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Taxes for landlords



As a landlord, you are required to notify HMRC if you let a property and you then pay tax on any profit made from it - if you don't you could face fines and interest. But what happens after you have registered with HMRC? What do you need to do to be able to report your rental income to HMRC?



Once you have registered as a landlord, HMRC should start to send you self assessment tax returns. These are due to be filed by 31st January following the end of the tax year. Within the tax return is a section for rental income. This is where you will need to record all of your property income and expenses, calculate your net income, and calculate the tax you need to pay on this income. If a property is owned jointly then the figures get divided between the legal owners, with each of you declaring your share individually on your own tax returns. 



So what income and expenses do you need to include on the tax return?


The income side is relatively easy - this is usually the total of all gross rents (so before any management fees) received for the property during the tax year. As for the expenses, there are a range of 'allowable expenses' that you can deduct from your income. These may include the following types of expenses that you have been charged in relation to your rental property:


  • letting agent fees

  • buildings and contents insurance and landlord insurance

  • ground rents and service charges

  • utility bills such as gas, electricity and water

  • council tax

  • any direct costs of letting the property such as advertising

  • property maintenance and repairs

  • accountants fees


A word of caution in relation to property repairs as this is a key area that HMRC may scrutinise. The general rule of thumb is that repairs to the property are allowable but any improvement expenditure is not. Don't worry, you can claim relief for improvements when the property is sold so still keep those receipts! As for what counts as an improvement, the cost has to be for a genuine upgrade. For example, replacing a single glazed window with a double-glazed window would count as repairs not improvement as you are merely replacing the windows with the modern equivalent. Other examples of typical repairs include:


  • repairing electrical faults

  • repairing internal and external walls, roofs or floors

  • repainting and redecorating the property to restore it to its original condition

  • replacing existing fixtures and fittings such as radiators, boilers, bathroom suites and kitchens


Some of you may be asking why mortgage costs aren't included on these lists of expenses? Mortgage costs for the rental property can be claimed but there are limitations. Landlords can only claim for relief on the interest element of their mortgage. If the mortgage covers more than just the rental property, then the interest will need apportioning. In addition, the relief that can be claimed is restricted to the basic rate of 20% and is capped at the value of your rental profit, with any excess being carried forward to future years. 



The future of landlord taxes


Some of you may already have heard about Making Tax Digital (MTD). This is a government drive to make tax returns online and more 'real time'. It has already happened for VAT returns and the next phase to be introduced will affect landlords. 



Following delays, Making Tax Digital for Income Tax and Self Assessment (MTD for ITSA) is now due to commence in April 2026. For landlords, this means that if you have property income (and it is your gross income not your net profit) 


above £50,000 per year then you will be subject to the new MTD for ITSA. 



From 6th April 2026, landlords under MTD for ITSA will need to send a quarterly summary of their income and expenses to HMRC using MTD compatible software. HMRC will then provide an estimated tax calculation based on this information to help budget for their rental tax. At the end of the tax year, any non-rental information will be submitted via the MTD software to finalise the tax affairs. This will replace the need for the self assessment tax return. 



Need help?


We have years of experience in helping a range of landlords from new landlords starting out with a single property, to experienced landlords with a large portfolio of properties. Please get in touch to see how we can help you. Call us on 0115 956 9452 or email info@marshallsmalley.com

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