Tax on Landlords – FAQ

Being a landlord has recently become more restrictive following changes in the Renters’ Rights Act. On top of this, there are now more tax filing requirements for landlords than ever before with the introduction of Making Tax Digital for Income Tax Self-Assessment (MTD ITSA).

In this blog we answer frequently asked questions on the tax implications of being a landlord.

Q: I have started receiving rental income, do I need to do anything?

When you start receiving rental income, you are required to register for self-assessment by the following 5 October. You will need to submit a tax return including the rental income and expenses incurred to 5 April on a tax return by the following 31 January.

Q: What expenses can I claim against my rental income?

There are various expenses that can be claimed against rental income, including, but not limited to, the following:

• Letting agent fees
• Repairs and maintenance
• Insurance
• Advertising
• Ground rent and service charges
• Water rates and energy bills
• Council tax
• Accountancy
• Mileage

Q: Can mortgage interest be deducted from my rental profit?

Tax relief on mortgage interest is not deductible from rental profit, instead 20% tax relief is given on mortgage interest and other finance costs. The 20% tax relief applies to basic, higher and additional rate taxpayers.

Q: I own a rental property jointly, do we both need to include the rental profit on our tax returns?

Each owner of the property is required to include their share of the rental income and expenses on their self-assessment tax return. Their share should be based on their beneficial ownership of the property, which doesn’t necessarily need to be 50/50.

Q: I own a joint property with my spouse, but the ownership is not 50/50, is there anything we need to do?

HMRC’s default position is for jointly held properties to be treated as being held 50/50. To amend this split with HMRC, a Form 17 will need to be submitted to HMRC within 60 days, including evidence of the ownership split, such as a Deed of Trust.

Q: I have sold a property, when do I need to make HMRC aware and when do I pay the tax?

For residential properties, a Capital Gains Tax (CGT) return needs to be filed within 60 days of completion of the sale, if there is a Capital Gains Tax liability due. Payment of the liability is also due within 60 days of completion.

The CGT return will be based on an estimate of your overall income for the tax year, with the disposal then included on your tax return after the tax year.

Q: I’ve heard about Making Tax Digital (MTD) for landlords, what is this?

Under MTD, landlords are required to submit quarterly returns showing their rental income and expenses via accounting software. The start date for MTD is dependent on your combined rental and self-employment income level, as follows:

• Income above £50,000 in 2024/25, April 2026 start date
• Income above £30,000 in 2025/26, April 2027 start date
• Income above £20,000 in 2026/27, April 2028 start date

Under MTD, you will be provided with an estimate of your tax liability for the year. Payment of the tax liability for the year will still be due by 31 January/31 July as normal.

Q: If I submit MTD quarterly returns, do I still need to submit a tax return?

A tax return will still need to be submitted at the end of the tax year, as this will include all sources of income.

Q: I have been renting a property but haven’t declared this to HMRC, what can I do?

HMRC has the Let Property Campaign allowing landlords with undeclared rental income to submit a disclosure to bring their tax affairs up to date. More details on the Let Property Campaign can be found in one of our previous blogs.

Final thoughts

As shown above, tax on rental income is a complex area and professional advice should be sought. If you require assistance, please contact our Property Team at our Sevenoaks and London branches.