If you’re renting out a property in your own name, this is a taxable activity - and you’ll need to complete a self-assessment tax return each year. There are different rules if you’re renting out property using a limited company, but we’ll focus here on individual landlords.
Rental income is subject to income tax, and the rate you pay depends on your total income across all sources. You’ll be taxed at 0%, 20%, 40% or 45%, depending on which band you fall into.
Please note that tax rules do change from time to time. Everything below is accurate at the time of writing.
Registering for Self Assessment
You must register with HMRC by 5 October following the end of the tax year in which your rental income began.
The tax year runs from 6 April one year to 5 April the next year. You need to be registered with HMRC by 5 October following the end of the tax year in which your rental started, and complete your return and pay any tax due by 31 January following the end of the tax year.
To clarify, if you started renting between 6 April 2025 and 5 April 2026, you have until January 2027 to complete your return.
If you already have a Unique Taxpayer Reference (UTR), you may not need to register again.
What Costs Can You Claim?
Firstly, it is important to distinguish between capital items and revenue items.
Capital vs Revenue Items
- Capital items (e.g. buying the property, adding an extension) cannot be deducted from rental profits, but may reduce Capital Gains Tax when you sell.
- Revenue items (e.g. repairs, insurance, agent fees) can be deducted from rental income.
Effectively a capital item is one that in purchasing it, you have increased the value of what you own. Purchasing the property itself is a capital item, as are any improvements you make to the property such as adding an extension or converting a loft.
Most other items are revenue items and can be claimed as a deduction on your tax return. These include things such as day to day maintenance, accountants fees, cleaning costs, and security costs.
Allowable Revenue Expenses
- Repairs and maintenance (not improvements)
- Landlord insurance
- Service charges and agent fees
- Cleaning and security
- Travel to inspect or repair the property
- Utilities and council tax (if vacant or paid by you)
- A realistic portion of mobile phone use for rental management
Mortgages
You can’t claim capital repayments on your mortgage, but you do get relief on the interest — although the rules have changed.
Since April 2020, mortgage interest is no longer deducted from rental profits. Instead, you receive a 20% tax credit against your overall tax bill.
If you’re a basic rate taxpayer (earning under £50,270), you won’t notice much difference. If you’re in a higher band, your tax bill may be higher than under the old system.
Jointly Owned Property
If you own a property jointly, each owner must report their share of income and expenses on your self-assessment return. HMRC assumes an equal split unless you declare otherwise.
Property Rental Allowance
If your income and expenses are small, then you may wish to claim the property rental allowance. This allows you to claim £1,000 rather than the exact costs you incur on your property rental. If your income is below this amount, then you do not need to tell HMRC about your rental and may be able to avoid completing a tax return.
Renting Part of Your Property
If you rent out part of your own home, you can claim £7,500 tax-free under the Rent a Room scheme. You also don’t have to be a homeowner to take advantage - if you’re renting you can also let out a room to a lodger, provided your lease allows you to do so.
If You Live Abroad
If you live outside the UK, you may fall under the Non-Resident Landlord Scheme. This means your tenant or managing agent may need to deduct tax from your rental income before passing it on to you.
This can affect your cash flow, and the amount deducted may be more than what you actually owe. You can apply to receive your rental income without deductions by registering with HMRC.
Selling Your Rental Property
If you sell your rental property, you may need to pay Capital Gains Tax (CGT). Since April 2020, CGT must be reported and paid within 60 days of completion.
To calculate the gain, take the sale price and deduct:
- Purchase price,
- Costs of purchase and sale (e.g. legal fees, stamp duty, estate agent fees),
- Capital improvements.
If you’ve lived in the property at any point, you may be eligible for Private Residence Relief, which can reduce the taxable portion of the gain.
Everyone has an Annual Exemption - currently £3,000 - and gains above this are taxed at 18% or 28%, depending on your income.
Further Questions
If you’re unsure about any of the above, or want help preparing your return, feel free to get in touch. We’ll be happy to talk through your situation and make sure everything is handled correctly.
All figures correct as of 20 November 2025.
