Landlord MTD checker
Use gross UK property income plus gross self-employment income from the relevant earlier tax year to show whether MTD applies and from which date.
1. How rental profit is calculated
Taxable property profit broadly starts with rental and other property-business income, less allowable expenses. Residential finance costs are then dealt with under separate tax-reduction rules for individual landlords.
A landlord receiving £24,000 of rent with £7,000 of ordinary allowable running costs has £17,000 of property profit before considering any finance-cost tax reduction.
2. What expenses can landlords claim?
Common running costs include letting-agent fees, accountancy costs, insurance, revenue repairs, utilities paid by the landlord, cleaning, advertising and certain professional fees.
The distinction between a repair and an improvement matters. Routine restoration is usually revenue; a material enhancement can be capital expenditure instead.
- Letting and management fees
- Insurance and qualifying professional fees
- Repairs and maintenance
- Cleaning, gardening and utilities where relevant
- Replacement of qualifying domestic items
3. The £1,000 property allowance
Individuals may be able to use a property allowance of up to £1,000 against qualifying property income. If income exceeds £1,000, compare the allowance with actual deductible expenses.
You cannot simply claim both methods against the same qualifying income.
4. Mortgage interest and finance costs
For most individual residential landlords, mortgage interest is no longer deducted in full from rental profit. Qualifying finance costs can instead generate a 20% tax reduction, subject to statutory limits.
This is especially important for higher-rate taxpayers because a 20% reducer is not the same as receiving relief at 40%.
Not sure how the finance-cost restriction affects your tax bill?
File my Self Assessment5. Jointly owned rental property
Married couples and civil partners living together are generally taxed 50:50 on jointly held property income unless the beneficial ownership is genuinely unequal and the appropriate declaration is made.
A Form 17 declaration must reflect the actual beneficial ownership; it is not a free choice of tax split.
Jointly own a property and unsure how the split should be taxed?
File my Self Assessment6. Property losses
UK property losses are generally carried forward against future profits of the same UK property business. They do not normally operate like ordinary trading losses against salary or unrelated income.
Keep a clear schedule of unused losses because they can remain valuable in later years.
7. The Furnished Holiday Lettings regime has ended
The separate FHL regime was abolished from 6 April 2025 for individuals. Current holiday-let income is therefore generally brought into the normal property-income regime.
Older advice about special FHL pension, capital-allowance or CGT advantages should be treated as historic unless it relates to a period before abolition.
8. Making Tax Digital for landlords
MTD for Income Tax started on 6 April 2026. Thresholds are based on combined gross qualifying self-employment and UK property income from the relevant earlier tax year.
This means neither source needs to exceed the threshold on its own for MTD to apply.
- Over £50,000 in 2024/25 → MTD from 6 April 2026
- Over £30,000 in 2025/26 → MTD from 6 April 2027
- Over £20,000 in 2026/27 → MTD from 6 April 2028
Not sure if Making Tax Digital applies to your rental income yet?
File my Self AssessmentFrequently asked questions
Do I pay tax on rental income or profit?
Generally on taxable property profit after allowable deductions, subject to special rules such as the residential finance-cost restriction.
Can I deduct my buy-to-let mortgage interest?
Individual residential landlords generally receive a basic-rate tax reduction for qualifying finance costs rather than a full deduction from property income.
Can I claim the £1,000 property allowance and expenses?
Not on the same qualifying income. You normally compare the allowance with actual deductible expenses.
Are furnished holiday lets still taxed differently?
The special FHL regime was abolished from 6 April 2025 for Income Tax, so current income generally follows normal property rules.
Need help with rental income and Self Assessment?
Experlu can help prepare your return, review property-income calculations and identify areas that may need specialist tax advice.
File my Self AssessmentThis guide provides general information only and does not constitute personal tax or financial advice. Tax treatment depends on individual circumstances.