“If you leave the preparation of your tax return until close to the filing deadline you may find yourself with a nasty surprise when your tax liability is calculated so close to the payment due date,” said Chloe Moss, chartered accountant at Tunstall Accounting.

“I always recommend that clients prepare their returns as soon after the end of the tax year as possible.

“If clients are making payments on account, filing their tax return before July 31 may mean that their second payment on account is reduced if their income is less than expected, so it’s always a good idea to aim to file before the end of July.”

Pay the right tax

Landlords may need to file a self-assessment return to ensure they pay income tax on the rental income they receive – you’ll need to detail this, and any other forms of income you receive, even if you’ve already paid tax on it (such as employment income).

You may also owe National Insurance if your profits are more than £12,570 a year and being a landlord is your main job.

If your rental income is below a certain level, you may not owe any tax – but you’ll still need to submit a return.

As well as the £12,570 personal allowance, there are some additional tax-free allowances that can be applied to your income. There is a property allowance of £1,000 a year if you earn income from land or property.

If you own a property jointly, each individual can use the £1,000 allowance against their share of the gross rental income – but if you apply this allowance, you won’t be able to claim individual allowable expenses.

Tax guidelines say you need to contact HMRC if your gross income is between £1,000 and £2,500, and must register for self-assessment if it is above that.

If you receive rental income from letting a room in your main home, you may be eligible for the “rent a room scheme”. Using this, you can make up to £7,500 per year tax-free.

Tax relief on mortgage interest

In the past, one of the main perks of buy-to-let was that landlords could offset mortgage interest payments on their tax bill.

Since April 2017, this has been restricted to 20pc relief – quite a drop, since higher-rate taxpayers would once have been able to claim back 40pc. This tax relief is ‘paid’ as a tax credit.

This means more of a landlord’s income is subject to tax, and they may also be pushed into higher tax brackets, which would potentially push self-assessment bills up further.

“Tax relief is only permitted on the interest element of any mortgage payments, not the capital repayment, so you will need a statement from your lender detailing the total interest paid for the tax year,” said Ms Moss.

“This reduction cannot be used to create a tax refund, but any unused relief can be carried forward to later years.”

For more information, see our guide to buy-to-let mortgage tax relief.

Claim for allowable expenses

The taxman does still let landlords claim for other costs of running a rental portfolio, known as “allowable expenses”.

HMRC has a list of allowable expenses that you can claim. These include:

• The cost of maintenance to the property

• Service costs from gardeners, cleaners and similar services

• Accountants’ fees

• Letting agent and management fees

• The cost of landlord insurance, contents insurance and public liability insurance.

“Do you pay a cleaner, ground rent or commission to a letting agency? They’re all expenses you can claim,” said David Portman, of chartered accountants and business advisers Lubbock Fine.

“So are your accountant fees and costs of travel to a property if you’re inspecting it.

“With how much the cost of insurance has risen in the last couple of years, it’s now particularly important to claim the cost of your building insurance as an expense.”

Timing your expenses can also save you money on your tax bill.

“For example, look at your profits in February and see whether it would be worth accelerating some expenses into this year,” Mr Portman added.

“Does one of your properties need a new boiler? It might be worth doing it before April 5. This will lower your profit and might help you stay in a lower tax bracket.”

To successfully claim expenses against your income, you’ll need to keep detailed records and proof of both the income you’ve received and what you’ve spent. This includes receipts, invoices, bank statements and rent books will all be required, should HMRC ask for evidence of your finances.

You can face penalties if your records are not deemed to be “accurate, complete and readable”, and if you don’t keep them for the required amount of time – at least five years after the January 31 deadline.

Put your losses to good use

If your allowable expenses exceed the income you’ve made from a property, you’ll have made a loss. This can be used against profits you make in the future.

For example, say you earned £5,000 from a property in 2024-24, but spent £10,000 on allowable expenses. Your loss would be -£5,000.

The next year, let’s say your profit was £10,000. You could use the £5,000 loss to make your profit £5,000 for 2024-25, thereby reducing the amount of tax you owe.

Alternatively, if you have more than one rental property, you can pool the profits and losses you make from all of them and essentially offset one property’s loss against another property’s gain.

In this case, let’s say you have three rental properties. One makes a £3,000 profit, another makes a £7,000 profit, while one makes a -£5,000 loss. When taken as a whole, relief on the losses can be automatically applied against the other properties, making your overall taxable profit £5,000.

Tips to pay the right amount of tax

• File on time: even being a day late can land you with a £100 fine.

• Know your allowable expenses: Make sure you know the difference between allowable expenses and costs that can’t be claimed. For example, major works that go beyond maintenance, and legal fees related to purchasing the property are not claimable. Failing to claim the expenses you’re entitled to means you could pay too much tax, while paying too little tax could land you with a fine.

• Ensure the information you provide is accurate: HMRC has a sliding penalty scale for mistakes and errors; careless mistakes can be charged up to 30pc of the “lost” tax, whereas deliberate mistakes could incur a charge of up to 100pc.

  
  Marc Shoffman

  Fri, January 30, 2026.