Self Assessment for Landlords 2025/26: What Property Income to Declare

Quick answer

If you received rental income from a UK property in the 2025/26 tax year, you almost certainly need to file a Self Assessment return. The threshold is low: any gross rental income above £1,000 must be reported. Under £1,000 it falls within the Property Income Allowance and you have nothing to declare. If your net rental profit (after expenses) is under £2,500, HMRC may be able to collect the tax through an adjustment to your PAYE tax code rather than requiring a full return — but if your gross rent exceeds £10,000, HMRC generally insists on a return regardless of your profit.

The other number that matters is the registration deadline: 5 October 2026 for 2025/26 income. Miss it and HMRC's penalty can equal the tax you owe.

Who must file: the rental income thresholds

The Property Income Allowance of £1,000 works as a full exemption if your gross receipts stay below that figure. If your receipts exceed £1,000 but your actual expenses are also under £1,000, you can elect to use the allowance instead of claiming actual expenses — whichever gives you the lower taxable income. You cannot claim both in the same tax year.

What counts as rental income

Rental income is broader than just the monthly rent cheque. HMRC includes:

• Rent received in cash or by bank transfer
• Any letting agent fees or utilities charges passed on to and paid by the tenant
• Payments you receive for services you provide to tenants (garden maintenance, cleaning)
• Insurance excesses paid to you by a tenant where you claimed on your policy
• Premiums for granting leases (spread over the lease term if long leases)

Rent in advance that spans two tax years is apportioned. A deposit held in a deposit protection scheme is not income — it only becomes income if you keep part of it legitimately at the end of the tenancy.

Allowable expenses: what you can and cannot deduct

The actual expenses method

If you opt for actual expenses rather than the Property Income Allowance, these are deductible against your rental income:

Deductible:

• Letting agent fees (typically 8–15% of annual rent for full management)
• Buildings insurance and contents insurance
• Property maintenance and repairs — replacing like-for-like counts; a broken boiler replaced with an equivalent model is a revenue expense and fully deductible
• Service charges and ground rent on leasehold properties
• Council tax, if you pay it rather than the tenant
• Gas, electricity, and water if included in the rent
• Accountancy fees for preparing your rental accounts
• Legal fees for drawing up tenancy agreements (not for purchasing the property)
• Advertising costs for finding tenants
• Travelling to inspect the property or deal with maintenance — at HMRC's approved mileage rate of 45p/mile for the first 10,000 miles

Not deductible:

• Capital improvements — a new kitchen, extension, loft conversion, or conservatory. These add to the property's value and are capital expenditure. They are not deductible from rental profits but do increase your CGT base cost, reducing any gain when you sell.
• Initial costs of purchasing the property (legal fees, stamp duty, survey)
• Your own time (you cannot pay yourself a salary as a landlord through your rental accounts)

The wear and tear allowance is gone

Until April 2016, furnished residential landlords could claim a blanket 10% wear and tear allowance on their net rents regardless of actual spending. It was abolished. Since then you can only claim the actual cost of replacing furnishings — on a like-for-like basis. Replacing a washing machine with an equivalent model is deductible; upgrading to a premium model means you can only deduct the cost of the equivalent replacement.

Capital improvements versus revenue repairs

The distinction between capital and revenue expenditure is one of the most contested areas in landlord taxation. The basic principle is:

• Revenue (deductible): restores the property to its original state, like-for-like replacement, routine maintenance
• Capital (not deductible against income): improves the property beyond its original state, extends its life significantly, or adds something new

Practical examples:

When the work is partly repair and partly improvement, you apportion. Only the repair element is deductible.

Section 24: the mortgage interest restriction explained

This is the single biggest tax change to affect buy-to-let landlords in modern times. Before April 2017, you could deduct 100% of mortgage interest directly from your rental income — reducing your taxable profit pound for pound. Section 24 phased that out and it is now fully in effect.

How it works now:

1. Calculate your rental profit ignoring mortgage interest — expenses deducted are everything except mortgage interest.
2. Declare that full profit figure as your taxable rental income.
3. Work out the income tax on that profit at your marginal rate.
4. Subtract a tax credit equal to 20% of the mortgage interest paid (the basic rate equivalent).

The effect on a higher-rate taxpayer is significant. A basic-rate taxpayer who pays 20% tax and gets a 20% credit breaks even on the interest element. A higher-rate taxpayer who pays 40% tax but only gets a 20% credit bears a real extra cost.

Section 24 worked example

A higher-rate landlord in 2025/26:

The same landlord at the basic rate would pay:

Notice that the mortgage interest of £8,400 has not wiped out any of that £14,650 profit figure. It only appears as a credit at the end. This is why many higher-rate landlords find their apparent profit on paper is higher than their cash position after the mortgage is paid.

The Furnished Holiday Let changes: April 2025

If you run a Furnished Holiday Let (FHL), the dedicated FHL tax regime was abolished from 6 April 2025. From 2025/26 onwards, all FHL income is treated as ordinary residential letting income.

What this means in practice:

• Capital allowances: FHL properties no longer qualify. You cannot claim 100% first-year allowances or the Annual Investment Allowance on furniture and furnishings. You can only claim actual replacement costs going forward, like any other residential landlord.
• Business Asset Disposal Relief (BADR): No longer available on sale of FHL properties. CGT will apply at residential rates (18%/24%), not business rates (10%).
• Rollover relief and gift relief: Gone. A gain on selling an FHL cannot be rolled into a replacement business asset.
• Pension contributions: Rental profits are no longer "relevant UK earnings" for pension purposes. If you had been using FHL income to justify high pension contributions, you need to reassess your pension strategy.
• Losses: FHL losses built up before April 2025 can still be carried forward — but only against future property income (not against other income).

If you have previously been completing an FHL section on your return, from 2025/26 you simply include the income and expenses on the standard UK property pages (SA105).

Overseas property: SA106

If you own property abroad — a Spanish apartment, a French gîte, an Irish investment property — the income and expenses go on SA106 (foreign income), not SA105. UK and overseas property are calculated separately:

• Losses on UK properties cannot be offset against overseas property profits, and vice versa.
• Double taxation relief may be available if the overseas country has already taxed the rental income at source, subject to any tax treaty between the UK and that country.

The SA105 supplementary page

UK property income does not go on the main SA100 return — it goes on SA105. One SA105 covers all your UK land and property regardless of how many properties you own.

Key boxes on SA105:

• Box 20: Total rents and other income from property
• Box 24–30: Individual expense categories (repairs, insurance, finance charges, legal fees, etc.)
• Box 26: Finance costs (mortgage interest) — this is a memo box; the interest does not reduce the box 20 figure
• Box 45: The tax credit for restricted finance costs (20% of mortgage interest)

If you have a loss from your UK properties overall, you enter it in the loss box. You cannot offset a rental loss against your employment income — it must be carried forward and set against future rental profits from the same property business.

Multiple properties: losses and profits

All your UK residential properties are pooled into a single UK property business for tax purposes. This means:

• A loss on one property offsets profits from another automatically within the same tax year.
• Overall net losses from your UK property business can be carried forward indefinitely against future property profits.
• You cannot claim relief for those losses against your salary, dividends, or any other non-rental income.

Keep records for each property separately even though they combine on the return — HMRC may query individual property figures.

Capital gains tax when you sell

When you eventually sell a residential property that is not your main home, CGT applies. The key figures for 2025/26:

You must submit a Capital Gains Tax on UK Property return to HMRC within 60 days of completing the sale — this is separate from your annual Self Assessment return and applies even if you have no CGT to pay (if the gain is below £3,000).

The base cost of the property includes:

• The original purchase price
• Stamp Duty Land Tax paid on purchase
• Legal and survey fees on purchase
• Capital improvement costs during ownership (the new kitchen and extension you couldn't deduct from rental income are deducted here instead)
• Estate agent and legal fees on sale

Private Residence Relief may reduce or eliminate the gain if the property was ever your main home during ownership, even for part of the ownership period.

Record keeping for landlords

HMRC expects landlords to keep records for at least 5 years after the 31 January filing deadline (so for 2025/26, until 31 January 2032). You should retain:

• Bank statements showing rent received (with dates)
• All invoices and receipts for expenses — digital is fine
• Mortgage statements showing the annual interest charged (not just the payment amount, which includes capital repayment)
• Any lease or tenancy agreements
• CIS deduction statements if contractors working on the property are CIS-registered
• Records of any insurance claims and settlements

A simple spreadsheet — or one of the many landlord accounting apps — that records each property's income and expenditure monthly is usually sufficient for most landlords. HMRC does not require specialist software yet (Making Tax Digital for Income Tax starts April 2026 for landlords with income over £50,000).

Full worked example: buy-to-let 2025/26

Here is a complete calculation for a basic-rate landlord with a single buy-to-let property.

The property:

• Monthly rent: £1,500
• Mortgage: £210,000 at 4% interest only — annual interest £8,400 (£700/month)
• Full management with letting agent

Income and expenses:

Note: mortgage interest of £8,400 is NOT deducted from the profit figure.

Tax calculation (basic-rate taxpayer):

Tax calculation (higher-rate taxpayer, same property):

The higher-rate landlord pays £2,870 more tax on exactly the same property with the same mortgage — purely because Section 24 caps the relief at 20% regardless of their actual marginal rate.

When and how to register

If this is your first year as a landlord and you have not filed Self Assessment before:

1. Register at gov.uk/register-for-self-assessment — choose the route for "not self-employed" if you are PAYE employed and property is your only untaxed income.
2. Registration deadline: 5 October 2026 for 2025/26 income.
3. HMRC sends your UTR (Unique Taxpayer Reference) by post within approximately two weeks.
4. File your return online by 31 January 2027 and pay any tax owed by the same date.

If your rental income has been running for several years but you have not registered, HMRC can charge penalties going back multiple years. Voluntary disclosure through the Let Property Campaign generally results in lower penalties than waiting for HMRC to discover the income.

Use the calculator

Before you fill in the return, running the numbers through a calculator helps you sense-check what you owe and plan any tax payments.

For the capital gains element when you eventually sell:

Sources

• HMRC: Work out your rental income when you let property
• HMRC: Restricting finance cost relief for individual landlords
• HMRC: Furnished Holiday Lettings
• gov.uk: Capital Gains Tax on property
• HMRC: SA105 — UK property (2025)