Rental income is subject to Income Tax. Start with how much you receive, then the expenses you can deduct, and then the special rule for mortgage interest.
Do I need to report my rental income?
Your property income
What to do
£1,000 or less a year
Tax-free, no need to report it
Between £1,000 and £2,500
Contact HMRC
£2,500 or more after expenses, or £10,000 or more before expenses
Report it through Self Assessment
If you need to report it and aren't registered for Self Assessment, register by 5 October after the end of the tax year in which you had the rental income.
The £1,000 allowance or your actual expenses: choose one
Property allowance: take £1,000 off your income, but you can't deduct any expenses.
Actual expenses: deduct each allowable expense.
If your actual expenses are more than £1,000, deducting them gives you a lower taxable profit.
Which expenses can I deduct?
letting agent, legal and accountancy fees
buildings and contents insurance
maintenance and repairs (not improvements)
utility bills, ground rent, service charges and Council Tax that you pay
cleaning, gardening, phone calls, stationery and advertising
replacing domestic items such as beds, sofas, curtains, carpets, fridges and crockery
Repairs and improvements are treated differently:
A repair can be deducted. It restores something to its original condition, such as replacing roof tiles or a broken boiler.
An improvement can't be deducted as an expense. It adds something that wasn't there before, or upgrades what was, such as building an extension.
Replacing domestic items: you can only deduct this when an old item is replaced and the tenant can no longer use it.
Mortgage interest isn't deducted as an expense
This catches out many landlords.
If you let residential property as an individual, you can't deduct mortgage interest or other finance costs as an expense.
Instead you get a tax reduction at the basic rate, which is 20% in the 2026 to 2027 tax year.
Example: £5,000 of mortgage interest in a year usually reduces your tax by £1,000 (£5,000 × 20%).
If a company owns the property and pays Corporation Tax, the interest can be deducted as an expense.
Changes from April 2027
The Finance Act 2026 has made it law: from 6 April 2027, property income tax rates in England and Northern Ireland rise by 2 percentage points:
Now
From 2027 to 2028
Basic rate
20%
22%
Higher rate
40%
42%
Additional rate
45%
47%
The tax reduction for mortgage interest will also be worked out at 22%. In Scotland and Wales, property income rates are set by the Scottish Parliament and the Senedd.
Owning a property jointly
Married couples and civil partners who live together: usually taxed on 50% each. If you own the property in different shares, you can tell HMRC the actual split using Form 17.
Other joint owners: taxed on your share of the property, unless you've agreed a different split.
Making a loss
If your expenses are more than your rental income, you've made a loss. You can usually only set it against future profits from the same rental business.
Common situations
Renting a room in your own home: you may be able to use the Rent a Room Scheme and earn up to £7,500 a year tax-free, or £3,750 if you share the income with someone else.
Renting out property in China or another country: if you're UK tax resident, income from property abroad usually has to be reported in the UK too, and kept separate from UK property. Special rules may apply if you've recently moved to the UK. See the foreign income guide.
Living abroad and renting out UK property: the Non-resident Landlord Scheme applies. Your letting agent or tenant deducts basic rate tax first, or you can apply on form NRL1i to receive the full rent. Either way you usually still need to send a tax return.
Rental and self-employment income over £50,000 in total: you may need to use Making Tax Digital. The threshold falls to £30,000 from 2027. See the Making Tax Digital guide.
Next steps
Gather this tax year's rental income and expenses, and keep receipts and bills.
Use the table above to see whether you need to report. If you do and aren't registered yet, remember 5 October.
The deadline to file online and pay is 31 January.
Sources checked: 1 October 2026 · Tax year: 2026 to 2027 · Sources are official GOV.UK pages.
This is general information, not tax advice for your situation. How it applies depends on your full circumstances.