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Tax for landlord — start here

Landlord tax is dominated by Section 24 and the 60-day CGT trap — both can hit cash flow harder than the rate cards suggest.

As a UK landlord you report rental profit through Self Assessment (or company CT if held in a Ltd). The big structural change of the last decade is Section 24 — for individual (non-corporate) landlords, mortgage interest is no longer a deduction but a 20% basic-rate tax reducer, pushing many higher-rate landlords into apparent profit while economic profit is thin or negative. April 2025 abolished the Furnished Holiday Lettings regime; from April 2026 MTD ITSA mandation begins for landlords with combined gross income above £50,000.

Key facts

Property allowance: first £1,000 of gross property income tax-free, no reporting needed. (as of 2025-04-06)
Section 24: mortgage interest for individual landlords is restricted to a 20% basic-rate tax reducer, not a deduction from rental profit. (as of 2020-04-06)
FHL regime abolished from 6 April 2025 — losing CGT BADR + full-relief capital-allowances + pension-relevant earnings treatment. (as of 2025-04-06)
60-day CGT reporting + payment-on-account window for UK residential property disposals by individuals. (as of 2021-10-27)
Rent-a-room scheme: £7,500/year tax-free for letting furnished rooms in your main residence (£3,750 if shared). (as of 2025-04-06)

Deadlines that matter for you

Within 60 days of completion
UK residential property disposal CGT report + payment to HMRC for individuals.
If missed: £100 immediate fixed penalty; further £300 or 5% of tax (greater) at 6 + 12 months; interest at HMRC rate.
31 January 2027
Self Assessment filing + balancing payment + first payment on account for property income 2025/26.
If missed: £100 fixed + daily £10 + 5% surcharges + interest. Penalty interaction with the 60-day CGT regime is layered.
6 April 2026
MTD ITSA mandation begins for landlords (combined with self-employment) above £50,000 gross.
If missed: £200 fixed penalty once 4 points accrued in the rolling 12-month window.
Ongoing
Annual gas safety certificate + 5-yearly electrical (EICR) — not tax, but evidence trail expected for repair vs capital improvement decisions.
If missed: Distinct legal exposure; tax-relevant because expenditure characterisation drives revenue / capital split for income tax.

What most people in your position get wrong

Deducting full mortgage interest as if Section 24 didn't happen.
Since 6 April 2020, individual landlords get only a 20% basic-rate tax reducer on finance costs. Higher-rate landlords with mortgage-heavy portfolios can be paying tax on cash they don't actually receive.
Typical cost: Tax-on-paper-profit-not-real-profit: thousands of £ per year depending on leverage.
Confusing 'repair' (deductible revenue) with 'improvement' (capital, added to base cost for CGT).
Like-for-like replacement of existing items in their current condition = repair; upgrading materially (e.g. single to double glazing in original installation) = capital. Document the condition before-and-after.
Typical cost: Mis-categorisation: full disallowance of expenditure as income deduction; only recoverable against CGT on eventual sale.
Missing the 60-day CGT window on a residential property sale because the SA return 'covers it later'.
Since 27 October 2021, individuals must report + pay UK residential CGT within 60 days of completion. The SA return reconciles, but does not replace, the 60-day filing.
Typical cost: Penalties: £100 + £300 or 5% at 6 months + same at 12 months + late-payment interest.
Assuming incorporation always wins tax-wise.
Transferring property to a company is a CGT disposal at market value + SDLT charge on the transfer + ongoing dual-layer taxation when extracting profits. Sometimes incorporation wins (portfolio + heavy reinvestment + Section 24 pain); often it loses (single property, lifestyle income).
Typical cost: Incorporation costs (SDLT + CGT crystallisation) can run to tens of thousands £; need 10+ year horizon to recover via lower ongoing rate.

Who this is for

You receive UK rental income — single buy-to-let, a portfolio, holiday lets, lodger income, or property held inside a company. Covers individual landlords (Self Assessment) and incorporated landlords (CT).

Who this is NOT for

Pure short-term Airbnb hosts treating it as a business may overlap with /start-here/side-hustle. Property developers (trading, not investment) should see sole-trader/Ltd routes depending on structure. Non-resident landlords moving abroad — see /moving-abroad.

Start with these guides

Section 24 — full mortgage-interest restriction mechanics →

What changed, why higher-rate landlords are worst hit, worked numbers.

FHL abolition — what replaces it from April 2025 →

Loss of BADR / capital allowances / relevant earnings; transition mechanics.

60-day CGT residential property reporting →

Filing + payment-on-account window for individuals.

Replacement of domestic items →

Relief for like-for-like replacement of furniture / appliances in rented dwellings.

Rent-a-room scheme →

£7,500 tax-free for lodgers in your main residence.

Property allowance →

£1,000 micro-landlord relief.

Tax for landlords — operational guide →

Day-to-day decisions: capital vs revenue, allowable expenses, voids.

Useful calculators

Capital Gains Tax calculator →

Residential property disposals, AEA, BADR where applicable.

Income Tax calculator →

Rental profit interaction with other income sources.

Stamp Duty calculator →

SDLT including 5% additional-property surcharge.

Go deeper

In plain English

Rental property is treated as investment income, not trading income — so it doesn't get most of the small-business reliefs, and since 2020 it doesn't even get full mortgage interest relief. The tax bill is driven by gross rent, your top rate, and how much of your spend HMRC will accept as 'repair' rather than 'improvement'. The two highest-cost mistakes are misjudging Section 24 cash-flow and missing the 60-day CGT window on sale.

Statute reference

ITTOIA 2005 Part 3 (property income); Income Tax Act 2007 s.272A–B (Section 24 mortgage-interest restriction); Finance Act 2024 (FHL abolition); Taxation of Chargeable Gains Act 1992 Sch.2 (60-day CGT reporting); ITTOIA 2005 s.311A (replacement of domestic items); ITTOIA 2005 Part 7 (rent-a-room).

Worked example

Higher-rate individual landlord, 2 rental properties, gross rent £24,000, mortgage interest £14,000, other allowable expenses £3,000, 2025/26.

Gross rent: £24,000
Allowable cash expenses (non-finance): £3,000
Taxable rental profit (interest NOT deducted): £21,000
Mortgage interest (for 20% tax reducer): £14,000

Calculation: Income tax on £21,000 at 40% (higher-rate landlord with PAYE income filling lower bands) = £8,400. Section 24 reducer: £14,000 × 20% = £2,800 off the tax bill. Net property tax: £5,600.

Outcome: Cash profit (rent − all expenses − interest): £24,000 − £3,000 − £14,000 = £7,000. After tax: £7,000 − £5,600 = £1,400. Effective tax rate on real cash profit: 80%. Pre-Section-24 this same landlord paid 40% × (£7,000) = £2,800 — half today's bill.

Last reviewed: 2026-05-24. Statute references are for orientation, not advice. Always confirm specifics for your situation against current HMRC guidance or a regulated professional.