How to Report Property Income on Your Tax Return

If you're a landlord or rent out property, you'll need to report this income on your Self Assessment tax return if you earn more than £1,000 from rental activities. This article explains how to complete the property pages of your return, what income to declare, which expenses you can claim, and how to calculate your taxable profit.

When you need to report property income

You must declare property income on your Self Assessment tax return if you've earned over £1,000 from:

• Renting out property in the UK or overseas
• Letting furnished rooms in your own home
• Furnished holiday lettings in the UK or European Economic Area (EEA)
• Premiums from leasing UK land

If your property income is £1,000 or less, you may not need to report it, depending on whether you choose to use the property income allowance (explained below).

The property income allowance

The property income allowance is a tax-free amount of £1,000. You have two options for how to use it:

Option 1: Claim the £1,000 allowance instead of deducting your actual expenses. This means you don't pay tax on the first £1,000 of property income, but you cannot claim any expenses.

Option 2: Deduct your actual expenses as normal and don't use the allowance. This is usually better if your property expenses exceed £1,000.

You cannot use both methods for the same income. Choose the option that gives you the lower tax bill.

Reporting rental income

Your rental income includes all money you receive from tenants, such as:

• Regular rent payments
• Advance rent payments
• Payments for the use of furniture (if let with the property)
• Charges for additional services you provide

You should report the gross rental income (the total amount before expenses) for the tax year. The tax year runs from 6 April to 5 April the following year, so for 2025/26, this covers 6 April 2025 to 5 April 2026.

Joint lettings

If you own a rental property jointly with someone else (such as a spouse or business partner), you need to declare your share of the rental income on your own tax return. Each owner completes their own property pages showing their proportion of both income and expenses.

Claiming property expenses

You can deduct allowable expenses from your rental income to work out your taxable profit. Allowable expenses are costs incurred wholly and exclusively for the purposes of renting out the property.

Common allowable expenses include:

• Rent, rates, insurance, and ground rent: Council tax (if you pay it, not the tenant), building insurance, landlord insurance, and ground rent on leasehold properties
• Property repairs and maintenance: Decorating, mending broken fixtures, and general maintenance (but not improvements or initial repairs to make a property fit to rent)
• Loan interest and financial costs: From 6 April 2020, you cannot deduct mortgage interest and other loan costs from your rental income. Instead, you receive a tax credit worth 20% of your finance costs
• Legal and professional fees: Letting agent fees, accountancy fees for rental accounts, and legal fees for rental matters (but not for buying the property)
• Other property expenses: Utility bills you pay, gardening and cleaning costs, and advertising for tenants

You cannot claim expenses for improvements or additions to the property (such as an extension or new kitchen). These are capital expenses, not day-to-day running costs.

Special schemes and reliefs

Rent a Room Scheme

If you let out furnished accommodation in your own home, you may qualify for Rent a Room relief. This gives you a tax-free allowance of £7,500 per year. If your rental income from lodgers is below this amount, you don't need to tell HMRC or pay tax on it. If your income exceeds £7,500, you can choose to deduct the allowance instead of your actual expenses if that works out better for you.

Furnished holiday lettings

Different rules apply if you run a furnished holiday letting business. The property must be:

• In the UK or EEA
• Available for commercial letting as holiday accommodation for at least 210 days in the tax year
• Actually let for at least 105 days

Furnished holiday lettings qualify for certain tax advantages, such as capital allowances on furniture and equipment.

Capital allowances

For most residential property lettings, you cannot claim capital allowances on furniture and equipment. Instead, you claim the actual cost of replacing items.

However, if you rent out commercial property or run a furnished holiday letting business, you may be able to claim capital allowances for:

• Plant and machinery (such as boilers, lifts, and security equipment)
• Structures and buildings (in some circumstances)

Calculating your taxable profit

Your taxable property profit is:

Total rental income - allowable expenses = taxable profit

You report this figure on the property pages of your Self Assessment tax return. If your expenses exceed your income, you have a loss, which you may be able to carry forward to offset against future property profits.

Getting help

HMRC provides several resources to help you complete the property pages:

• Helpsheets covering specific topics such as the Rent a Room Scheme, furnished holiday lettings, and capital allowances
• YouTube videos and recorded webinars explaining how to fill in the property section of your online tax return

These resources walk through the different boxes on the return and explain what figures to enter where.

Sources

• Help with property on your Self Assessment tax return

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.