If you receive income from renting out property in the UK, you are almost certainly required to declare it to HMRC through a self assessment tax return. This guide explains exactly how to do that, which expenses you can offset, what relief is available, and where landlords commonly go wrong. Whether you rent out a single buy-to-let flat or several properties, the rules apply to you.
- Who needs to declare rental income
- Registering with HMRC for self assessment
- What counts as rental income
- Allowable expenses landlords can claim
- Mortgage interest relief and Section 24
- Rent a Room Relief
- The £1,000 property allowance
- Completing the property pages on your tax return
- Making Tax Digital for landlords
- Record keeping for landlords
- Frequently asked questions
Who needs to declare rental income
You must declare rental income if you receive more than £1,000 in total property income during the tax year. This threshold is the gross figure — before any expenses are deducted. If your rental income is below £1,000, the property allowance covers it and you do not need to report it (more on that below).
The requirement applies to:
- Buy-to-let landlords with residential properties
- Landlords renting out commercial property
- People who rent out a room in their home (unless fully covered by Rent a Room Relief)
- Landlords with furnished holiday lettings
- Anyone receiving income from land
If you already complete a self assessment tax return for other reasons — such as being self-employed — you simply add the property pages to your existing return. If you are a landlord and rental income is your only reason for filing, you will need to register separately.
Registering with HMRC for self assessment
If you have not filed a self assessment return before, you must register with HMRC. Do this by 5 October following the end of the tax year in which you first received rental income. So if you started letting a property in the 2024/25 tax year, you needed to register by 5 October 2025.
You can register online through HMRC’s website. Once registered, HMRC will issue you a Unique Taxpayer Reference (UTR), which you need to file your return. The deadline to file online and pay any tax owed is 31 January following the end of the tax year.
Missing these deadlines triggers automatic penalties, so act quickly if you have let a property and have not yet told HMRC.
What counts as rental income
Rental income is not just the rent your tenant pays each month. HMRC expects you to include all amounts you receive in connection with the property, including:
- Monthly or weekly rent
- Advance rent payments
- Non-refundable deposits
- Payments for the use of furniture
- Charges for services such as cleaning or gardening that you provide
Refundable tenancy deposits held in a government-approved scheme are not income unless you keep part or all of the deposit at the end of a tenancy, at which point the retained amount becomes taxable.
Allowable expenses landlords can claim
You can reduce your taxable rental profit by deducting allowable expenses. These must be costs you have incurred wholly and exclusively for the purpose of renting out the property.
Common allowable expenses
- Letting agent fees and management charges
- Buildings and contents insurance
- Repairs and maintenance (not improvements)
- Utility bills you pay on behalf of tenants
- Council tax while the property is empty between tenancies
- Accountancy fees for preparing your rental accounts
- Advertising costs to find tenants
- Ground rent and service charges
- Legal fees for tenancy agreements (not for buying or selling the property)
What you cannot claim
You cannot claim for capital expenditure — work that improves the property rather than simply restoring it to its original condition. Replacing a broken boiler like-for-like is a repair. Upgrading to a far superior boiler and extending the heating system is likely to include a capital element. Keep this distinction in mind when categorising costs.
Personal costs, private use portions, and fines are also not allowable.
Good bookkeeping makes it far easier to identify and claim every allowable expense without including anything that HMRC would reject.
Mortgage interest relief and Section 24
This is one of the most significant tax changes to affect residential landlords in recent years. Since April 2020, landlords can no longer deduct mortgage interest directly from their rental income to calculate their taxable profit.
Instead, you receive a tax credit worth 20% of your mortgage interest costs. This credit is set against your tax bill, not your income. The practical effect is that higher-rate and additional-rate taxpayers face a larger tax bill than they did under the old rules.
A worked example
Say your rental income is £18,000 per year and your mortgage interest is £8,000. Under the current rules, your taxable profit is £18,000 (minus other allowable expenses). You then receive a 20% tax credit on the £8,000 interest, which is £1,600, deducted from your final tax bill.
If you are a higher-rate taxpayer paying 40% income tax in 2026/27, you pay tax on the full rental profit but receive only a 20% credit — meaning the effective tax relief on your mortgage interest is halved compared to the pre-2020 position.
This rule applies to residential properties only. Commercial property landlords and furnished holiday letting landlords (under transitional rules) may have different treatment — check the latest HMRC guidance for your situation.
Rent a Room Relief
If you rent out a furnished room in your own home, you may qualify for Rent a Room Relief. In 2026/27, the threshold is £7,500 per year (check the latest HMRC guidance to confirm this figure remains unchanged). If your gross income from the room is below this threshold, you do not need to pay tax on it or report it.
If your income exceeds the threshold, you have two options: pay tax on everything above £7,500, or opt out of the scheme and instead deduct actual expenses in the normal way. It is worth doing the maths both ways before choosing.
The relief only applies if you are letting part of your main home. It does not apply if you have moved out of the property.
The £1,000 property allowance
Every individual has a £1,000 property allowance. If your total gross rental income is £1,000 or less, it is completely tax-free and you do not need to report it.
If your income exceeds £1,000, you can choose to deduct the £1,000 allowance instead of your actual expenses — but only if the allowance is more beneficial. In most cases where landlords have genuine costs such as letting fees, insurance, and repairs, actual expenses will be higher than £1,000 and the standard deduction route is preferable.
You cannot claim both the property allowance and actual expenses. You pick one method for the tax year.
Completing the property pages on your tax return
When you complete your self assessment return, you need to include the UK property supplementary pages (SA105). This is where you declare all rental income and expenses.
Key sections of SA105
- Total rents and other income: enter gross rental income received in the tax year
- Allowable expenses: broken down by category including repairs, insurance, legal and professional fees, and other costs
- Mortgage interest: enter the full amount here — it feeds into the 20% tax credit calculation automatically
- Rent a Room income: there is a separate box if you are using this relief
- Losses: if your expenses exceed your income, you have a property loss that can be carried forward to future years
If you have both furnished holiday lettings and standard residential lettings, these are reported separately because they are treated differently for tax purposes. Be careful not to mix them up.
Joint ownership
If you own a property jointly with a spouse or civil partner, income is normally split 50/50 for tax purposes, regardless of who paid for what. If you own the property in unequal shares and want the income split accordingly, you must complete a Form 17 and submit a deed of trust to HMRC before the split takes effect.
For properties jointly owned with someone other than a spouse or civil partner, income is split according to actual ownership shares.
Making Tax Digital for landlords
From April 2026, Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will apply to self-employed individuals and landlords with total income over £50,000. This means quarterly digital reporting to HMRC using compatible software, rather than one annual tax return.
The threshold drops to £30,000 from April 2027, with further rollout planned after that.
If you are a landlord with rental income approaching or exceeding £50,000, now is the time to start using compatible software and getting comfortable with digital record keeping. Waiting until April 2026 gives you very little room to adapt.
Record keeping for landlords
HMRC can enquire into your tax return for up to four years from the filing date in normal circumstances, and up to six years if they suspect careless errors. Keep thorough records for at least six years.
At a minimum, keep:
- Tenancy agreements and rent schedules
- Bank statements showing rent received
- Receipts and invoices for all expenses
- Mortgage statements showing interest charged
- Records of any capital expenditure on the property
- Correspondence with letting agents
A spreadsheet works for some landlords with one or two properties. If you manage several properties, dedicated software or Xero training to set up a proper cloud accounting system will save you significant time and reduce the risk of errors at tax return time.
Good records also make it much easier to claim capital gains tax reliefs when you eventually sell a property — so the effort pays off in more than one way.
Penalties and what happens if you do not declare
HMRC has access to Land Registry data, letting agent records, and information from other sources. They run campaigns specifically targeting landlords who have not declared rental income. If HMRC contacts you before you disclose, penalties are significantly higher than if you come forward voluntarily through the Let Property Campaign.
Penalties for undeclared rental income range from 0% (for unprompted voluntary disclosure of a genuine mistake) up to 100% of the tax owed for deliberate concealment. Interest is charged on top of any unpaid tax.
If you have missed years of rental income, take professional advice and make a voluntary disclosure as soon as possible. The cost of putting it right now is almost always lower than the cost of waiting for HMRC to find it.
If you need help getting your rental income correctly reported, or you want someone to handle your self assessment return on your behalf, NDCA works with landlords across the UK to make sure their returns are accurate, filed on time, and tax-efficient.
Frequently asked questions
Do I need to declare rental income if I make a loss?
Yes. Even if your expenses exceed your rental income and you have made a property loss, you should still complete the property pages on your self assessment return. Declaring the loss allows you to carry it forward and offset it against future rental profits, which reduces your tax bill in later years.
How much rental income can I earn before paying tax?
In 2026/27, the personal allowance is £12,570. If rental income is your only income, you will not pay tax until your net rental profit exceeds this amount. However, if you have other income such as employment income, your personal allowance may already be fully used, meaning rental profit is taxed from the first pound.
Do I pay tax on rental income if the property is in my partner’s name?
Tax follows ownership. If the property is solely in your partner’s name, the rental income belongs to them and they must declare it. If it is jointly owned, income is split — usually 50/50 between spouses and civil partners, or according to actual ownership shares for others.
Can I claim for the time I spend managing my properties?
No. HMRC does not allow a deduction for your own time spent managing properties. You can claim for professional letting agents or property managers you pay, but not for your own labour.
What is the deadline for paying tax on rental income?
For the 2026/27 tax year, the deadline to file your self assessment return online and pay any tax owed is 31 January 2027. If your tax bill is over £1,000, you will also need to make payments on account — advance payments towards the following year’s tax bill, due on 31 January and 31 July.
Does rental income affect my tax code if I am employed?
It can. HMRC may adjust your PAYE tax code to collect tax on smaller amounts of rental profit through your employer’s payroll, rather than requiring a self assessment return. However, if your rental income is substantial or your affairs are complex, filing a return is likely the cleaner option.
Areas we cover
NDCA works with clients across the following regions. If you’re based in one of these areas, our team can help with the accounting issues covered in this article.
