Rental income is taxable in the UK. You pay Income Tax on your net rental profit, which is your total rental income minus allowable expenses. The amount you pay depends on your total income, including rental profits alongside any employment or self-employment earnings.
If your total rental income is below £1,000 in the tax year, you do not need to declare it or pay tax on it. This is the property income allowance. Above this threshold, you must declare all rental income and can claim allowable expenses instead.
How rental income is taxed
Rental profits are added to your other income and taxed at your marginal rate:
| Total income (2025/26) | Tax rate on rental profit |
|---|---|
| Up to £12,570 (Personal Allowance) | 0% |
| £12,571 to £50,270 | 20% (basic rate) |
| £50,271 to £125,140 | 40% (higher rate) |
| Above £125,140 | 45% (additional rate) |
If you already earn £50,000 as an employee, your rental profits will be taxed at 40% from the first pound. This is why tax planning is important for landlords with other income.
What counts as rental income?
- Monthly rent payments from tenants
- Advance rent payments
- Payments for the use of furniture (in a furnished let)
- Service charges and maintenance fees paid by tenants to you
- Payments by tenants for utilities where those payments form part of the rental arrangement
What can you deduct?
You can deduct allowable expenses from your rental income before calculating your profit. Key deductions include:
- Letting agent fees and management charges
- Accountancy fees
- Buildings and contents insurance
- Repairs and maintenance (not improvements)
- Council tax, water rates, and gas/electricity (if you pay them)
- Ground rent and service charges (leasehold properties)
- Advertising and tenant-finding costs
See our full guide to landlord allowable expenses for the complete list.
The 20% mortgage interest tax credit (Section 24)
Since April 2020, landlords can no longer deduct mortgage interest as an expense. Instead, you receive a 20% tax credit on your mortgage interest costs. This change, known as Section 24, has significantly increased the effective tax rate for higher-rate taxpaying landlords. See our Section 24 guide for full details.
Jointly owned properties
If you own a rental property jointly with a spouse or civil partner, rental income is split equally by default (50/50) for tax purposes. However, you can elect for the income to be split in proportion to your actual beneficial interest in the property using Form 17. This election cannot be used for unmarried couples, who must declare income in proportion to their beneficial interest.
How to declare rental income
If you have rental income you must declare it via Self Assessment. See our guide to declaring rental income to HMRC.
This guide is for general information only. Property taxation is complex and frequently changes. Always consult a qualified tax adviser or accountant before making decisions. Find one via our accountant directory.