Who Needs to Complete Self Assessment?

If you receive rental income from a UK property, you are required to register for Self Assessment and declare that income to HMRC each tax year. This applies whether you are a private landlord, accidental landlord, or professional property investor.

You must register by 5 October following the end of the tax year in which you first received rental income.

Allowable Expenses

You can deduct certain expenses from your rental income before calculating your tax liability. Allowable expenses include:

• Letting agent fees and management charges
• Property repairs and maintenance (not improvements)
• Buildings and contents insurance premiums
• Accountancy and professional fees
• Ground rent and service charges (leasehold properties)
• Utility bills paid by the landlord
• Council tax paid during void periods
• Advertising costs for finding tenants
• Stationery, phone calls, and travel to the property

Mortgage Interest Relief

Since April 2020, landlords can no longer deduct mortgage interest as an expense. Instead, you receive a basic rate tax credit of 20% on your mortgage interest payments. This applies to residential properties only.

• Higher and additional rate taxpayers are most affected by this change
• The credit is applied after calculating your tax liability
• Commercial properties are not affected

Wear and Tear Allowance

The old 10% Wear and Tear Allowance was abolished in April 2016. You can now only claim for the actual cost of replacing furnishings in furnished properties — this is known as the Replacement of Domestic Items Relief.

Property Income Allowance

If your total rental income is £1,000 or less per tax year, it is covered by the Property Income Allowance and you do not need to declare it. If your income exceeds £1,000, you can choose to deduct the £1,000 allowance instead of actual expenses — but only if that is more beneficial.

Key Filing Deadlines

• 5 October: Register for Self Assessment (if new to it)
• 31 October: Deadline for paper tax returns
• 31 January: Deadline for online tax returns and tax payment
• 31 July: Payment on account (second instalment)

Making Tax Digital (MTD) for Income Tax

From April 2026, landlords with rental income over £50,000 must use MTD-compatible software to keep digital records and submit quarterly updates to HMRC. The threshold drops to £30,000 from April 2027, and £20,000 from April 2028.

Penalties for Late Filing or Payment

• £100 automatic penalty for missing the 31 January deadline
• Further daily penalties of £10 per day after 3 months (up to £900)
• 6-month and 12-month penalties of 5% of tax due
• Interest charged on unpaid tax from the due date

Record Keeping

You must keep records of all rental income and expenses for at least 5 years after the 31 January submission deadline for the relevant tax year. HMRC can investigate returns up to 20 years back in cases of deliberate non-compliance.