Income Tax on Rental Profits
How rental income is taxed, what counts as profit and the key rates.
How rental income is taxed
Rental income is taxed as property income. You pay income tax on your net rental profit — your total rental income minus your allowable expenses. The tax rates are the same as for other income: 20% (basic rate), 40% (higher rate) and 45% (additional rate).
If you have multiple properties, all rental income and expenses are pooled together as a single property business. You cannot offset losses from one property against profits from another in a different tax year.
- Tax on net rental profit (income minus allowable expenses)
- Basic rate: 20% (income up to £50,270 in 2025/26)
- Higher rate: 40% (income £50,271–£125,140)
- Additional rate: 45% (income over £125,140)
- Personal allowance: £12,570 (2025/26) — no tax on income below this
Keep accurate records of all rental income and expenditure throughout the year. Good records make your self-assessment return straightforward and reduce the risk of errors.
Self-assessment
If your rental income exceeds £1,000 in a tax year, you must register for self-assessment and complete a tax return. The deadline for online returns is 31 January following the end of the tax year. The deadline for paper returns is 31 October.
You must also make payments on account — advance payments of your estimated tax bill — by 31 January and 31 July each year, if your tax bill exceeds £1,000.
Late filing of your self-assessment return incurs an automatic £100 penalty. Late payment of tax incurs interest and surcharges. File and pay on time.