If you receive rental income in the UK, HMRC requires you to declare it — even if you make a loss. This guide covers everything individual landlords need to know: allowable expenses, the £1,000 property allowance, Rent-a-Room relief, the Section 24 mortgage interest restriction, and how to file. Part of our property and land tax hub.
All thresholds and rates sourced from HMRC's published guidance for the 2026/27 tax year.
Per HMRC's published property income guidance on GOV.UK, rental income from UK property is taxable as part of your total income — taxed at the same rates as employment income (20%, 40%, or 45% depending on your income band). It must be declared even if you make a loss in a given year, as losses can be carried forward to offset future rental profits.
Rental profit is calculated as your total rental receipts minus allowable property expenses — not as a flat percentage of gross income. Per HMRC's guidance, you must register for Self Assessment and file a tax return if your gross rental income (before any expenses) exceeds £10,000 per year, or your taxable rental profit (after expenses) exceeds £2,500.
HMRC's complete guidance on declaring rental income, calculating rental profit, and filing your return is published at GOV.UK: Income Tax when you rent out a property.
If you have received a nudge letter from HMRC about undeclared rental income, see our dedicated HMRC nudge letters and compliance checks guide for exactly what to do.
Per HMRC's published guidance, the property allowance is a £1,000 tax-free amount for individuals with rental income. Here's how it works:
Per HMRC's guidance, the property allowance can reduce your taxable rental profit to zero — but it cannot create a tax loss that carries forward. If you want to use a genuine rental loss to offset future profits, you must claim actual expenses rather than the flat allowance.
Use our property tax calculator to compare the allowance versus actual expenses approach for your rental income, or ask our AI Tax Assistant to model it for your specific figures.
Per HMRC's published property income guidance, the following expenses are allowable deductions from rental income (provided they are wholly and exclusively incurred for the rental business):
Per HMRC's published guidance, you cannot deduct the cost of improving a property from rental income — only the cost of repairing it. Replacing a broken boiler like-for-like is a repair (deductible). Installing a premium new kitchen where a basic one existed before is an improvement (capital expenditure — not deductible from rental income, but can reduce CGT on eventual sale). HMRC's Connect system actively screens landlord expense claims for anomalies in this area.
Per HMRC's published guidance, Section 24 of the Finance Act 2015 fundamentally changed how individual landlords are taxed on mortgage interest. Since 6 April 2020, individual (unincorporated) landlords can no longer deduct mortgage interest directly from rental income. Instead, they receive a 20% basic-rate tax credit on their total finance costs.
Before Section 24, this landlord would have declared: £18,000 − £3,000 expenses − £10,000 interest = £5,000 taxable profit, tax at 40% = £2,000. Section 24 doubles their tax bill on this rental property from £2,000 to £4,000.
For landlords whose total income (including the grossed-up rental profit) stays within the basic rate band, Section 24 has minimal cash impact — the 20% credit matches the 20% tax on the finance costs. However, because Section 24 requires you to include the full (grossed-up) rental income before expenses in your total income calculation, it can push your adjusted net income above the £100,000 personal allowance taper — potentially creating a much higher effective marginal rate on unrelated income.
Limited companies are not subject to Section 24 and can still deduct mortgage interest in full as a business expense. For a detailed breakdown of whether incorporation makes sense for your portfolio — including the SDLT and CGT costs of transferring properties — see our Section 24 and property incorporation guide.
Per HMRC's published guidance, the Rent-a-Room Scheme allows individuals to receive up to £7,500 per year tax-free from letting a furnished room in their own home. This is a per-person allowance — if you share the income with a partner, each of you gets a £3,750 allowance (combined £7,500).
This is the most common Rent-a-Room misconception. The scheme only applies when you live in the property alongside your lodger. If you rent out the whole property — even on a short-term basis through Airbnb — while you are not there, the scheme does not apply. All income above the £1,000 property allowance is taxable. HMRC's platform reporting data from Airbnb and similar services is being used to identify exactly this situation.
Per HMRC's published guidance, rental income is declared via Self Assessment. You complete the supplementary SA105 property pages as part of your annual tax return. Key dates for 2026/27:
| Deadline | What it covers |
|---|---|
| 5 October 2026 | Register for Self Assessment for the 2025/26 tax year if you haven't done so already |
| 31 October 2026 | Paper Self Assessment return deadline for 2025/26 |
| 31 January 2027 | Online Self Assessment return and payment deadline for 2025/26 · Most important date |
| 31 July 2027 | Second payment on account for 2026/27 (if applicable) |
Source: HMRC GOV.UK — Self Assessment tax returns. Dates based on standard 5 April tax year end.
Per HMRC's guidance, if your Self Assessment tax bill exceeds £1,000 and less than 80% of your tax is collected at source (e.g. through PAYE), HMRC requires you to make two "payments on account" — advance payments towards next year's tax bill — due 31 January and 31 July. New landlords who receive a large first-year bill are often caught out by the requirement to pay 150% of that year's liability in total on 31 January (the current year's bill plus the first payment on account).
Per HMRC's published MTD guidance, Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) requires landlords above certain gross income thresholds to keep digital records and submit quarterly updates to HMRC instead of filing a single annual return. The phased rollout means:
Full MTD for Income Tax guidance, approved software list, and registration process are at GOV.UK: Making Tax Digital for Income Tax.
If you have received an MTD non-registration notice from HMRC, see our nudge letters guide for exactly what to do. You can also ask our AI Tax Assistant to check whether MTD applies to your specific income level and situation.
Section 24 impact modelling, MTD registration, maximising allowable expenses, and deciding whether incorporation makes sense for your portfolio — these decisions need a property tax expert who knows the detail. Our matching service connects you with the right professional.
Find a landlord tax specialist →The most frequently asked questions about rental income tax in 2026/27.
Free HMRC-sourced guidance for landlords. Use our calculator to check your rental profit tax, or match with a property tax expert for personalised advice.
Guidance, not advice. Based on HMRC's published rules for 2026/27. Always verify at GOV.UK before filing your return.
