Crack the Tax Code: Maximise Your Allowances

Rental income is taxable, but smart landlords pay less. Discover five proven tax tips to protect your profit and stay compliant.

Prefer to watch? Press play on the video above for a quick overview or keep reading for the complete guide.

Declare All Rental Income

All rental income, even from a single room, must be declared to HMRC. Fortunately, you only pay tax on your net profit, which means you can deduct legitimate expenses first. Failing to declare income can lead to penalties and interest, so it's always best to be proactive.

Claim Every Allowable Expense

To reduce your tax bill, you can deduct a wide range of costs. These include letting agent fees, insurance premiums, property maintenance, service charges, and replacing furnishings under the 'renewals relief' system. Keeping receipts and invoices is essential; without documentation, HMRC won't accept the claims.

Understand Mortgage Interest Relief

In the past, landlords could deduct mortgage interest in full. Now, HMRC offers a 20% tax credit instead. This is automatically applied during online self-assessment submissions, so most landlords won't need to do anything manually, but understanding how the relief works helps you estimate your end-of-year bill more accurately.

Know the Rules for Overseas Landlords

If you live outside the UK for more than six months in a tax year, you're classed as a non-resident landlord. Letting agents must deduct basic rate tax from your rent unless you register for gross rental receipts by submitting an NRL1 form to HMRC. Applying is free, and it ensures you receive your rent in full without deductions.

Meet the Deadlines to Avoid Penalties

The tax year ends on 5 April. Paper returns must be filed by October 31, while online submissions are due by January 31 of the following year. Late filing triggers automatic penalties even if you owe nothing. Start early and set reminders to stay on track.

Keep Excellent Records

Good record-keeping is key to stress-free tax returns. Store digital copies of receipts, keep a log of rent received and expenses paid and consider using landlord-specific accounting software. With organised books, you'll find it easier to file returns, justify claims, and respond to any future queries from HMRC.

Ask an Expert

A qualified tax adviser can help you maximise deductions and ensure you’re claiming correctly. Many landlords save more in tax than they pay in advice fees. Our team can connect you with an expert if you’d like a personalised consultation.

Speak to our lettings specialists today and start investing smarter, to live better.