by Asim Abbas
11 November 2026 
Landlord tax return guide 2026/27
Landlord tax return guide 2026/27
If you rent out property, you’re running a business in HMRC’s eyes, even if it’s a single flat you used to live in.
- Rental income over £1,000 usually means a tax return
- Mortgage interest gets a 20% tax credit
- Making Tax Digital applies to gross property and trading income over £50,000, falling to £30,000 in 2027
- Property income rates of 22%, 42% and 47% are planned from April 2027
Landlord tax has changed a lot: mortgage interest relief is restricted, holiday lets lost their special treatment in 2025, Making Tax Digital has arrived and new property tax rates are coming in 2027.
This guide brings it all together: who needs to file, how rental profit is taxed and how to plan for what’s next.
Who needs to file?
- You received more than £1,000 of rental income in the tax year
- Your rental profit is £2,500 or more, or HMRC asked you to file
- You live abroad and let UK property (the Non-Resident Landlord Scheme also applies)
- You sold a rental property at a gain
If your rent is under £1,000, the property allowance means you may not need to tell HMRC. Renting a furnished room in your own home is covered by Rent a Room relief up to £7,500.
How rental profit is worked out
Rental profit is rent received minus allowable expenses: letting agent fees, repairs, insurance, ground rent, service charges, accountancy fees and replacing furnishings like-for-like. Improvements, such as an extension, aren’t deductible against rent, but they reduce Capital Gains Tax when you sell.
Mortgage interest
Individual landlords can’t deduct mortgage interest. Instead, you get a tax credit of 20% of the interest. Higher rate landlords therefore pay tax on profit before interest and only get basic rate relief.
A higher rate landlord receives £18,000 rent, pays £3,000 of costs and £8,000 of interest. Tax is 40% of £15,000 = £6,000, minus a £1,600 credit, so £4,400, even though their cash profit is only £7,000.
Rental income tax calculator
Includes the 20% mortgage interest credit.
Joint ownership
Each owner declares their own share. Married couples and civil partners are taxed 50:50 by default, but if you own the property in unequal shares you can send HMRC a Form 17 so income follows ownership.
Making Tax Digital for landlords
Qualifying income is gross rent plus any self-employment turnover. Landlords over £50,000 have been in MTD since April 2026, and the threshold drops to £30,000 from April 2027. Read our guide to MTD or Self Assessment.
Letting property in Manchester? See our landlord and property accountants in Manchester.
Fixed-fee accountancy support
Transparent monthly packages for sole traders, landlords and limited companies. Fixed fees agreed upfront, VAT included.
Get a fixed-fee quoteCall 0161 531 4179Planning for 2027
The UK Government has announced separate property income tax rates of 22%, 42% and 47% from April 2027, with finance cost relief at 22%. For larger portfolios, it may be worth reviewing ownership, including whether a limited company makes sense. Our landlord tax returns service and rental income tax calculator help you plan, and HMRC’s rules are on GOV.UK.
What should I do next?
For every property.
Only interest qualifies for the credit.
Gross rent plus trading income.
Frequently Asked Questions
Do I need to declare rent under £1,000?
Usually not, thanks to the £1,000 property allowance, unless HMRC has asked you to file a return.
Can I deduct mortgage interest?
No. You get a tax credit of 20% of the interest instead, limited by your rental profit.
How is jointly owned property taxed?
Each owner declares their share. Spouses default to 50:50 unless they send a Form 17 for unequal ownership.
Are repairs or improvements deductible?
Repairs are deductible against rent. Improvements aren’t, but they reduce Capital Gains Tax when you sell.
How much does a landlord tax return cost at Wingate?
From £250 including VAT, with a fixed quote for portfolios.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Asim Abbas
I’m Asim Abbas, founder of Wingate Accountants and a Chartered Certified Accountant. I help sole traders, landlords and directors stay on top of their tax with fixed fees and plain-English advice.
