Tax Return for Landlords UK — Rental Income, Allowable Costs & Deadlines
Renting out a property creates a tax return duty — and for many landlords it is the first time they ever have to deal with HMRC directly. This tax return for landlords UK guide explains how rental income is taxed, what you can claim, how mortgage interest now works, and the deadlines you must not miss.
Who has to tell HMRC about rental income?
It depends on how much you make. HMRC uses three bands:
| Rental income | What to do |
|---|---|
| Gross rent of £1,000 or less in the tax year | Tax-free under the property allowance — you do not need to tell HMRC or file a return for that income |
| Profit of £1,001 to £2,500 | Tell HMRC — the tax can often be collected through your tax code, with no full return needed |
| Profit over £2,500, or gross rent of £10,000 or more | You must register for Self Assessment and file a tax return |
The £1,000 property allowance is the simplest route for small-scale landlords. If your gross rental income is £1,000 or less in the tax year, it is tax-free and does not need reporting. But if you claim it, you cannot also deduct expenses — so if your expenses are higher than £1,000, claim your actual expenses instead. You cannot claim both.
You must tell HMRC by 5 October following the end of the tax year in which you first became a landlord. The tax year runs from 6 April to 5 April the following year, so if you first let a property in 2025/26, the deadline to notify HMRC is 5 October 2026.
How rental profit is worked out
You are not taxed on the rent you collect. You are taxed on your rental profit:
Rental profit = rent received − allowable expenses
That profit is added to your other income — your salary, pension, or self-employment profit — and taxed at your normal Income Tax rates: 20% basic rate, 40% higher rate, or 45% additional rate, after your Personal Allowance of £12,570. Because the incomes stack together, rental profit can push you into a higher tax band.
Allowable expenses — what you can deduct
You can deduct the day-to-day costs of running your rental property:
- Repairs and maintenance — fixing a broken boiler, repainting between tenants, repairing a leaking roof. The work must restore the property to its previous condition, not improve it.
- Letting agent fees — the commission and management fees you pay to your agent.
- Insurance — buildings and contents insurance for the let property, and landlord liability cover.
- Ground rent and service charges — on leasehold flats, these are deductible.
- Legal fees — for lets of a year or less, and for renewing a tenancy. Legal fees for buying the property are not deductible.
- Council tax and utility bills — but only if you pay them yourself, for example when the property is empty between tenants or the tenancy includes bills.
- Other running costs — cleaning, gardening, advertising for tenants, accountancy fees for preparing your rental accounts, and the cost of travelling to the property for genuine management purposes.
Keep receipts and invoices for everything. If HMRC asks, you need to show the expense was real and wholly for the rental business.
What is NOT allowable
- Capital improvements — building an extension, converting a loft, or replacing a kitchen with a much better one. These add value rather than restore the property. They are not deductible against rental income, though they may reduce your Capital Gains Tax bill when you sell.
- Personal costs — anything that is not for the rental business.
- Mortgage interest as a deduction — see the next section. You cannot deduct it from your rent any more.
- The cost of buying the property — including stamp duty and conveyancing fees. These are capital costs, not running costs.
Mortgage interest and the 20% tax credit
This is the change that catches most landlords out. Since April 2020, under the rules known as Section 24, individual landlords cannot deduct mortgage interest (or other finance costs, such as arrangement fees) from their rental income. Instead, you get a 20% basic-rate tax credit on your finance costs. The credit reduces your tax bill, but it is worth less than a full deduction for higher-rate taxpayers, and it does not reduce your total income — so it can still push you into a higher tax band.
Worked example — how the numbers actually work
Sarah lets a flat for £20,000 a year. Her other allowable expenses (repairs, agent fees, insurance) come to £5,000. She pays £12,000 a year in mortgage interest.
| Step | Calculation | Amount |
|---|---|---|
| Rent received | £20,000 | |
| Less allowable expenses (excluding interest) | £20,000 − £5,000 | £15,000 rental profit |
| Tax at 20% basic rate | 20% × £15,000 | £3,000 |
| Less 20% tax credit on mortgage interest | 20% × £12,000 | −£2,400 |
| Tax due on the rent | £600 |
Notice that the £12,000 of mortgage interest is never deducted from the rent. It only comes back as a £2,400 credit at the end. If Sarah were a higher-rate taxpayer, the same £15,000 profit would be taxed at 40% (£6,000), with the same £2,400 credit — leaving £3,600 to pay. The credit is always 20%, whatever your tax rate.
Limited companies are not affected by Section 24 — a company can still deduct mortgage interest in full. That is one reason some landlords hold property through a company, though it brings its own costs and tax rules, so take advice before making that switch.
Renting a room in your own home
If you let a furnished room in the home you live in, the Rent a Room Scheme may cover you instead. The first £7,500 a year is tax-free, and the exemption is automatic if your gross receipts are below that limit — you do not need to tell HMRC. The limit is halved to £3,750 if the income is shared with someone else. If you earn more than £7,500, you must file a tax return and choose between paying tax on the excess over £7,500 (with no expenses deducted) or on your actual profit after expenses. The scheme only applies to your own home — a separate buy-to-let does not qualify.
Joint ownership
If you own a rental property jointly — with a spouse, partner, or another person — the rental profit is normally split in the same proportions as the ownership, and each owner declares their share on their own tax return. Married couples and civil partners who own property jointly are taxed 50/50 by default, unless they make a formal election to HMRC to split it differently.
Furnished holiday lets
The Furnished Holiday Lettings regime was abolished from 6 April 2025. Holiday lets are now taxed like any other rental property: the same rules on allowable expenses, the same 20% mortgage interest credit, and no special capital allowances. If you let a holiday home, make sure you are not still following the old holiday-let rules.
Making Tax Digital for landlords
Landlords are being brought into Making Tax Digital for Income Tax. From 6 April 2026 it applies to landlords with qualifying income over £50,000 a year, from 6 April 2027 over £30,000, and from 6 April 2028 over £20,000. That means keeping digital records in compatible software and sending HMRC quarterly updates, plus a final return by 31 January. If your rental income is near one of those thresholds, start planning now.
The property pages — SA105
Rental income goes on the SA105 supplementary pages of your Self Assessment return. You complete one SA105 for all your UK properties together, listing total rent received and total allowable expenses, then the profit (or loss) feeds into your main return — that is how this tax return for landlords UK is filed.
Selling a rental property
When you sell a rental property, the gain is subject to Capital Gains Tax at 18% (basic-rate taxpayers) or 24% (higher-rate taxpayers), with a £3,000 annual exempt amount. You must report the sale to HMRC and pay any tax due within 60 days of completion — you cannot wait until your next tax return. Keep records of what you paid for the property and any capital improvements, because they reduce the gain.
What to check now
- Add up your gross rent and your expenses for the tax year — is your profit over £2,500, or your gross rent over £10,000?
- If this is your first year as a landlord, have you told HMRC by 5 October?
- Are you claiming the £1,000 property allowance or your actual expenses — whichever is worth more?
- Have you separated mortgage interest from your other expenses, so the 20% credit is calculated correctly?
- Is your rental income over £50,000? If so, Making Tax Digital applies from 6 April 2026.
Frequently asked questions
How much rental income can I earn before paying tax?
The first £1,000 of gross rental income is tax-free under the property allowance. Above that, your rental profit is taxed at your normal Income Tax rates after your £12,570 Personal Allowance, and this tax return for landlords UK is how you report it.
Can I deduct my mortgage interest from my rent?
No — not since April 2020. Individual landlords get a 20% basic-rate tax credit on their finance costs instead of deducting the interest.
What is the deadline for a landlord’s tax return?
The same as everyone else: this tax return for landlords UK is due 31 January after the tax year ends. The 2025/26 return is due by 31 January 2027.
What if my rental property makes a loss?
A loss is not wasted — it can be carried forward and set against future rental profits. You cannot set it against your salary or other non-rental income, and you still need to report it on this tax return for landlords UK so the loss is recorded.
What happens if I sell my rental property?
You pay Capital Gains Tax at 18% or 24% on the gain, after your £3,000 annual exempt amount, and you must report the sale to HMRC within 60 days of completion.
This article gives general information about UK tax, not personal financial or tax advice. Tax rules can change, and your situation may be different. Check GOV.UK or speak to a qualified accountant before you act.
