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What Tax do Landlords Pay on UK Rental Income?

Posted on October 28th, 2022 -

 Article by GoSimpleTax

There are about 2.6m private landlords in the UK, and although some have large, lucrative property portfolios, 43% of private residential landlords in England rent out just one property. About 39% rent out two to four properties, while 18% rent out five or more. It’s a similar story elsewhere in the UK.

Sometimes people become “accidental landlords”, for example, after inheriting a property which they rent out rather than sell. In other cases, people move to another UK or overseas location and rent out their former home, which provides welcome additional income, as well as a sound retirement investment.

If you’ve just become a residential landlord or you’re interested in becoming one, naturally you’ll want to know the answer to one key question – “how much UK tax will I pay on my rental income?”


How much tax will you pay on your rental income?

  • Most UK residential landlords pay tax on their rental income via Self Assessment, the system UK tax authority HMRC uses to collect Income Tax.
  • You don’t pay tax on the first £1,000 of property rental income. This is called your Property Allowance. However, you can’t claim your Property Allowance if you claim allowable expenses (see below).
  • If your annual property income is between £1,000 and £2,500 a year, contact HMRC for advice on reporting your rental income.
  • You must report your rental income via a Self Assessment tax return if it’s £2,500-£9,999 after allowable expenses or £10,000-plus before allowable expenses.
  • Allowable expenses are costs that HMRC allows you to deduct from your rental income. The higher your total allowable expense claim, the lower your tax bill.


Need to know!

To pay tax via Self Assessment you must first register with HMRC. If you don’t normally file a tax return, you must register for Self Assessment by 5 October following the end of the tax year (5 April) within which you had rental income to report.


Your rental income will be added to your other taxable income and once allowances and reliefs have been claimed, you’ll be taxed on what’s left. The Income Tax band into which you fall will determine the size of your tax bill.


  • No tax is payable on annual taxable income of up to £12,570. This is your tax-free Personal Allowance.
  • The basic rate of 20% is payable on taxable income of £12,571-£50,270.
  • The higher rate of 40% is payable on taxable income of £50,271-£150,000.
  • The additional rate of 45% is payable on taxable income of more than £150,000 (*all figures 2022/23 tax year).


Claiming allowable expenses

For an expense to be allowable/deductible, it must result “wholly and exclusively” from renting out your property. If you use something for personal and landlord reasons, such as a mobile phone, you can only claim allowable expenses for calls you make for renting out and managing your property.

You claim allowable expenses by summarising them within your Self Assessment tax return, as well as your rental income and other sources of taxable income. Then HMRC will tell you how much Income Tax you owe.


Need to know! The online filing deadline for your Self Assessment tax return is midnight on 31 January following the end of the tax year in which you had taxable income. The UK tax year runs from 6 April until 5 April.



What allowable expenses can landlords claim?

Allowable expenses that landlords can claim can include:

  • property maintenance and repairs
  • ground rents and service charges
  • redecorating between tenancies
  • insurance
  • water rates, council tax, gas and electricity (if you pay them for the property)
  • gardening and cleaning costs
  • letting agent fees/management fees
  • legal fees for lets of a year or less
  • accountancy/bookkeeping fees
  • direct costs (eg phone calls, stationery and advertising for new tenants)
  • vehicle/fuel costs (only those relating to renting out your property)
  • costs for disposing of old items of furniture or electrical appliances, etc.


What expenses can’t landlords claim?

You cannot claim mortgage capital repayments as an allowable expense. Neither can you claim for mortgage interest payments or other finance-related costs (eg mortgage-arrangement fees). Instead, you get a 20% tax credit to cover such outgoings.

When replacing things, for example, a toilet or burglar alarm, you cannot claim a full allowable expense if the replacement is of superior value. You can only claim for a “like for like” amount as an allowable expense.

Improving a property, for example, by adding an extension, cannot be claimed as an allowable expense, because you’re making a “capital improvement”. Later, if you sell the property, you may be able to claim capital expenses against Capital Gains Tax.


Need to know! You can’t claim an allowable expense for replacing sofas, beds, carpets, curtains, furnishings, white goods, etc in a furnished or part-furnished rental property. But you might be able to claim Replacement Domestic Items relief, which will also reduce your Income Tax bill. Once again, you cannot claim for something of superior value.


What about undeclared rental income?

If, for whatever reason, you’ve earned rental income that you haven’t reported via Self Assessment, you can tell HMRC about it by means of a “voluntary disclosure”. There may be a penalty to pay, but it will be lower than it would be if HMRC finds that you’ve failed to report taxable rental income. Visit government website GOV.UK to find out more.


About GoSimpleTax

Income, Expenses and tax submission all in one. GoSimpleTax will provide you with tips that could save you money on allowances and expenses you might have missed.

Software submits directly to HMRC and is the digital solution for Landlords to record income, expenses and file their self-assessment giving hints on savings along the way.

Covering all self-assessment pages, not just property, GoSimpleTax does all the calculations for you.


Homebuilding & Renovating Show – Free Tickets Available for SWLA Members

Posted on October 21st, 2022 -

Saturday 19th November 2022 10am – 5pm & Sunday 20th November 2022 10am – 4.30pm
Bath & West Showground, Shepton Mallet, Somerset, BA4 6QN

Register below for free entry for 2 people;

Homebuilding & Renovating Show – South West Landlords Association offers – Homebuilding & Renovating Show Somerset (homebuildingshow.co.uk)


SWLA’s October General Meeting

Posted on October 19th, 2022 -

Thank you to our members who attended our speaker meeting at the Future Inn on Tuesday – we had around 50 members attend and it was great to see and speak to everyone.

Thank you to our brilliant speakers;

Calum Levy and Stella Goodman from Excaliber Associates – Calum gave an update on rate rises, recession, the borrowing market now and what it may look like over the coming months. A very interesting presentation which gave our attendees an insight into the current BTL situation.

Sue Pope from Health & Safety Matters – an interesting and informative presentation regarding The Regulatory Reform Act and how it impacts landlords and their rental properties. Landlords were reminded of their fire safety responsibilities and many questions were raised and answered.

We look forward to seeing everyone again on Wednesday 25th January 2023 at 7.30pm for the SWLA AGM.

SWLA Membership Renewal Reminder

Posted on October 14th, 2022 -


£50 for Annual Membership starting 1st November 2022

If paying by BACS, please include your full name (and where possible your membership number).

 BACS payments to SWLA: Sort Code- 20-68-10, Account Number- 50498610

Make cheques payable to SWLA. Please write your full name (and where possible your membership number) on the back of the cheque.
Send to; SWLA, 30 Dale Road, Plymouth PL4 6PD

Call the office or pop in to pay by card. Opening hours 10am – 3pm Monday to Friday.
01752 510913

By paying your membership renewal, you agree to continue to be a subscriber to clause 7 of the Memorandum of Association of SWLA and the Code of Conduct. See www.landlordssouthwest.co.uk.

Your receipt will be emailed when payment has been received unless a paper copy is requested. A membership card is no longer automatically issued but can be requested or picked up from the office.

Please let us know if you do not wish to renew, or if any of your contact details have changed.

Landlord Insurance – Get a no obligation quote from one of SWLA’s approved specialists. Competitive prices, extensive cover.  Batemans- 0800 731 6689, Oakfield- 01752 717667

Landlord Training and Accreditation – ONLY £65 for a one day course. Be professional, be accredited. See website for all upcoming training course details.

Free Landlord Webinar by ‘Ashley Taylors Legal’ 05/10/2022

Posted on October 5th, 2022 -

**PLEASE NOTE – THIS IS NOT AN SWLA WEBINAR – PLEASE SIGN UP BY CLICKING THE LINK BELOW IF YOU WISH TO ATTEND** Martyn Taylor of Ashley Taylors Legal invites all SWLA members to the following free landlord webinar; When – 11am Wednesday 5th October 2022  Subject Carbon Monoxide Alarm (amendment) Regulations 2022 plus other updates on disrepair claims WhereZoom Wednesday 5th October at 1100am Martyn Taylor is giving another of his (now highly popular) short webinars on the subject of Carbon Monoxide Alarm Regulations which came into force 01/10/2022 for Landlords. He will also be adding in the latest issues surrounding the ever growing disrepair claims from tenants and how to create some protection for you plus …………………some other updates on what’s happening in the L&T market. Webinars are free and generally last a maximum of 40 minutes.   If you would like to sign up, please click the following registration link to register in advance; https://us02web.zoom.us/webinar/register/WN_oeSWaCBYRTCyrTL-GJbhBQ After registering, you will receive a confirmation email containing information about joining the webinar. The webinar is limited to 1000 attendees on a first come, first served basis.

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