Landlord tax tips
If you're a landlord with property in London, it's important to know where you stand when it comes to paying taxes on the income you earn from renting out your property.
Refer back to this page (we suggest bookmarking it) to stay up to date with all of the expenses you can deduct, tips and changes you should prepare for.
Tax deductible expenses:
Letting agent's fees
Costs associated with general maintenance and repairs (but not improvements)
Rents, ground rents, and service charges
Insurance covering appliances like boilers ex. the British Gas HomeCare cover
Costs of services like gardeners and cleaners
Between tenancy inventories and deep cleans
Compliance checks like gas safety inspections (GSIs), EICRs and EPCs
Water rates, council tax, gas and electricity
Legal fees for lets of a year or less, or for renewing a lease of less than 50 years
Direct costs like phone calls, stationary and advertising for new residents
Keep in mind...
1. If you let out your property for only part of the year, or you let out only part of your home, you have to apportion your expenses.
2. You can no longer deduct any of your mortgage expenses from your rental income to reduce your tax bill. Instead, you now receive a tax-credit, based on 20% of your mortgage interest payments.
Making Tax Digital
This is a move from the government to reduce the tax gap and make tax collection more efficient. It will require landlords to keep digital records and submit their taxes through compatible software.
Notably, landlords will need to file every quarter, so it will be critical to keep track of expenses as they occur. There will be a point system for late submissions, and a fine once a threshold of points is reached.
So far, the changes don't extend to payment, which will remain annual.
The good news is, for landlords with larger portfolios, they're likely to either already use an accountant or their own accounting software like QuickBooks.
Those with a VAT registered business are already required to keep digital records and use compatible software.
But for those landlords with smaller portfolios - those who inherited a family property for example - they're less likely to already have this type of set up in place. It's likely the government will provide free filing software as they do in other countries, but it's yet to be confirmed.
So when do these changes come into play?
So far the government has announced these changes apply from 6 April 2026 for landlords with an annual property income of more than £50K, and April 2027 for landlords with an annual property income of more than £30K.
If you're keen to get ahead of the game, you can check to see if you're eligible to sign up and test Making Tax Digital for Income Tax on the government website here.
We’ll keep this page updated as more information is announced, so make sure to check back!