For landlords

What tax do I pay on rental income in England?

Guide · about 20 min read · Covers the law in England as at October 2026 · Reviewed on 29 October 2026

A landlord in England pays Income Tax on the profit from letting, not on the rent that comes in. Profit is the rent less allowable expenses. For the tax year that started on 6 April 2025 and ended on 5 April 2026, GOV.UK says a paper return has to reach HMRC by 11:59pm on 31 October 2026, an online return by 11:59pm on 31 January 2027, and the tax itself is due by 11:59pm on 31 January 2027.

A property allowance of up to £1,000, which GOV.UK describes as tax free, may cover the first slice of property income where the conditions for it are met, and it cannot be used at the same time as deducting actual expenses or claiming the reduction for finance costs. Mortgage interest is not an allowable expense for an individual landlord. It is given instead as a reduction worked out at the basic rate, 20 per cent of the lowest of three figures, so the relief can be smaller than the interest paid, and it cannot create a refund. The profit that remains is added to your other income and taxed at your own rate, so the rate depends on everything you earn rather than on the rent alone. Landlords with qualifying income over £50,000 for 2024 to 2025, and who are not exempt, should already have moved to Making Tax Digital for Income Tax from 6 April 2026.

This guide is about an individual landlord letting residential property in England and paying Income Tax through Self Assessment. It does not cover companies, commercial property, or the furnished holiday letting rules, which GOV.UK notes ended in April 2025. It is general information and not legal or tax advice, and anything unusual in your affairs is worth putting to an accountant.

VEYLO X is a software platform for renting and letting in England. It holds the record of the letting: the rent that was due and paid, the dates, and the documents behind it.

Do I have to pay tax on rental income?

Yes, on the profit, although profit and a bill are not the same thing. The tax is charged on what is left after allowable expenses, not on the gross rent, and that profit is then added to your other income. Where the total sits inside the Personal Allowance, there is taxable profit and nothing to pay on it, which is why a small let alongside no other income can produce a return and a nil liability. The Personal Allowance and the bands are on the GOV.UK page for Income Tax rates and Personal Allowances. Reporting is a separate question from paying, and the thresholds for it are below. Before any of that calculation matters, though, there is an allowance. GOV.UK, on paying tax and National Insurance when you rent out a property, says "The first £1,000 of your income from property rental is tax-free. This is your 'property allowance'."

Under £1,000 of gross property income, the allowance gives what GOV.UK's guidance on tax-free allowances on property and trading income calls full relief: "If your annual gross property income is £1,000 or less, from one or more property businesses you will not have to tell HMRC or declare this income on a tax return." That is not the same as having nothing to do. The same page adds, in four words that catch people out, "You must keep records of this income."

Over £1,000, the allowance becomes a choice. It can be used "instead of deducting any expenses or other allowances", deducting up to £1,000 but not more than the amount of the income. GOV.UK calls that partial relief, and notes that "If your expenses are more than your income it may be beneficial to claim expenses instead of the allowances". You cannot have both, and you cannot use the allowance to manufacture a loss: "You cannot deduct more than the amount of your income and create a loss." Gross income here means "the total amount you would put on your tax return before any allowances or expenses are taken off". Two further points are easy to miss. The allowance belongs to the person, not the property, so where a property is owned jointly "you're each eligible for the £1,000 allowance against your share of the gross rental income". And it is closed to a landlord who claims the tax reducer for finance costs such as mortgage interest, which is the subject of its own heading below.

There are also cases where the allowance is not available at all, whatever the amount. GOV.UK says the allowances cannot be used in a tax year where the trade or property income comes from a company you or a connected person owns or controls, from a partnership in which you or a connected person is a partner, or from your employer or the employer of your spouse or civil partner. Nor can the allowance be used where you deduct expenses from income from letting a room in your own home instead of using the Rent a Room Scheme. So "under £1,000 means nothing to report" holds only once those exclusions have been read and ruled out.

When do I have to tell HMRC, and do I need a tax return?

GOV.UK sets three thresholds, and they are not the same figure read three ways. Above £1,000 and up to £2,500 a year, the instruction is to "Contact HM Revenue and Customs (HMRC)". A Self Assessment return is required where the income is "more than £2,500 after allowable expenses" or "more than £10,000 before allowable expenses". The second of those is measured before expenses come off, so a let can clear it on gross rent alone while the profit after expenses is far smaller. Which of the two thresholds bites depends on the figures, not on the number of properties.

Registering is a separate step from filing. GOV.UK: "If you do not usually send a tax return, you need to register by 5 October following the tax year you had rental income." For the tax year that ended on 5 April 2026 that date was 5 October 2026, which has passed.

Missing it is not the end of the matter. Where you register after 5 October 2026, GOV.UK says HMRC "will send you a letter or email with a different deadline to send your tax return by", three months from the date on that letter or email. The payment date does not move with it: "You must still pay the tax you owe by 11:59pm on 31 January 2027 or you'll get a penalty." GOV.UK also warns that registering late and not paying the whole bill by 31 January can bring a "failure to notify" penalty, based on the amount still left to pay.

What are the deadlines for the tax year that ended in April 2026?

GOV.UK's page on Self Assessment deadlines states the year itself first: "The last tax year started on 6 April 2025 and ended on 5 April 2026." The dates that follow from it are these.

31 October 2026, 11:59pm. "HMRC must receive your paper tax return by 11:59pm on 31 October 2026 or you'll get a late filing penalty."
30 December 2026, 11:59pm. The date to submit by if you want to pay the bill through your tax code. Miss it and GOV.UK says you have to pay another way.
31 January 2027, 11:59pm. "You must submit your online tax return by 11:59pm on 31 January 2027 or you'll get a late filing penalty."
31 January 2027, 11:59pm. The tax itself. "You need to pay your Self Assessment tax by 11:59pm on 31 January 2027 or you'll get a penalty."
31 July 2027. "There is a second payment deadline of 31 July if you make payments towards your bill", which GOV.UK calls payments on account.

The paper deadline for the year that ended on 5 April 2026 is 31 October 2026, and after that date the route for that year is an online return by 31 January 2027. Two things do not move with the filing route. The tax is due on 31 January 2027 either way, and a reader who registered late and has been given an individual filing deadline in a letter or email from HMRC works to the date in that letter rather than to either of these.

Payments on account are worth understanding before the January figure arrives, because that figure is often not one payment. GOV.UK describes them as "payments towards your next tax bill", made in two instalments "due by midnight on 31 January and 31 July", each "half of the tax you owed last year". They are not required where the tax owed last year was under £1,000, or where more than 80 per cent of last year's tax was paid outside Self Assessment, for example through a tax code. Where they do apply, GOV.UK says that if you made payments on account last year you need to pay both "your first payment on account towards your next bill" and "any balancing payment you owe". So 31 January 2027 can carry the balancing payment for the year ended 5 April 2026 and the first instalment towards the year ending 5 April 2027 at the same time, with the second instalment following on 31 July 2027. A first year is where this lands hardest. With no payments on account already made, the whole of that year's tax falls due on 31 January, and where neither exception applies a first payment on account towards the following year falls due on the same date, so a first January bill can be larger than the year's tax on its own. HMRC's guidance on payments on account sets out how each is worked out.

Which software you file through is a separate question from the dates, and worth checking before 31 January. GOV.UK says HMRC's own online filing service cannot be used for a return for a partnership, for a trust or an estate, by someone who "lived abroad as a non-resident", to report multiple chargeable event gains, or by someone with income from a trust, a Lloyd's underwriter or a religious minister, and tells those readers to "Use commercial software or download or request other forms instead". Filing through commercial software is still filing online, and the 31 January 2027 deadline is the same either way. Requesting paper forms does not extend the 31 October 2026 paper deadline.

How is rental profit actually taxed?

Rental profit is not taxed on its own account. It is added to your other income for the year, whether that is a salary, self-employed profit, a pension or a mixture, and the total is what the Income Tax bands are applied to.

The practical consequence is that two landlords with identical flats and identical rents can pay very different amounts, because the rate depends on the income underneath the rent. The current bands and the Personal Allowance are on the GOV.UK page for Income Tax rates and Personal Allowances, which is the place to read them rather than a figure quoted in an article that may be a year out of date. Which set of bands applies follows the landlord rather than the property. This guide is about letting a home in England, but a landlord who lives in Scotland pays Scottish Income Tax on most taxable income, which has its own bands and rates, and that applies to the rental profit from an English property as much as to a wage. Welsh rates are set separately as well. If you are at the start of all this, our guide to letting a property in England covers the duties that come with it.

What expenses can I deduct from rental income?

GOV.UK describes allowable expenses as "things you need to spend money on in the day-to-day running of the property", and gives this list.

letting agents' fees
legal fees for lets of a year or less, or for renewing a lease for less than 50 years
accountants' fees
buildings and contents insurance
maintenance and repairs to the property, but not improvements
utility bills, like gas, water and electricity
rent, ground rent, service charges
Council Tax
services you pay for, like cleaning or gardening
other direct costs of letting the property, like phone calls, stationery and advertising

What is excluded is capital expenditure. GOV.UK: "Allowable expenses do not include 'capital expenditure' - like buying a property or renovating it beyond repairs for wear and tear." The line between a repair and an improvement is where most of the arguments happen, and the words GOV.UK uses are the ones to measure against.

Furniture and white goods have their own relief. "You may be able to claim tax relief on money spent on replacing a 'domestic item'", and the items GOV.UK names are beds, sofas, curtains, carpets, fridges, crockery and cutlery. GOV.UK states two of the requirements: "You must have only bought the domestic item for use by tenants in a residential property and the item you replaced must no longer be used in that property."

The full test is longer, and HMRC sets it out in the Property Income Manual. It is for a replacement and not for an initial purchase, and four conditions have to be met.

A property business that includes letting a dwelling-house.
An old item replaced by a new one provided for the tenant's exclusive use, with the old one no longer available to them.
Expenditure which is not prohibited by the wholly and exclusively rule, so it has to satisfy that rule, but which would otherwise be prohibited by the capital expenditure rule.
No capital allowances claimed on the same expenditure.

Relief is refused where Rent a Room relief has been claimed on receipts from the dwelling. The furnished holiday letting bar is now historical for Income Tax, because HMRC says those rules cease to apply for tax years beginning on or after 6 April 2025.

The amount is not simply the invoice. Where the new item is broadly the same standard as the old one the starting figure is its cost, and HMRC says a brand new item is not an improvement merely for being new. Where it is not substantially of the same standard, the figure is the lower of what it cost and what a like for like replacement would have cost, so an upgrade is relieved only up to the equivalent. Two adjustments then run. Anything received for the old item in money or money's worth comes off, and HMRC's example is a £600 sofa less £100 for the old one giving £500; a trade in works the same way, so £800 less a £300 trade in gives £500. Incidental capital expenditure in connection with buying the new item or disposing of the old one is added, and HMRC's examples are delivery, installation and the cost of taking the old appliance away. HMRC sets this out at PIM3210, and the statutory provision is section 311A of the Income Tax (Trading and Other Income) Act 2005.

Can I still deduct my mortgage interest?

Not as an expense, if you own the property personally. GOV.UK puts the split plainly: "If you're a company paying Corporation Tax, you can claim interest on property loans as an allowable expense. You cannot do this if you're an individual landlord who pays Income Tax."

What an individual landlord gets instead is a tax reduction at the basic rate. GOV.UK's guidance on how tax relief for residential landlords is worked out says relief for finance costs "is being restricted to the basic rate of Income Tax. This is being phased in from 6 April 2017 and will be fully in place from 6 April 2020", so for the year just ended the restriction is complete. The reduction is "the basic rate value (currently 20%) of the lower of" three figures: finance costs not deducted from rental income in the year plus any brought forward; property business profits for the year after using any brought forward losses; and adjusted total income, meaning income after losses and reliefs, excluding savings and dividends income, that exceeds your personal allowance.

Two limits travel with it. "The tax reduction can't be used to create a tax refund." And where the reduction is worked out on property business profits or on adjusted total income rather than on the finance costs themselves, the difference is carried forward to a later year. A landlord claiming this reduction also cannot use the £1,000 property allowance.

The effect that surprises people is arithmetical rather than legal. Because the interest no longer comes off before profit is worked out, the profit figure on the return is higher than the cash in hand, and that higher figure is what sits on top of your other income when the bands are applied. The relief then arrives at the end, as a reduction in the bill, and at one rate rather than yours.

Do I have to use Making Tax Digital for Income Tax?

It depends on your qualifying income, and for some landlords the date has already passed. GOV.UK says the rules apply where all of three things are true: "you're a sole trader or a landlord registered for Self Assessment"; "you get income from self-employment or property, or both"; and "your qualifying income is more than the relevant threshold for the tax year", and separately that there are exemptions, some automatic and some applied for, which can take a person out of it. The page is GOV.UK's guidance on whether and when you need to use Making Tax Digital for Income Tax.

Qualifying income is the figure to get right, because it is not the profit the rest of this guide is about. GOV.UK's guidance on working out your qualifying income defines it as "your total income from self-employment and property", and says "This is the amount before expenses (also known as turnover), based on the tax return you submitted in the previous tax year". So it is gross, it combines letting with any self-employment, and it is read off a return that has already been filed. Employment income taxed under PAYE, a share of partnership profit as an individual partner, dividends including from your own company, the State Pension and private pensions are all outside it. GOV.UK's own example is £25,000 of rental income plus £27,000 of self-employment income giving qualifying income of £52,000. Its guidance, last updated on 26 March 2026, sets out the timetable as follows.

Qualifying income over £50,000 for the 2024 to 2025 tax year: "you should've started using Making Tax Digital for Income Tax from 6 April 2026".
Over £30,000 for the 2025 to 2026 tax year: "you will need to use it from 6 April 2027".
Over £20,000 for the 2026 to 2027 tax year: "you will need to use it from 6 April 2028".

In practice it means keeping digital records of property income and expenses, sending quarterly updates to HMRC, and then filing the return through the software rather than on the Self Assessment screens. GOV.UK adds that "You still need to submit a Self Assessment tax return for the tax year before you start using Making Tax Digital", so the first year is a handover rather than a clean switch. Partnerships are to follow, and HMRC says it will set out that timeline later.

There are exemptions, some automatic and some you have to apply for, and GOV.UK sets them out on its own guidance on whether you can get an exemption, with a tool on the main page that asks about the 2026 to 2027 tax year. Anyone close to a threshold is better off running that tool than estimating, because qualifying income is measured on a tax year that has already closed rather than on the one you are in.

What records do I have to keep?

The record keeping duty for Self Assessment is in section 12B of the Taxes Management Act 1970. It sits behind the return rather than inside it, which is why it is the part most often left until something is queried.

Records can matter even where no return is due. A landlord using full relief under the property allowance still has the GOV.UK instruction to keep records of the income. And Making Tax Digital changes the shape of the job rather than the amount of it: the records have to be digital, and they feed quarterly updates, so the once-a-year shoebox stops working as a method. Our guide to what records to keep and for how long goes through the wider set, including the certificates that have nothing to do with tax.

This is the part of the year where VEYLO X is relevant, and the limit of it is worth being exact about. VEYLO X is a software platform for renting and letting in England. It holds the record of each tenancy: the rent that was due and the rent that was paid, the dates those things happened on, and the documents the landlord put there, such as the tenancy agreement and the safety certificates. It does not work out tax, produce figures for a return, file anything or take a view on what is allowable. The return is yours, and so is the advice you take on it.

What if I have not declared rental income before?

Tell HMRC rather than wait. GOV.UK, on the same page: "You can declare unpaid tax by telling HMRC about rental income from previous years. If you have to pay a penalty it'll be lower than if HMRC find out about the income themselves." A disclosure gets a reference number, and from there "You then have 3 months to work out what you owe and pay it."

One trap in going back through old years: the property allowance did not always exist. GOV.UK says "Do not include the £1,000 tax-free property allowance for any tax years before 2017 to 2018."

Do I pay National Insurance on rental income?

Not as a charge on the rent. What GOV.UK describes is the other way round: "You can choose to pay voluntary National Insurance contributions to qualify for the State Pension or certain benefits."

Which class depends on how the letting looks. You "may be eligible to pay voluntary Class 2 National Insurance contributions if you're considered 'gainfully employed' for National Insurance purposes", and the examples GOV.UK gives are that being a landlord is your main job, that you rent out more than one property, or that you are buying new properties to rent out. If you are not eligible for Class 2, voluntary Class 3 may be possible, and the activities GOV.UK lists in that example are collecting rent, arranging or carrying out repairs, maintaining common areas, preparing properties between lets, advertising for tenants and arranging tenancy agreements. These are contributions a landlord opts into for the pension record, not a deduction from the rent.

Common questions

Do I pay tax if I let a room in my own home?

That is a different regime, and whether it covers you is a question to put to GOV.UK's guidance rather than to assume. The Rent a Room Scheme concerns furnished accommodation in your own home, it has its own allowance and its own exclusions, and deducting actual expenses instead of using the scheme is an alternative open to you. What is settled is that the two reliefs do not stack: the property allowance cannot be used on income from letting a room in your own home under the Rent a Room Scheme, and nor can it be used where you deduct expenses from that income instead of using the scheme. The choices are not independent either. GOV.UK says that where you have two businesses and claim the property allowance in one, you may not claim actual expenses in respect of the other, so deducting expenses from the room rather than using the Rent a Room Scheme can close the allowance off more widely than the room itself.

Can I claim for replacing a fridge or a carpet?

Both are on GOV.UK's own list for replacement of domestic items relief, which names beds, sofas, curtains, carpets, fridges, crockery and cutlery. The relief is for replacing an item rather than buying one for the first time, and GOV.UK gives two of the requirements: the item must have been bought only for use by tenants in a residential property, and the item it replaced must no longer be used there. It is not the whole test, and the calculation has more to it than the price. HMRC sets out four conditions at PIM3210, including that the spend has to satisfy the wholly and exclusively rule, and that no capital allowances may have been claimed on it, and refuses relief where Rent a Room relief has been claimed on receipts from the dwelling. On the amount, an upgrade is relieved only up to what a like for like replacement would have cost, anything received for the old item or allowed as a trade in comes off, and incidental costs such as delivery, installation and taking the old item away are added. Read PIM3210 before claiming, rather than treating this answer as the arithmetic.

What happens if I miss the Self Assessment deadline?

GOV.UK sets out the late filing penalties as an initial £100, then after three months daily penalties of £10 a day up to a maximum of £900, then after six months a further 5 per cent of the tax due or £300, whichever is greater, and after twelve months another 5 per cent or £300 on the same basis. Late payment is charged separately, at 5 per cent of the tax unpaid at 30 days, at six months and at twelve months, with interest on top. The two run alongside each other, so a return that is late and a bill that is late attract both. GOV.UK publishes an estimator for the amount. Those are the penalties for the 2025 to 2026 return, including for a landlord who joined Making Tax Digital for Income Tax on 6 April 2026: GOV.UK says the current penalties still apply to previous tax years and gives that exact example. From the tax year a landlord joins Making Tax Digital, a different regime replaces them, with points for late submissions and its own late payment rules, and GOV.UK sets those out on its separate page about penalties for Making Tax Digital for Income Tax instead.

How is my rent taxed if I live abroad?

Through what GOV.UK calls the Non-resident Landlord Scheme and describes as follows. A landlord who lives abroad for more than six months of the year must pay tax on any income they get from renting out property in the UK, and that the tax is collected through that scheme, so approval to receive rent gross does not remove the landlord's own liability to tax. Who deducts depends on who receives the rent. Where the rent goes to a letting agent, the agent must operate the scheme whatever the amount collected, and the tenant is not the one withholding. Where the tenant pays the landlord direct, a tenant paying over £100 a week in rent to a landlord who lives abroad has to register with HMRC and deduct the tax. GOV.UK adds that a tenant also needs to register where they pay "a UK representative of your landlord, such as a friend or family member, who isn't a letting agent". The exception is worded to each of them: GOV.UK tells the tenant "You don't need to deduct the tax if HMRC has told you in writing that the landlord can receive the rent with no tax deducted, but you must still register with HMRC and complete an annual report", and tells the agent the same thing about a notice to the agent. A notice given to an agent is not the tenant's exception. Where the landlord is a joint owner, GOV.UK says tax is paid on their own share of the rental income.

Does each joint owner get their own £1,000 property allowance?

Yes. GOV.UK says so in terms in its guidance on tax-free allowances on property and trading income for joint owners: "If you own a property jointly with others, you're each eligible for the £1,000 allowance against your share of the gross rental income." The allowance attaches to the person rather than to the property, so two owners of one let flat have £1,000 each against their own share. Each owner also decides for themselves whether to use the allowance or deduct actual expenses, and the usual bar applies to each of them individually: an owner claiming the tax reducer for finance costs cannot use the allowance in that year.

What should I do next?

Work in the order above. Check whether a return is due at all on the GOV.UK thresholds, then the filing date for your route, then 31 January 2027 for the payment, which is the same date whichever route you file by. If you registered late, the date in HMRC's letter is the one that applies to your filing, and the payment date stays 31 January 2027. Anything unusual in your affairs is worth putting to an accountant rather than a guess.

Sources

The primary sources behind this guide. Where the law and a summary disagree, the law is what counts.

This article is general information, not legal advice, and it is not tax advice. It covers England only and reflects the position as at October 2026. Tax rules change, so check the current GOV.UK guidance and consider taking advice from an accountant or a tax adviser on your own situation.

Get started