Reporting property income to HMRC
If you rent out property, then you will usually have to report this to HMRC and pay tax on it.
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You may need to complete a tax return if you have rental income which is taxable. You only pay income tax on any taxable profits you make, that is, the excess of your rental property income when compared with deductible rental expenses.
The position can be summarised as follows:
|Gross rental income
|Net rental income (profit)
|Do I need to complete a tax return?
|Less than £1,000
|No, as the rental income is exempt under the property allowance. However, you might need to complete a tax return if you do not want the property allowance to apply and to claim a loss to carry forward.
|More than £1,000 but less than £10,000
|Less than £2,500
|You should contact HMRC to let them know about the income. HMRC may be able to collect the tax on the rental profit via PAYE.
|More than £10,000
|More than £2,500
|You should complete a tax return.
More information on needing to complete a tax return can be found in our separate guidance on this topic.
If you start getting rental income which is taxable, you should tell HMRC about it. Contact them as soon as possible, but at the latest by 5 October following the end of the tax year concerned. For example, if you started getting taxable rental income in the year to 5 April 2023, you should tell HMRC by 5 October 2023.
If you miss the 5 October deadline, you should still tell HMRC as soon as possible. As long as any tax due is paid on time (normally by the tax return deadline of the following 31 January), there will be no penalty to pay for having missed the 5 October deadline. You can read more about penalties generally on our page Tax penalties and interest.
Making Tax Digital (MTD) for income tax
MTD for income tax is a new system for recording and reporting business income and expenses if you are self-employed and/or receive property income. It is due to be rolled out in phases from April 2026. Initially, this will only affect those with gross rental and/or self-employed income of £50,000 or more. From April 2027, those with gross rental and/or self-employed income of £30,000 or more will be required to report under MTD for income tax, unless they are exempt.
If you come within scope of the MTD for income tax regime you will be required to comply with certain digital requirements, including the need to make quarterly reports of your income and expenses. If you are within MTD for income tax, you may not need to file a separate self assessment tax return for that year in addition to meeting these obligations.
See our page Making Tax Digital for income tax to find out more about the specific digital requirements, your start date under the new regime and exemption from MTD for income tax.
Reporting property income under MTD for income tax
Foreign property income
Foreign property income will need to be reported separately from UK property income on the quarterly updates under MTD for income tax.
Furnished holiday lets
If you have a furnished holiday let (FHL) you will need to keep separate underlying records for that business (as is the case currently), but FHL income is added to non-FHL income in the quarterly updates for either UK property income or foreign property income.
MTD and jointly-owned property
If you let out jointly-owned property, the MTD digital requirements potentially apply to each joint owner in respect of their share of income and expenses. However, given that this could prove difficult for some joint owners, where only one person is the record-keeper (and, for example, would usually let the other co-owner(s) have the relevant information at the end of the tax year), HMRC have announced an easement to the MTD for income tax requirements. Landlords with jointly-owned property can choose to use this easement if they wish to reduce the administrative burden in these circumstances.
The easement will allow landlords with jointly-owned property to report their share of the gross rental income only from the jointly-owned property in the quarterly updates. This means they will not need to report details of the expenses in the quarterly updates during the tax year (but will need to do so as part of the annual finalisation process for each tax year).
For landlords who own property on their own as well as owning property jointly, the easement only applies to the jointly-owned property. So, income and expenses relating to the solely owned property must still be included in quarterly updates.
HMRC have also stated that there will be an easement in relation to the digital records that will be required for landlords with jointly-owned property in respect of that jointly-owned property only. The details of this easement are not yet published but we will update this section once further information becomes available.
LITRG will be publishing more detailed guidance on MTD for income tax as more information becomes available about the new regime in due course. There is also some general information regarding MTD for income tax on GOV.UK.
Undisclosed property income
If you have failed to disclose your property income to HMRC, we recommend that you seek advice as soon as possible to understand the likely exposure to tax, interest and penalties as a result of the non-disclosure.
You should aim to bring your tax affairs up to date as soon as possible. Note that HMRC may receive information from third parties about the property income which you have received, and you may be exposed to higher penalties if HMRC approach you before you approach them.
HMRC provide an opportunity for individuals to report undisclosed property income through the Let Property Campaign. For further information, please see GOV.UK.