Tax when you rent out property
Rental profit is added to your other income and taxed at your usual rates, but mortgage interest and capital gains have rules of their own. These guides show the working for landlords who own property in their own name.
3 guides in this subject
Every guide in renting out property
Since April 2020, mortgage interest on a residential let earns a 20% tax credit. Worked for a higher rate landlord in 2026/27, with the change coming in April 2027.
Running costs, repairs and replacement furniture come off rent; improvements and mortgage capital do not. Worked for a basic rate landlord with £14,400 of rent in 2026/27.
Worked for a flat bought for £180,000 and sold for £275,000 in 2026/27 by a landlord on a £45,000 salary: which costs come off, which rate applies, and the 60-day deadline.
Common questions
Not from the profit. For a residential let you get a tax credit of 20% of the finance costs instead, which is why Section 24 costs higher-rate landlords more.
Yes if your rental income is more than £2,500 after allowable expenses or £10,000 before them. Between £1,000 and £2,500 you contact HMRC instead.