and maintenance — separately identified from renovation / capital work.
• Replacement of domestic items — post-FHL, this is a specific tax category and needs its own line.
• Professional fees — accountancy, planning consultancy, licensing fees, and operational legal costs (tenancy disputes, employment advice, day-to-day contract work). Legal costs on acquisition and disposal (conveyancing, transfer paperwork, professional fees on the deal itself) are generally not revenue expenses — they are capital in nature and belong on the acquisition or disposal side of the CGT computation under s.38 TCGA, not deducted against income. Ask the accountant which side of the line a specific legal invoice falls on before booking it.
• Compliance — Tourism NI certificates, STL licences, Welsh register fees, English register fees when live.

Each expense line also carries a property dimension. When your P&L for a specific property tells you what you spent on cleaning last quarter versus what the same property spent the year before, you have management information. When it tells you total cleaning across the portfolio and nothing else, you do not.

Balance sheet: capital, repair or revenue?

The common bookkeeping decision on maintenance and refurbishment expenditure is whether the cost is a repair (revenue, deductible against income) or an improvement (capital, added to base cost). The distinction is not "how big is the invoice" — HMRC's guidance at PIM2030 sets out the tests. A replacement of an existing kitchen with a modern equivalent of a similar standard can qualify as a repair — modern materials can improve on old ones without turning the work into an improvement. A whole-new kitchen where none existed before, or a substantial upgrade in specification, is capital. Take advice on the specific facts rather than defaulting either way.

Capital classification for accounting purposes is not the same as CGT enhancement expenditure. Section 38 TCGA 1992 limits allowable expenditure on disposal to acquisition cost, incidental costs of acquisition and disposal, and enhancement expenditure "reflected in the state or nature of the asset at the time of the disposal". Furniture is generally not part of the property's CGT base cost — it is a separate chattel with its own CGT position. Section 39 TCGA also disallows any expenditure already deducted against income tax. Do not treat a capital ledger entry as automatically an enhancement expenditure claim; the CGT analysis is separate.

Every fixed asset should still carry acquisition date, cost, and the specific property it belongs to. This supports the eventual CGT calculation — subject to the s.38/s.39 tests actually establishing enhancement.

VAT: separate ledger, reconciled to filed returns

For VAT-registered operators, keep the VAT liability as its own balance sheet line and reconcile it to filed returns, payments and the current period at each period-end. The account does not need to be zero at each quarter-end — unpaid returns, later-period postings and adjustments can legitimately sit as a balance. What matters is that the balance reconciles cleanly.

Bank feeds: workflow choice

Whether to run each property through its own bank account is a workflow choice rather than a universal rule. Separate accounts make the reconciliation more automatic but add administrative overhead — for a two-property operator on one bank feed with clean per-transaction tagging, the same information is available. For portfolios or where multiple owners share ownership, separate accounts are often worth the extra admin.

What operators should do

1. Review your current chart of accounts against the categories above. Add per-property tagging if it is missing.
2. Move to gross booking value + separate platform-fee line rather than net-payout recognition — the VAT threshold analysis depends on it.
3. Where a repair-vs-capital decision is material, get it in writing from your accountant against the PIM2030 tests before classifying it in the books.

Book a free consultation.

Sources: HMRC — PIM2030 Deductions: repairs and renewals; HMRC — PIM3210 Replacement of Domestic Items Relief; Section 38 TCGA 1992 (allowable expenditure); Section 39 TCGA 1992 (no double deduction); HMRC — VAT Notice 700 (The VAT Guide).