Sometimes life makes you an accidental landlord—maybe you moved in with a partner, inherited a property, or simply couldn’t sell your old home.
Renting out a second property can bring in extra income and ensure it doesn’t sit empty, but it also comes with a fair bit of admin.
Between managing tenants, complying with the Renters’ Rights Act, and staying on top of taxes, there’s a lot to think about before you let out your home.
Understanding Rental Income Tax
Any rent you receive (but not the deposit) must be declared to HMRC.
Rental income is treated as investment income, and currently no National Insurance is due, though this could change in the upcoming Budget on 26 November 2025.
Landlords can claim a wide range of expenses against rental income, including:
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Maintenance and repairs
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Water, council tax, gas, and electricity if paid by you
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Insurance, including buildings, contents, and public liability
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Services like gardeners or cleaners
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Letting agent and management fees
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Legal and professional fees
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Ground rents, service charges, and sublet rent
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Advertising, phone calls, and stationery
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Vehicle costs proportional to the rental business
Mortgage interest is limited to basic rate tax relief, giving a 20% credit on eligible finance costs.
If you already file a self-assessment, report rental profits there; if not, you must register by 5 October after the relevant tax year.
Capital Gains Tax When You Sell
If you sell a rental property, you may owe capital gains tax (CGT).
Your main residence is normally exempt through Private Residence Relief (PRR), but once you let a property out, PRR may no longer apply.
You can deduct:
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Purchase costs, like Stamp Duty, solicitors, and surveyor fees
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Sale costs, such as estate agent and legal fees
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Improvements that add value, like extensions, landscaping, or solar panels
For properties that used to be your main residence, gains are split between the time you lived there and the period it was rented.
You can also deduct the last nine months of ownership, CGT allowance (£3,000), and any allowable capital losses.
CGT rates are 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers.
Additionally, if you paid higher Stamp Duty Land Tax on a new home and sell your previous property within three years, you may claim a refund.
Managing Empty Properties
Leaving a property empty can cause issues with insurance, deterioration, and rates.
Inform your insurer and mortgage provider if the property becomes unoccupied or is rented out, and ensure you comply with all relevant terms.
Handling Tenants and Legal Responsibilities
Many landlords use letting agents to manage tenants and handle deposits through government-approved protection schemes.
Agents typically charge 12–13% of gross rent, collect payments, coordinate repairs, and deal with tenant issues.
If you prefer managing the property yourself, consult a solicitor to draft tenancy agreements.
Check local selective licensing rules as some areas require permission to rent, and penalties for non-compliance can be severe.
Key Upcoming Changes for Landlords
Making Tax Digital
From April 2026, private landlords with gross rental income over £50,000 must report quarterly to HMRC using Making Tax Digital (MTD) software, with an annual return included.
Thresholds drop to £30,000 in April 2027 and £20,000 in April 2028.
This does not apply to limited companies, but combines all trade and rental income, including overseas property.
Renters’ Rights Act
The Act, not yet in force, will prevent ‘no-fault’ evictions, allow tenants to give two months’ notice, and challenge poor conditions or rent hikes.
Landlords can still evict to move in or sell, but with four months’ notice and only after the first 12 months of tenancy.
Energy Performance Certificates
Future regulations may require landlords to upgrade properties to meet certain energy performance standards.
Tips for Staying Compliant
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Always register rental income and gains accurately with HMRC
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Keep records of all expenses and receipts
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Use professional advice when unsure about tax or legal obligations
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Avoid scams; the application of taxes and filings should be free of third-party charges
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Stay informed through gov.uk or trusted financial outlets
Seeking Help and Advice
Heather Rogers, founder of Aston Accountancy, is available for tax questions related to income tax, CGT, inheritance, and more.
Readers can email her at taxquestions@thisismoney.co.uk.
While personal replies may not be guaranteed, she provides guidance in her monthly column.
For further support, landlords can also contact MoneyHelper at 0800 011 3797 for free, government-backed financial advice.
Final Thoughts
Being a landlord can be profitable, but it comes with responsibility.
From understanding tax implications to legal compliance, staying informed and organized is essential.
With the right preparation, landlords can navigate these challenges while making their property work for them.
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