Is a new kitchen a repair or an improvement?

The test is whether you have restored the property or upgraded it. Replacing a worn kitchen with a modern equivalent of similar quality is a repair, deductible against rental profit in the year, even though the units are new and the old ones were not. Replacing a small galley kitchen with a bigger one after knocking a wall through is an improvement, and goes against your capital gain when you sell instead. Changes in material that simply reflect what is now standard, such as fitting a modern boiler in place of an old one, are usually still repairs. Keep the quote wording and before-and-after photographs, because that is what settles the argument later.

Should I move my properties into a limited company?

Sometimes, but the transfer cost usually decides it rather than the running tax. Moving a property you own personally into your own company is a sale at market value for tax, so it can trigger Capital Gains Tax on the gain to date, and the company pays Stamp Duty Land Tax including the 5% additional dwellings surcharge — on a £200,000 property that is £11,500 before anyone has considered the tax saving. If there is a mortgage, the lender has to agree and buy-to-let company rates are typically higher. The company case is strongest for higher rate taxpayers building a portfolio with new purchases, not for someone with two flats they have owned for a decade.

Can I claim for the time I spend managing my own properties?

No. You cannot pay yourself for your own labour and deduct it, because there is no third party and no real cost — it is your own income going round in a circle. What you can claim is the mileage or actual motoring cost of genuine journeys to the property for repairs, inspections and viewings, the proportion of phone and broadband used for the letting, and a reasonable use-of-home figure if you run the letting from your own house. If a spouse or family member genuinely does the work, paying them a commercial rate is deductible, but it has to be real work at a real rate, actually paid, and it becomes their taxable income.

What if I make a loss on a rental property?

Rental losses cannot be set against your salary, pension or trading income. They are carried forward and set against future profits of the same UK property business instead, and there is no time limit on carrying them forward. All your UK properties are treated as one business, so a loss on one flat automatically offsets profit on another in the same year — you do not elect for that, it happens by default. Overseas property is a separate business with its own pool of losses. Losses still have to be reported to be preserved, so keep declaring the property on your return in loss-making years rather than leaving it off.

I have not declared rental income for several years. What now?

Come forward voluntarily, through HMRC's Let Property Campaign, before HMRC come to you. It is a disclosure route specifically for individual landlords with undeclared residential letting income, and the penalties on a voluntary, unprompted disclosure are substantially lower than on one prompted by an HMRC letter. HMRC receives data from the Land Registry, letting agents, deposit protection schemes and councils, so undeclared lettings surface routinely rather than rarely. Expect to disclose the years involved, pay the tax with interest, and pay a penalty calculated on how the disclosure came about. It is an uncomfortable conversation to start and a far cheaper one than the alternative.

Does the £1,000 property allowance apply per property or per person?

Per person, not per property. One landlord with four flats has a single £1,000 allowance across the lot, because all UK lettings are treated as one property business. A jointly owned property is different: each owner has their own £1,000 allowance against their share, so a couple letting one property between them has £2,000 of combined allowance available. Remember it is an alternative to claiming actual expenses rather than an addition to them, and it also cannot be combined with the finance cost reducer. For anyone with a mortgage the allowance is almost always the worse of the two options.

The Landlord's Guide to Tax and Compliance

The question every landlord asks: what can I actually claim?

It's one of the most common questions landlords ask, and it's a fair one — the rules aren't always intuitive, and getting it wrong in either direction causes problems. Claim too little and you're paying more tax than you need to. Claim too much, or claim the wrong things, and you're storing up a problem for later. The starting principle is that allowable expenses need to be incurred wholly and exclusively for the purpose of renting out the property. Most of the confusion comes from costs that sit in the middle — partly personal, or partly capital improvement rather than day-to-day running cost.

What's usually claimable

Day-to-day running costs are generally the safest ground: letting agent fees, landlord insurance, ground rent and service charges, accountancy fees for managing the property's tax affairs, and repairs and maintenance that keep the property in its existing condition rather than improving it. Utility bills paid on the tenant's behalf, and the reasonable costs of finding and vetting new tenants — advertising, referencing checks and similar — are usually claimable too.

The £1,000 property allowance

Before working through expenses at all, check whether you need to. Every individual has a £1,000 property allowance. If your gross rental income for the year is £1,000 or less you generally do not need to declare it. If it is more, you can choose to deduct the £1,000 allowance instead of your actual expenses — which is worth doing only where your real costs are under £1,000, because it is one or the other, not both. For a landlord with a mortgage, actual expenses win almost every time. For someone letting a garage, a parking space or a room on a licence with almost no running costs, the allowance is simpler and often larger.

The mortgage interest question, with the numbers

This is where individual landlords get caught out, because the rules finished changing on 6 April 2020 and a lot of advice still predates them. Mortgage interest on a residential rental property held personally is no longer deducted from rental income before your tax is worked out. Instead you are taxed on the rent without deducting finance costs, and then given a tax reducer worth 20% of those finance costs. For a basic rate taxpayer the outcome is broadly neutral. For a higher rate taxpayer it is not.

A worked example, illustrative only. Take a landlord who is already a higher rate taxpayer from their job, with one buy-to-let producing £24,000 of annual rent, £9,000 of mortgage interest and £3,600 of other allowable costs — agent fees, insurance, repairs, safety certificates.

Under the old rules, taxable rental profit would have been £24,000 − £9,000 − £3,600 = £11,400, and the tax at 40% would be £4,560.
Under the rules as they stand, taxable rental profit is £24,000 − £3,600 = £20,400. Tax at 40% is £8,160, reduced by the 20% finance cost reducer of £1,800, giving £6,360.

Same property, same cash, £1,800 a year more tax. And there is a second effect that catches people out even harder: the figure that goes into your total income is now £20,400 rather than £11,400. That extra £9,000 of declared income can push you from basic rate into higher rate, past £100,000 where the personal allowance is withdrawn at £1 for every £2, or past £60,000 where the High Income Child Benefit Charge starts and claws back the full amount by £80,000. Landlords who are nowhere near higher rate on their own figures find themselves there once the interest is added back.

What changes on 6 April 2027

At the November 2025 Budget the government announced separate rates of Income Tax for property income, taking effect from 6 April 2027 across England, Wales and Northern Ireland. They are two percentage points above the equivalent main rates: a property basic rate of 22%, a property higher rate of 42% and a property additional rate of 47%. Finance cost relief moves with them, given at the new property basic rate of 22% rather than 20%.

Run the same landlord through the 2027/28 rules and the tax on that property becomes £20,400 at 42% = £8,568, less a finance cost reducer of £1,980 (22% of £9,000), giving £6,588 — about £228 a year more than now. That is not catastrophic on one property, but it scales with the portfolio, and it lands on top of the finance cost restriction rather than instead of it. It is a real number you can budget for, and it is worth putting into any purchase you are appraising this year, because a deal underwritten on 40% will be running at 42% within two years.

Replacing the sofa: a relief people forget

Since 6 April 2016, replacement of domestic items relief lets you deduct the cost of replacing movable furniture, furnishings, household appliances and kitchenware in a let residential property — beds, sofas, carpets, curtains, fridges, washing machines, crockery. Three conditions do the work. The old item has to be genuinely replaced, not supplemented. It must no longer be available for the tenant to use, so it has to go. And if the replacement is an upgrade, you can only claim what the equivalent item would have cost: swap a sofa for a sofa bed and you deduct the price of a like-for-like sofa, not the sofa bed.

The relief applies to unfurnished, part-furnished and fully-furnished lets. What it does not cover is the first time you buy an item — kitting out a property before the first tenant moves in is capital, not a deductible replacement. Fixtures that form part of the building, such as a fitted kitchen or a boiler, sit outside this relief and are usually treated as repairs instead where you are replacing like with like.

What generally can't be claimed

Capital improvements — extending the property, adding an extension, or upgrading it well beyond its original condition — usually aren't claimable as a running cost against rental income in the year you spend the money. They typically get factored in later, against any gain when you sell, rather than against annual rental profit. The distinction between a repair (claimable) and an improvement (not, in the same way) trips up a lot of landlords, and it's worth checking before assuming a big piece of work is deductible straight away. Personal use of the property, and costs that would exist whether or not you were letting it out, generally aren't claimable either.

Personal ownership vs. limited company ownership

How your portfolio is structured changes several of these answers. Property held personally is taxed under Income Tax rules, with the mortgage interest treatment described above, and reported through Self Assessment. Property held through a limited company is taxed differently, under Corporation Tax, with its own set of rules around allowable costs and finance charges, and reported through Corporation Tax returns and statutory year-end accounts rather than a personal tax return. Neither structure is automatically better — it depends on your portfolio size, your other income, your growth plans and your appetite for the additional admin that comes with running a company. This is a genuinely individual decision, and one worth discussing properly with an accountant who understands your whole picture rather than working from a general rule of thumb.

One figure belongs in that comparison before anything else: Stamp Duty Land Tax. Buying an additional dwelling in England or Northern Ireland attracts a 5% surcharge on top of the standard residential rates, and a company buying residential property pays the surcharge from the first pound. On a £200,000 buy-to-let the standard SDLT is £1,500 (nothing to £125,000, then 2% on the next £75,000) and the surcharge adds £10,000, for £11,500 in total. That is a cost of entry, not an annual one, but it is large enough to change whether a deal works — and moving an existing property from your own name into a company is a purchase for these purposes, so the surcharge is charged again on the transfer. Our stamp duty calculator will run your own figures, and the wider structure question is covered in our guide on sole trader versus limited company.

What changes at sale: Capital Gains Tax

Selling a property you have let out is a separate tax event from the rental income you have been declaring. For personally held property, Capital Gains Tax applies to the gain — broadly the sale price less what you paid, less buying and selling costs, less capital improvements. Every individual has an annual exempt amount of £3,000 for 2026/27. Above that, from 6 April 2026 the rates are 18% where the gain falls within your remaining basic rate band and 24% on the rest, which now applies to all types of asset rather than residential property having its own rates.

The deadline is the part that catches people. You must report and pay Capital Gains Tax on UK residential property within 60 days of completion, using HMRC's online property disposal service, not on your next tax return. Interest and penalties run from day 61. Sell in April and leave it to your accountant in the following January and you are ten months late on a return you did not know existed.

This is where the record-keeping pays off. Every capital improvement you made over fifteen years of ownership reduces the gain, and every receipt you cannot find does not. Use our capital gains calculator for a rough figure before you accept an offer, so the tax is a decision input rather than a surprise after completion.

Making Tax Digital: the deadline most landlords have not diarised

Making Tax Digital for Income Tax applies to landlords as well as sole traders, and it is judged on qualifying income — your gross rent plus any gross self-employed turnover, before expenses. That gross test is what catches landlords out: a portfolio producing £55,000 of rent and £8,000 of actual profit is over the threshold on the £55,000.

The dates are set. Anyone with qualifying income over £50,000 came into Making Tax Digital on 6 April 2026. Over £30,000 follows on 6 April 2027, and over £20,000 on 6 April 2028. In practice it means keeping digital records and sending quarterly updates to HMRC from compatible software, then a final declaration after the year end, instead of one annual return. Work out which April applies to you now and get the records into software a full year ahead of it — the landlords who struggle are the ones who start in the quarter it begins. Our Making Tax Digital page sets out what compatible software actually has to do.

The records worth keeping as you go

Even a straightforwardly claimable cost isn't much use to you at tax time without something to back it up — a receipt, an invoice, or a bank statement line showing what was paid and when. This matters more for landlords than almost anyone else, because rental expenses tend to be spread across a whole year of smaller costs — a repair here, a service charge there — rather than a handful of big ones, which makes them easy to lose track of without a system behind them. Keep records of: every item of rental income received and when, every expense with supporting documentation, mortgage or finance statements, and anything spent on capital improvements versus repairs, kept separately since they're treated differently for tax. Doing this as you go, rather than gathering it in a rush before a deadline, is what actually lets you claim confidently rather than guessing what you spent eighteen months ago.

Staying compliant beyond the tax return

Tax isn't the only compliance landlords need to think about, though it's the one that touches every property owner regardless of portfolio size. Depending on how your properties are let and structured, there may be VAT considerations, and if you employ anyone directly (a managing agent's staff don't usually count, but direct employees do) payroll obligations too. The common thread across all of it is the same: clean, current records make every one of these obligations simpler to meet, and reconstructing a year's worth of activity from memory at the deadline is where most landlord tax problems actually start.

Where Buzz fits in

We work with landlords with a single buy-to-let and with growing portfolios, personally owned and through limited companies, with pricing that scales with the size of your portfolio rather than a one-size-fits-all package. Have a look at our landlord accounting page for the full detail, or book a free discovery call and we'll talk through your specific portfolio and structure.