Income from Property
UK tax glossary · Last reviewed: April 2026
Rental income from UK property is taxable in the tax year it is received (cash basis for most landlords). Allowable expenses include letting agent fees, maintenance and repairs, insurance, ground rent, and council tax if paid by the landlord. Mortgage interest is no longer a direct deduction — it gives a 20% tax credit instead.
The £1,000 property allowance means landlords with gross rental income under £1,000 need not report it. Above £1,000, you can either deduct the allowance or actual expenses — whichever produces a lower taxable profit.
Losses from property cannot be offset against other income. They are carried forward against future property income from the same property business. UK and overseas property businesses are accounted for separately.
Worked example
Gross rent: £14,400/year. Expenses (exc. mortgage interest): £2,400. Net profit before finance: £12,000. Mortgage interest: £4,800 (gives a 20% credit of £960, not deducted from income). Tax (basic rate): £12,000 × 20% = £2,400. Less credit: £960. Net tax: £1,440.
Common questions
Do I need to register for Self Assessment as a landlord?
Yes, if your net rental income (after allowable expenses) exceeds £2,500/year — or gross income exceeds £10,000 — you must file a Self Assessment return. Below these thresholds, HMRC may accept adjustment via your tax code.
Can I deduct the cost of a new kitchen or extension?
Capital improvements (like an extension) are not allowable revenue expenses; they may be deducted from capital gains when you sell. Repairs that restore but do not improve a property are allowable.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.