Introduction

Property rental can be a profitable venture, but it comes with tax responsibilities. If you earn money from letting out residential or commercial property, even informally, you’re required by law to declare that income to HMRC. Failing to do so can lead to fines, interest, and legal scrutiny.

Whether you’ve just started letting a spare room, or you’re a new landlord with a buy-to-let mortgage, this guide will walk you through how to declare rental income to HMRC accurately and on time.

Finding it difficult to Start keeping accurate records of your rental income and expenses then Contact Taxcom for handling all your queries..

What is Considered Rental Income in the UK?

Before you can understand how to declare rental income, you need to know what HMRC defines as rental income. In the UK, rental income includes more than just monthly rent payments. It encompasses all payments you receive from tenants related to the occupation of your property.

Income HMRC Considers Taxable:

Rent Payments:
The primary source of income – this includes regular rent from tenants or lodgers.
Utility Payments and Bills:
If your tenant pays you a flat fee that includes utilities, or reimburses you for bills, that amount counts as income.
Furnishings and Services:
Charges for furniture use, cleaning services, internet, gardening, or maintenance are all taxable.
Non-refundable Deposits:
If you retain part or all of a deposit due to tenant damage or unpaid rent, this must be included in your declared income.
Lease Premiums:
For longer-term leases (over 50 years), part of the lease premium may count as rental income.
Holiday Lets and Airbnb:
Income from short-term lets also qualifies as rental income and must be declared, even if you only rent occasionally.

Understanding what counts helps you avoid underreporting income or over-claiming deductions.

Call to Action: Review all payments from tenants – even incidental ones – and include them in your rental income records.

When and Why You Must Declare Rental Income

Knowing how to declare rental income is only part of the process — timing is just as critical. HMRC requires individuals to report rental income under Self Assessment if their income exceeds certain thresholds or meets specific conditions.

When You Need to Declare Rental Income

You must declare rental income to HMRC if:

Your total rental income is over £1,000 per tax year
HMRC offers a “property income allowance” of £1,000. If your gross rental income is less than or equal to that amount in a tax year (6 April to 5 April), you don’t need to declare it. If it exceeds £1,000, you must register for Self Assessment and file a tax return.
You rent property through a company or business structure
Even if your share of rental income is under £1,000, if you’re letting through a business or have joint ownership structures (such as partnerships), declaration is still required.
You live abroad but rent out UK property
Non-resident landlords must still declare rental income to HMRC. In many cases, tenants or letting agents must withhold tax at the source unless you register with HMRC’s Non-Resident Landlord Scheme.
You operate furnished holiday lettings (FHLs)
These are treated differently from traditional buy-to-let income and come with separate rules and reliefs — but still require declaration.
You’ve sold or plan to sell the rental property
Capital Gains Tax (CGT) may apply, and previous rental income history may be relevant to your CGT calculation.

HMRC Penalties for Non-Declaration:

Up to 100% of the unpaid tax in penalties
Daily interest charges
Potential criminal proceedings in severe cases

Don’t wait for HMRC to contact you — register for Self Assessment Through The Taxcom as soon as your rental income exceeds the threshold.

How to Declare Rental Income to HMRC

Once you’ve determined that your rental income exceeds the £1,000 threshold and must be reported, you’ll need to go through HMRC’s investigation process. Here’s a step-by-step guide on how to declare rental income to HMRC properly.

Step 1: Register for Self Assessment

If you’re a new landlord, you must first register for Self Assessment by 5 October following the end of the tax year in which you received rental income.

Where: GOV.UK – Register for Self Assessment
When: For example, if you earned rental income in the 2024/25 tax year (ending 5 April 2025), you must register by 5 October 2025.
What you’ll get: A Unique Taxpayer Reference (UTR) and activation code for your Government Gateway account.

Step 2: Keep Detailed Records

You must maintain accurate, dated records for all rental income and allowable expenses. These should include:

Rental agreements
Rent payment receipts
Bank statements
Invoices for repairs, insurance, or services
Mortgage interest statements
Utility bills (if paid by you and included in rent)

HMRC can request records going back 6 years, so store them securely.

Step 3: File Your Self Assessment Tax Return

Each year, you must file your return by the deadline:

Paper returns: 31 October
Online returns: 31 January

The tax return form is SA100, and rental income is entered under SA105 (UK Property).

You’ll need to:

Enter total rental income
Subtract allowable expenses (we’ll cover these next)
Declare profit or loss
Submit online or via an accountant

Step 4: Pay Any Tax Due

The deadline to pay is 31 January following the tax year end. You may also have to make payments on account for the next tax year if your tax bill exceeds £1,000.

Methods of payment: Bank transfer, Direct Debit, debit/credit card, or through your online personal tax account.

Step 5: Declare Future Income Annually

You must continue declaring rental income every year until you:

Stop letting the property
Your income drops below the threshold
You inform HMRC and deregister from Self Assessment

Registering early and filing your Self Assessment on time to avoid fines and ensure accurate reporting of your rental income is the right thing to do. We at The Taxcom are always here to guide you with our teams of experts.

What Rental Expenses Can You Deduct?

Knowing how to declare rental income isn’t just about reporting what you earn — it’s also about understanding what you can legitimately deduct to reduce your tax bill. HMRC allows landlords to offset certain “allowable expenses” against their rental income to calculate the net taxable profit.

What Are Allowable Expenses?

Allowable expenses are costs incurred wholly and exclusively for the purpose of renting out the property. You can only claim for the portion of an expense related to the rental activity — personal use must be excluded.

Common Allowable Expenses:

Letting Agent Fees
- Charges for property management, tenant finding, and rent collection.
Property Repairs and Maintenance
- Fixing leaks, repainting, replacing broken fittings (not improvements).
- Routine maintenance is claimable, but capital improvements (e.g. extensions) are not.
Insurance Premiums
- Landlord insurance, buildings and contents cover, and rent guarantee insurance.
Council Tax, Utilities, and Ground Rent
- If you pay these costs (not the tenant), they’re allowable.
Services Provided to Tenants
- Cleaning, gardening, security, or concierge services.
Accountant Fees
- Costs of professional help with your rental accounts or tax return.
Legal Fees
- Related to renewing leases of less than a year or evicting tenants.
Mortgage Interest
- You can no longer deduct mortgage interest directly, but you may claim a 20% basic rate tax credit instead.
Advertising Costs
- Promoting your property online or in print to find tenants.
Wear and Tear (Furnished Properties)

You can’t claim a flat-rate anymore, but you can deduct the actual cost of replacing domestic items, like:
- Beds, sofas
- Curtains, carpets
- White goods (e.g. fridge, washing machine)

Partial Expenses

If a cost is shared between personal and rental use (e.g. broadband), only the rental-use portion is deductible. Be prepared to justify this split with records or usage logs if HMRC asks.

at a discounted rate — do I still declare it?

Yes. HMRC still considers that income taxable. Even if it’s below market value, you need to know how to declare rental income correctly — and you may be restricted from claiming full expenses if it’s not a commercial arrangement.

4. What if I don’t make a profit? Do I still need to declare rental income?

Yes. Even if your rental business operates at a loss, you must learn how to declare rental income to HMRC and report your income and expenses through a Self Assessment return. Losses can usually be carried forward to offset future profits.

5. How to declare rental income if I live abroad?

If you’re a non-UK resident with a UK property, you still need to know how to declare rental income to HMRC. You may be required to register under the Non-Resident Landlord Scheme and either pay tax through Self Assessment or have it deducted at source.

6. Can I deduct my full mortgage payments when declaring rental income?

No. One of the most common mistakes in how to declare rental income is thinking mortgage payments are deductible. Only the mortgage interest qualifies — and that’s now restricted to a 20% tax credit for most landlords.

7. I made an error on last year’s return. Can I fix it?

Yes. If you’re reviewing how to declare rental income correctly and realise there was a mistake in a previous tax return, you can amend it within 12 months of the filing deadline. After that, you’ll need to write to HMRC directly.

8. What happens if I’ve never declared rental income in the past?

If you’ve failed to report past rental earnings, HMRC has a disclosure route known as the Let Property Campaign. It’s designed for landlords to catch up. If you’re learning how to declare rental income for the first time and know you’ve missed previous years, disclosing voluntarily can reduce penalties.

9. Is rental income taxed separately from my job income?

No. If you’re wondering how to declare rental income alongside employment income, you should know that rental profits are added to your total income and taxed at your marginal rate. That means it could push you into a higher tax band.

10. Should I open a separate bank account for rental income?

It’s not mandatory, but it’s best practice. Understanding how to declare rental income involves good record-keeping — and a separate account simplifies tracking income and expenses, which makes your Self Assessment more accurate.

Need Help Declaring Rental Income? Let The Taxcom Handle It for You

Declaring rental income to HMRC doesn’t have to be stressful or risky. Whether you’re a first-time landlord, managing multiple properties, or catching up on undeclared income, The Taxcom can guide you through every step.

Contact The Taxcom today for your initial consultation

How to Declare Rental Income to HMRC: A Complete Guide