If you’re earning income from property, you may need to file a Self Assessment tax return. Keeping accurate records of your income and expenditure is a must, but there are other things to consider too.
In this guide, we explain the key features of Self Assessment for landlords. Learn about allowable expenses and the steps to declaring rental income.
What are Self Assessment tax returns for landlords?
If you’re a landlord, Self Assessment is how you declare rental income to HMRC. You can submit one online, or on paper until MTD for Income Tax Self Assessment takes effect.
If you’re declaring rental income on your Self Assessment tax return for the first time, you might be wondering ‘how much tax do landlords pay?'
When it comes to Self Assessment, landlords are taxed on rental profits – not total income. Profits are calculated by subtracting your allowable expenses from the total rental income.
You can get up to £1,000 each tax year in tax-free allowances for property income. If your total annual gross property income is £1,000 or below from one or multiple property businesses, there is no obligation to inform HMRC or report this income on a tax return. However, you might still be mandated to file a tax return for any other sources of income.
Going forward, you'll need to submit a Self Assessment tax return if you earn:
- £2,500 to £9,999 after allowable expenses
- £10,000 or more before allowable expenses
If it’s your first time completing a Self Assessment for rental income, check out our guide on how to fill in a Self Assessment tax return online.
What are allowable expenses for landlords?
Most businesses have running costs. A freelance designer might need to purchase new software, whereas a plumber could need to pay for parts. Property businesses are no different.
Some of these running costs can be claimed as allowable expenses on your tax return for property income. Costs related to purchasing a property or renovating it (beyond basic maintenance) can't be claimed as allowable expenses for landlords. But costs for repairs and maintenance that restore the property to its original standard can be claimed along with a selection of other day-to-day running costs, including:
- Professional fees: For letting agents, accountants and legal
- Insurance: For buildings and contents
- Utilities: Gas, water, electricity and Council Tax
- Property-related charges: Ground rent, service charges
- Maintenance services: Gardening, cleaning
- Other direct costs of letting the property: Phone calls, stationery, marketing and advertising
There are different rules for residential, commercial and furnished holiday letting properties. For more support with landlord allowable expenses, head to the HMRC site.
How to register for Self Assessment for rental income
You can register for landlord Self Assessment online, or by post. You’ll need to give a few basic details – your full name and address, date of birth, phone number, and National Insurance number (if you have one).
You need to register by 5 October following the tax year you wish to submit a Self Assessment for. So, if you’re submitting a Self Assessment for the 2023/24 tax year you need to register by 5 October 2024.
Once registered, HMRC will send you a Unique Taxpayer Reference (UTR) number, which you’ll need to use to submit a rental income Self Assessment.
What’s the difference between Self Assessment and MTD for Income Tax for landlords?
Self Assessment for landlords is the current process for declaring rental income. Making Tax Digital (MTD) for Income Tax is a new system, coming into place from April 2026.
Currently rental income and expenditure is included on your annual Self Assessment tax return and this information is used to calculate your annual tax liability.
From April 2026, landlords earning above £50,000 from property or a combination of property and business need to use the MTD system to declare rental income.
The new submission process is made up of two separate parts:
In April 2027, landlords earning above £30,000 will follow.
Making Tax Digital for landlords means you’ll need to use accounting software to manage property income and submit returns to HMRC. Self-employed people and landlords mandated to follow MTD for VAT rules will already be familiar with using software, but if you’re not already experimenting with digital record keeping, now’s the time to get started.
It can take a little while to familiarise yourself with cloud-based accounting software, so the sooner you find a solution that suits you, the easier it will be to make the transition.
How landlords can ensure they’re Self Assessment compliant and ready for Making Tax Digital
Self Assessment for landlords is changing. When MTD for ITSA comes into place, you may need to alter how you manage your accounting.
Keeping clear, accurate records of your income and expenditure will help you complete your tax return and transition to the MTD system. Software like Xero empowers landlords with trustworthy data – so you can see your cash flow and profitability at a glance. Track your allowable expenses with ease, and spot where cash flow issues could pop up.
Start using Xero for free
Access Xero features for 30 days, then decide which plan best suits your business.
- Safe and secure
- Cancel any time
- 24/7 online support