Landlord tax basics: rental income, expenses and dates
By TenancyDesk · Sources checked
Rental profit is taxed as income. The first £1,000 is tax-free under the property allowance, and you must file a Self Assessment return if your rent is over £10,000 before expenses or £2,500 after them. You deduct day-to-day running costs but not improvements. Mortgage interest gives a 20% tax credit, and from 6 April 2027 property income has its own rates: 22%, 42% and 47%.
- Tax-free
- First £1,000 of rental income (property allowance)
- Must file if
- Over £10,000 before expenses or £2,500 after
- Register by
- 5 October after the tax year with rental income
- Mortgage interest
- Tax credit at the basic rate, 20%
- From 6 April 2027
- Property rates of 22%, 42% and 47%
- Selling
- Report and pay Capital Gains Tax within 60 days
How is rental income taxed?
If you own a let property in your own name, the profit is added to your other income and taxed at your Income Tax rates. GOV.UK says you work out the profit or loss for all your lettings together as a single business: add up all the rent, add up all the allowable expenses, and take one from the other. Rental income includes the rent itself and any payments for furniture or services you provide, such as cleaning communal areas, heating or hot water.
A property owned by a company is taxed differently: the rent is counted like any other business income and the company pays Corporation Tax. This guide is about landlords who own property personally.
Sources: GOV.UK: renting out your property, paying tax and National Insurance · GOV.UK (HMRC): work out your rental income when you let property
The £1,000 allowance and when you must file
The first £1,000 of rental income each year is tax-free. This is the property allowance. If you claim it, GOV.UK says you cannot also deduct your expenses, so it suits landlords whose costs are small.
You must report rental income on a Self Assessment tax return if it is more than £2,500 after allowable expenses, or more than £10,000 before them. Between £1,000 and £2,500, GOV.UK says to contact HMRC. If you do not normally send a tax return, you must register by 5 October after the end of the tax year in which you had the income.
Higher-income landlords are now also within Making Tax Digital: since 6 April 2026 anyone with more than £50,000 of rent and self-employment income keeps digital records and sends quarterly updates, and the threshold falls to £30,000 in April 2027.
Sources: GOV.UK: renting out your property, paying tax and National Insurance
What expenses can a landlord claim?
Allowable expenses are the costs of running the property day to day. HMRC’s list includes repairs and maintenance, water rates, council tax, gas and electricity you pay, landlord insurance, cleaners and gardeners, letting agent and management fees, legal fees for lets of a year or less, accountant’s fees, ground rent and service charges, and direct costs such as phone calls, stationery and advertising for tenants.
Compliance costs are running costs too. The gas safety check, the EICR and the EPC are part of letting a home lawfully. GOV.UK also says the £65 landlord register fee is tax-deductible; see our landlord database guide.
- Repairs and maintenance, but not improvements.
- Letting agent and management fees.
- Landlord insurance: buildings, contents, public liability.
- Council tax, water, gas and electricity, when you pay them.
- Ground rent and service charges.
- Accountant’s fees, and legal fees for lets of a year or less.
- Cleaning, gardening and other services you pay for.
- Advertising, phone calls and stationery for the letting.
Sources: GOV.UK (HMRC): work out your rental income when you let property · GOV.UK: renting out your property, paying tax and National Insurance · GOV.UK: Register your rental property service, guidance for landlords
Repairs or improvements: the capital rule
HMRC treats a cost as capital, and not allowable against rent, when you add something the property did not have before, alter or upgrade something that was there, or buy furnishings and equipment for the property. Replacing a broken boiler with a similar one is a repair. Building an extension is capital. Capital costs may reduce Capital Gains Tax when you sell instead.
Replacing furniture and household items has its own relief. Replacement of domestic items relief lets you deduct the cost of replacing items such as beds, wardrobes, curtains, carpets, fridges, crockery and cutlery, as long as the new item is for the tenant’s use and the old one is no longer used in the property. The first purchase of an item for a new let does not qualify.
Sources: GOV.UK (HMRC): work out your rental income when you let property · GOV.UK: renting out your property, paying tax and National Insurance
Mortgage interest and finance costs
An individual landlord cannot deduct mortgage interest from rental income as an expense. Since 6 April 2020, HMRC has given relief on residential finance costs as a tax reduction at the basic rate of 20% instead. A higher-rate taxpayer therefore pays tax on rent before interest and gets 20% of the interest back, rather than 40%.
Companies are treated differently: GOV.UK says a company paying Corporation Tax can claim interest on property loans as an allowable expense.
Sources: GOV.UK (HMRC): work out your rental income when you let property · GOV.UK: renting out your property, paying tax and National Insurance
New property income tax rates from April 2027
The government is creating separate Income Tax rates for property income, in the way savings and dividends already have their own. From 6 April 2027 the property basic rate will be 22%, the property higher rate 42% and the property additional rate 47%, each two points above the main rates. The relief on finance costs will be given at the property basic rate of 22%.
For a landlord, the practical effect is that the same rental profit costs two percentage points more tax from the 2027 to 2028 tax year, and the mortgage interest tax credit rises from 20% to 22%.
Sources: GOV.UK (HMRC): changes to tax rates for property, savings and dividend income
Losses, selling a property and National Insurance
If your expenses exceed your rent, GOV.UK says you can carry the loss forward and set it against future profits of the same property business. When you sell a let property that is not your home, you may owe Capital Gains Tax, and on most sales of UK residential property you must report and pay it within 60 days.
Rental income does not usually carry National Insurance. GOV.UK says you may be able to pay voluntary Class 2 contributions if being a landlord counts as gainful employment, for example if it is your main job or you let more than one property, or voluntary Class 3 contributions otherwise, to protect your State Pension.
Sources: GOV.UK: renting out your property, paying tax and National Insurance · GOV.UK: tax when you sell property
Common questions
Do I pay tax on rental income in the UK?
Yes, on the profit after allowable expenses, at your Income Tax rates. The first £1,000 of rental income is tax-free under the property allowance. You must file a Self Assessment return if your rent is over £10,000 before expenses or over £2,500 after them, registering by 5 October after the tax year.
Can landlords claim mortgage interest?
Not as an expense, if you own the property personally. Instead HMRC gives a tax reduction of 20% of your residential finance costs. From 6 April 2027 that reduction rises to 22%, matching the new property basic rate. Companies can still deduct interest as an expense.
What are the new landlord tax rates in 2027?
From 6 April 2027 property income will have its own Income Tax rates: 22% at the property basic rate, 42% at the property higher rate and 47% at the property additional rate. That is two points above the main rates. Finance cost relief will be given at 22%.
Is the landlord register fee tax-deductible?
Yes. GOV.UK’s guidance on the ‘Register your rental property’ service says the £65 annual fee per property is tax-deductible and not subject to VAT, and tells landlords to check HMRC’s guidance when completing their return.
Can I claim for a new kitchen?
It depends. Replacing a worn kitchen with a similar one is usually a repair and can be claimed. Upgrading it, or fitting a kitchen where there was none, is a capital cost and cannot be set against rent, though it may reduce Capital Gains Tax when you sell. HMRC’s guidance explains the line.
Official sources and scope
Checked on 11 November 2026. This is general information for private landlords in England, not legal advice or a complete compliance assessment. Follow the current official guidance for your tenancy and get advice about exceptions, missed deadlines or disputes.
- GOV.UK: renting out your property, paying tax and National Insurance
- GOV.UK (HMRC): work out your rental income when you let property
- GOV.UK (HMRC): changes to tax rates for property, savings and dividend income
- GOV.UK: tax when you sell property
- GOV.UK: Register your rental property service, guidance for landlords
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