If you live in the UK and have rental income, you’ll usually have to pay tax on it.
You do this by filing a Self Assessment tax return – TaxScouts can help you do it 100% online.
How much rental income tax will I have to pay?
How to calculate what you will pay tax on:
- figure out which allowable expenses or allowances you want to claim
- deduct those from your total rental income
- this is your rental profit – add it to your other income (wages, etc.) to figure out what your total income for the year was
- based on this you’ll know what tax band you’re in
- you’ll pay tax on rental profits at the tax rate corresponding to your tax band.
In case you don’t know what are the tax bands and tax rates in the UK:
|Income ||Tax rate |
|Up to £12,500 ||0% ||Personal allowance|
|£12,501 to £50,000 ||20% ||Basic rate|
|£50,000 to £150,000 ||40% ||Higher rate|
|over £150,000 ||45% ||Additional rate|
What if I also live on the property?
Then you can be eligible for the Rent-a-Room Scheme – probably the best tax-free allowance for landlords:
What if it’s a buy-to-let or second home?
Then HMRC will ask you to treat it as a business:
What expenses and allowances can I claim?
You can claim pretty much everything related to running your property and being a good landlord:
- letting agents’ fees, accountants’ fees (incl. TaxScouts), or legal fees
- rent, ground rent, and service charges (like cleaning)
- gas, electricity, water, and other utilities.
There are also quite a few allowances you can use:
Can I claim my mortgage payments as an expense?
It’s a bit complicated, but yes:
What if I own it jointly with my partner?
- if you’re not married, your share of the rental profits will be based on the share of the property you actually own.
- if you’re married or in a civil partnership, then you will have to split the profits, expenses, and most of the allowances (except the personal allowance and the property income allowance) 50/50. You could also benefit from the Marriage Allowance.
Read more in our guide to paying rent from jointly owned properties.
What if it’s a property abroad?
Most of the time, you’ll pay tax on the rental income just as if it was based in the UK – read more on our guide to paying UK tax on foreign income here.
Do I need to do a Self Assessment tax return?
Are there any other taxes?
Yes, but you won’t have to pay them every year:
You can read more details about all these taxes here.