However, while having a rental property can offer an income for the landlord, they need to realize their tax obligations. Understanding what you can claim would help you minimise your rental profit liable to tax and help you avoid overpaying tax. This is the UK Landlord Tax Guide 2026/27 and outlines the principle allowable expenses, mortgage interest allowances, property repairs, landlord insurance, letting agent costs, and the deadline for landlords’ tax returns. It also includes other key tax reforms likely to impact on property income from April 2027. If you are a one person buy-to-let landlord or own multiple properties, then it is important to keep accurate records. You can also get professional accounting assistance to report rental income appropriately and claim any deductible expenses.
Rental Income Tax Definition
Rental income tax is tax that could be due on income from renting out property. The vast majority of the time, HM Revenue & Customs (HMRC) will work out the taxable rental profit from your property by subtracting any allowable expenses from your income. For instance, let’s say that your property generates rental income of £15,000 for a tax year. Repairs, Insurance and letting fees are eligible and cost £3,000. Other adjustments are likely to be considered, but the rental profit would normally be £12,000 before taking those into account. But the total taxes you’ll pay will depend on your overall earn, tax allowances and tax provisions. Landlords should also be careful to differentiate between deductible expenses and costs that are not deductible.
What Kinds of Expenses Can a Landlord Claim Against Rental Income?
Expenses that the landlord incurs that are 100% for her rental business are typically deductible. The cost will have to be connected to the rental income and will be subject to HMRC’s rules.
1. Letting Agent and Property Management Fees
Qualifying fees are usually possible expenses if you use a letting agent to locate tenants, or are a letting agent managing your property. These expenses can cover tenant placement, rent roll upkeep and property upkeep. Retain statements and invoices that detail the services and charges.
2. Repairs and Maintenance
Generally, routine repairs can be eligible for tax exemption. This may involve repairing a leaky tap, mending a broken window, fitting new roof tiles or repainting in between tenancies. But there is a difference between repairs and improvements. The costs associated with bringing back a feature that was there before it was altered may be considered a revenue cost. More significantly improved features or improvements may be deemed capital expenditure.
For instance, if a fence is damaged, repairing the damage may be considered a repair. This is because an entirely new upgraded boundary system may be treated differently under the circumstances.
3. Landlord Insurance
Qualifying landlord insurance premiums may be deducted from your rental income. This can cover buildings insurance, contents insurance (particularly for furnished rentals) and appropriate public liability cover. Maintain policy documents and payment records. If the policy also includes private use, just the rental business aspect of the policy should be taken into account.
4. Utility Bills and Council Tax
Might be eligible to claim qualifying utility bills and council tax if you are liable for paying them as a landlord. A landlord may, for instance, make payment for electricity, water or council tax in any void period between tenants. Rental business expenses of this type may be eligible where they are associated with the rental business.
No double dipping! When a tenant pays a bill on their own account, you can’t deduct the bill as your own expense.
5. Advertising and Tenant-Finding Costs
Typical costs that can be considered allowable expenses include those used to advertise a rental and looking for tenants. These can be property advertising and tenant-referencing services that are available online and/or in person. Maintain receipts and make sure expenses are associated with your rental business.
6. Fees for Accountancy and Bookkeeping
The preparation of rental accounts, computation of taxable property profits, and the preparation of the relevant tax returns by a professional may be eligible for relief. Good bookkeeping also enables landlords to know which records are missing and how to avoid common reporting problems. An accountant can check your numbers, let you know the rules and assist you in filing the correct tax data.
7. Ground Rent and Service Charges
Ground rent and service charges that are in some way connected to a let property and comply with HMRC’s requirements may generally be claimed as qualifying ground rent or service charges. This is frequently important to landlords who own leasehold flats. Review statements with care, and make sure there is a distinction between rental and capital costs or charges which are taxed differently.
8. Other Eligible Running Costs
Other expenses that may be allowed include (depending on the circumstances):
- Clearing and tidying up between tenants.
- Maintenance of gardens and public areas.
- Eligible pest control expenses.
- Costs for safety inspection and compliance.
- Postage and administrative expenses relating to the rental business.
- Qualifying property management journeys: Mileage.
Treatment will vary according to cost and usage of the property. Continue to provide evidence to back up each claim.
Do Landlords Get Tax Deductions for Their Property Mortgage?
One of the most significant issues in the taxing of landlords is the question of mortgage interest. But, as for most expenses of owning residential property, mortgage interest payments are not generally considered deductible as running costs. Alternatively, qualifying home loan costs are typically taxed at a standard rate. This limitation is referred to as Section 24. Qualifying finance costs include mortgage interest and some qualifying loan arrangement costs. Capital repayments are not considered interest expenses.
Let’s imagine a landlord that is obtaining £20,000 as rent and is spending £8,000 in allowable running expenses. The likely rent before residential finance costs is likely to be £12,000. Normally a landlord would not be allowed to take the £5,000 as a direct deduction from the taxable rental profit. Rather, the rules for tax reduction of finance costs apply, with the appropriate caps. This can impact their total tax picture, so it’s important that landlords make careful calculations.
Which Costs Are Not Tax-Deductible?
Not all payments related to a property are deducted to lower rental income.
Typical costs that are usually considered personal, rather than ordinary rental costs, include:
- Mortgage capital repayments.
- Any costs associated with the rental property that are not covered and any costs that are not related to the rental business.
- Additions to buildings and equipment that are substantial in nature.
- Expenses already covered and/or already claimed elsewhere.
- The cost of your personal time investments in the property.
When you sell the property, you might still need to consider capital expense for the tax purpose. But it is typically different from the normal everyday rental costs. Don’t accept an invoice and take the total for a repair job and improvements unless you check with your accountant, since the items have to be separated out for the full total to be deductible.
Understand the Differences Between Repairs and Improvements
The difference between an improvement vs repair can have a big impact on your tax return. A repair typically restores an asset to the condition it was in before the failure. An improvement is generally an improvement above an acceptable standard and/or is substantially new. For instance, a repair may be defined as replacing a component that is broken with a modern equivalent, even if it is the same component. Capital expenditure is more likely to be a large extension or major upgrade. This will vary depending on the work done, the condition of the property and the relevant tax rules. Maintain contractor invoices, photographs and descriptions for work completed to support treatment.
Important Tax Changes for 2026/27 and 2027/28
The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. It is important for landlords to consider rental income and expenses during this time instead of waiting until the filing deadline.
The government has introduced legislation that would allow for separate property income tax rates starting from 6 April 2027 for the 2027/28 tax year. Rates announced for England, Wales and Northern Ireland are:
- Income from basic properties: 22%.
- Property income rate is higher: 42%.
- Additional property income rate: 47%.
Changes also make new rules for the calculation of finance cost relief and the order of certain allowances and reliefs. Under devolved income tax powers, this does not apply to Scottish taxpayers. The rates will not be in effect for 2026/27, but for 2027/28 onwards. Landlords should check official HMRC guidance before submitting their tax returns—the situation and future laws could impact their tax return.
How to Report Rental Income to HMRC
Self Assessment is used by many individual landlords to report any rental income that is not exempt, thus for any rental income that doesn’t fall under the exemptions, it can be taxed within the individual landlords’ own Self Assessment. It is important to note that tax return filing requirements are dependent upon the situation and rules for tax return reporting.
Here are some steps you can take to stay on top of your rental tax business:
- Report all rents received during the tax year.
- Gather bills and receipts for deductible expenses.
- Separate repairs from capital improvements.
- Use the proper rules to figure the profit on renting.
- Examine mortgage interest and other finance charges individually.
- See if you are required to fill in a Self Assessment tax return.
- Ensure returns are submitted and tax paid on time.
Maintain accurate rent and expense records, tenancy dates and any rent-related transactions. Excellent bookkeeping ensures that you can be more readily able to respond to HMRC queries as well as rectify any errors quickly.
Self Assessment Deadlines for Landlords
The following are the usual deadlines for the 2026/27 tax year:
- Register for Self Assessment if not already registered: 5 October 2027.
- Paper tax return deadline: 31 October 2027.
- Online tax return and payment deadline: 31 January 2028.
- Other reporting requirements: If you are a new landlord or have a number of income types, review your position with HMRC.
How City Gate Accountants Can Help Landlords
Running a rental business isn’t just about taking in rent and paying out bills. Landlords will require a certain level of understanding with regards to allowable expenses, finance cost restrictions, record keeping requirements and Self Assessment obligations. City Gate Accountants can offer accountancy and tax assistance. It has accounting experts who can guide landlords with their reporting obligations and put them in order of financial records, depending on the services confirmed by the firm.
If you own more than one property, also if you have got employment or self-employed income in addition to your rent, and if you have questions regarding repairs and improvement, professional support might be beneficial. Individual financial guidance will enable you to obtain information on your choices and to keep accurate tax records. Be sure to find an accountant who offers the services you need, and inquire about charges before hiring a professional; make sure you know what you’ll get out of the services you are hiring.
Conclusion
Knowing what expenses are acceptable for your rental property is an essential component of running a successful rental business. Landlords need to keep income on their books and also remember to claim running costs that may be eligible, make sure to differentiate repairs from improvements, and use the correct mortgage interest rules. Another reason for looking at records before the separate property income tax rates begin in April 2027 in the 2026/27 tax year. Ensure that your book is well arranged and that you refer to official guidance where necessary when rules change. City Gate Accountants may be able to provide suitable accounting and tax assistance if you require assistance in understanding rental income, in producing accurate tax records or with your reporting requirements. Proper preparation can help you to face responsibilities with confidence.
FAQs
1. As a Landlord in the UK, What Can I Claim as Expenses?
Typically, landlords can recover costs for letting agency fees, repairs, landlord’s insurance, eligible utility bills, advertising, accountancy fees and property maintenance. Every expense needs to comply with the rules HMRC have, and be related to the rental business.
2. Can I Claim Mortgage Interest on Rental Income?
Typical residential rental landlords cannot claim mortgage interest as an income item on their rental income. Rather, the finance costs imposed on an eligible entity typically are eligible for a standard rate tax benefit, which may be subject to conditions and limitations.
3. Do Property Repairs Count as Tax Deductible?
Typical repairs can include things that bring a property back into its former state and usually qualify as allowable repairs. Capital expenditure may occur if improvements are made to the property that enhance it or cause a major change to the property.
4. Is It Possible for a Landlord to File a Self Assessment Tax Return?
Depending on their income and circumstances, some landlords will need to report rental income in Self Assessment. Rules may differ depending on the size of the amount received and allowances and other income received.
5. What Is the Due Date for the Landlord Tax Return 2026/27?
The usual online Self Assessment deadline for the 2026/27 tax year is 31 January 2028. The paper returns are due on a regular basis, usually by 31 October 2027. The registration deadlines may also apply, so new landlords should check their duties early.
6. Can I Deduct Expenses When My Property Is Vacant?
If the cost relates to a rental business and is in accordance with HMRC’s rules, some of the costs incurred while a property is temporarily empty may qualify. Examples can include qualifying insurance, utilities and maintenance.
7. When Selling a Rental Property, Is Capital Gains Tax Due?
If you sell a rental property for more than its allowable acquisition and disposal costs, plus any relevant reliefs and losses, you may owe Capital Gains Tax. The computation is different from the rental income tax calculation.