Property Income

Property Income

What makes you a landlord?


If you rent your property, you're a landlord. There are different ways your property can be assessed depending on whether you rent out:


How do I pay tax and what expenses can I claim?


The tax you pay will be based on the profits you make from your property income. The percentage you pay will depend on whether your total income for the year meets the basic or higher tax thresholds.


Your profits is your income less your allowable expenses or allowances.


Your allowable expenses are expenses that are incurred wholly and exclusively for the purposes of renting the property. These will include:


  • mortgage interest;
  • repairs and maintenance, but not improvements;
  • gas, electricity, water and council tax;
  • insurance e.g. contents or public liability;
  • cost of services e.g. wages of cleaners;
  • letting agent and management fees;
  • accountant fees;
  • ground rents and service charges;
  • advertising, phone and stationery for new tenants;
  • vehicle costs e.g. mileage for business related travel.


Your allowable expenses do not include capital expenditure. These may be claimed against capital gains tax if you later sell the property. Examples would include improvements to the property, such as:


  • upgrading furniture or a kitchen;
  • adding an extension;


For some, it may be more prudent to claim property allowance. This is where you can claim up to £1,000 tax-free. Remember that you cannot claim the allowance and your allowable expenses. In some circumstances, you may also be able to claim for the replacement of domestic items e.g. beds, wardrobes, fridges, freezers.


If you rent a room in your only or main property, you will be automatically placed on the rent-a-room scheme if your income is less than £7,500. If you earn more than this amount, you will need to complete a tax return and opt into the scheme. In both cases, you can choose to opt out and record your income and expenses instead.


Should you wish to sign up for our services, please click below to fill our onboarding form or tax return form and our accountant will be in touch within two working days.

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