If you earn money from renting out a property, you may need to declare that income to HMRC. Whether you own a single buy-to-let property, rent out a room in your home, or have a portfolio of rental properties, it's important to understand your tax responsibilities—and the expenses you may be able to claim.
Here's a straightforward guide to help you stay on the right side of the tax rules.
What Counts as Rental Income?
Rental income isn't just the monthly rent your tenants pay. It can also include income from:
Utility bills (if tenants pay them to you)
Cleaning or maintenance services
Parking spaces or garages
Furniture hire
Any other charges included in the tenancy agreement
If you're receiving money connected to your rental property, it's worth checking whether it needs to be included as rental income.
Do I Need to Declare My Rental Income?
In many cases, yes.
Even if you only rent out one property or your rental income is a side income alongside your regular job, you may still need to report it to HMRC.
Whether you'll actually pay tax depends on your individual circumstances, including:
Your total rental income
Your allowable expenses
Any tax reliefs available
Your overall taxable income
Whether the property is owned personally or through a limited company
If you're unsure, it's always better to seek advice than assume you don't need to declare it.
What Expenses Can Landlords Claim?
One of the questions we're asked most often is:
"What can I actually claim?"
The good news is that many day-to-day costs of running a rental property are tax deductible.
Letting Agent Fees
If you use a letting agent to manage your property, their fees
are usually allowable expenses.
Repairs and Maintenance
You can normally claim the cost of repairing and maintaining your property, including:
Fixing a leaking roof
Replacing broken windows
Plumbing repairs
Decorating between tenants
However, improvements, extensions or major upgrades are treated differently and generally can't be claimed as day-to-day expenses.
Insurance
Landlord insurance, buildings insurance and other policies relating to your rental property are generally allowable expenses.
Safety Certificates
Costs for gas safety checks, electrical inspections and Energy Performance Certificates (where applicable) can usually be claimed.
Ground Rent and Service Charges
If your property is leasehold, ground rent and service charges are often allowable expenses.
Professional Fees
Accountancy fees for preparing your rental accounts and tax return can usually be claimed, along with certain legal and professional fees connected with the day-to-day running of your rental property.
Mortgage Interest
Mortgage interest rules have changed in recent years.
Most individual landlords can no longer deduct all mortgage interest as an expense. Instead, they generally receive a basic rate tax reduction. Different rules may apply if your property is owned through a limited company, so it's worth getting advice based on your circumstances.
What If I Rent Out a Room in My Home?
If you rent out a room in the home you live in, different tax rules may apply. Depending on your circumstances, you could qualify for specific tax reliefs, so it's worth checking before assuming you have nothing to declare.
Keep Good Records
Good record keeping makes completing your tax return much easier and helps ensure you don't miss out on allowable expenses.
Keep copies of:
Receipts and invoices
Letting agent statements
Bank statements
Safety certificates
Maintenance records
Having everything organised throughout the year can save time, stress and money.
What Happens If I Don't Declare Rental Income?
Failing to declare rental income when required could result in interest and penalties from HMRC.
If you've recently become a landlord or think you've missed declaring rental income in previous years, it's usually best to address it sooner rather than later.
Every Landlord Is Different
Tax rules vary depending on:
Whether you own one property or several
Whether the property is owned personally or through a limited company
The type of property you let
Your overall income and tax position
That's why tailored advice can make all the difference.
We're Here to Help
At Soldi Partners Accounting, we help landlords understand their tax obligations, claim every allowable expense they're entitled to, and submit their tax returns with confidence.
Whether you're a first-time landlord or an experienced property investor, we'll explain everything in plain English and help you stay compliant while making the most of the tax reliefs available.
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