Tax for landlords

Renting out a property — even a single room or one flat — is taxable income, and it has its own set of rules that differ from self-employment. Here's what you can claim, and the one that catches everyone out.

If your rental income is more than £1,000 a year, you'll need to declare it. There's a £1,000 property allowance that covers you below that, similar to the trading allowance for the self-employed.

How much tax will you pay?

Your rental profit is added to your other income and taxed at the normal rates — 20%, then 40% above £50,270 — but, unlike self-employment, there's no National Insurance on rental income. Two things make property its own beast: the £1,000 property allowance above, and the way mortgage interest is now handled.

A worked example. Say you rent out a flat for £12,000 a year. After £3,000 of allowable expenses (below) your rental profit is £9,000, and you paid £4,000 in mortgage interest. As a basic-rate taxpayer:

• Income tax on the £9,000 profit at 20% = £1,800.
• Less a tax credit worth 20% of your £4,000 mortgage interest = £800 off.
• Tax due: about £1,000 — and no National Insurance.

Higher-rate taxpayers feel the mortgage-interest change most, so it's worth getting right. Our how-much-tax guide shows how the bands work.

Rental expenses you can usually claim

• Letting agent and management fees.
• Repairs and maintenance — fixing what's already there, like a broken boiler or repainting.
• Buildings and contents insurance.
• Ground rent, service charges and any council tax or utilities you pay.
• Accountancy and other professional fees.

Mortgage interest works differently now

You can no longer simply deduct mortgage interest from your rental income as an expense. Instead, you get a tax credit worth 20% of the interest. For basic-rate taxpayers the effect is broadly similar; for higher-rate taxpayers it's less generous than the old rules, so it's worth getting the calculation right.

How to file, step by step

• 1. Register with HMRC for Self Assessment for your rental income by 5 October after the tax year you started letting. You'll get a UTR (Unique Taxpayer Reference).
• 2. Keep records through the year — rent received and receipts for every property expense.
• 3. File your return online by 31 January (or on paper by 31 October). The dates that matter →
• 4. Pay what you owe by 31 January.

Making Tax Digital for landlords

Making Tax Digital is already here for landlords: since 6 April 2026 it applies if your combined property and self-employment income was over £50,000, dropping to £30,000 in April 2027 and £20,000 in April 2028. It means digital records and a short update to HMRC every quarter — 7 August, 7 November, 7 February and 7 May — plus a final declaration, instead of one annual return.

It's a big change for landlords used to one annual return — and exactly what we're built to handle.

Common questions

Do I pay National Insurance on rental income? No — rental profit is taxed at the normal income tax rates (20%, then 40% above £50,270) but there's no National Insurance on it, unlike self-employment.

How does mortgage interest relief work for landlords now? You can't deduct mortgage interest from rental income any more. Instead you get a tax credit worth 20% of the interest — broadly neutral for basic-rate taxpayers, but less generous for higher-rate.

What rental expenses can landlords claim? Letting-agent and management fees, repairs and maintenance (not improvements), buildings and contents insurance, ground rent and service charges, council tax or utilities you pay, and accountancy fees.

This guide is general information, not personal tax advice. Figures are for the 2026/27 tax year; rules, rates and allowances can change at each Budget — always confirm the current position on GOV.UK or ask us to check your situation.