Whether you let a single flat or manage a growing portfolio, property tax keeps changing. Ken Accounting is a landlord accountant in Uxbridge, helping landlords across Ruislip, Hillingdon and West London with tax returns, Making Tax Digital and property tax planning. We agree a fixed fee up front and explain everything in plain English.
Rental income tax returns
If you receive rental income, you will usually need to tell HMRC about it, and in most cases that means filing a self assessment tax return. For the 2025 to 2026 tax year, the online deadline is 31 January 2027.
We prepare your return from your rental statements and records, making sure you claim the costs you are entitled to. Allowable expenses can include letting agent fees, repairs and maintenance, insurance, ground rent and service charges, and certain legal and accountancy costs.
It is just as important to get the line between repairs and improvements right. Replacing like for like is usually an allowable expense, while improving or extending a property generally is not, though it may reduce Capital Gains Tax when you sell.
From 6 April 2027, property income will be taxed at its own rates: 22% at the basic rate, 42% at the higher rate and 47% at the additional rate. Planning ahead is likely to matter more for landlords from that point on, and we can talk through what it means for you.
See our self assessment page for deadlines and what we need from you.
MTD for landlords
Making Tax Digital for Income Tax now applies to many landlords. Since 6 April 2026, if your qualifying income is over £50,000, you must keep digital records and send quarterly updates to HMRC. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
Qualifying income is your gross rent and any self-employment income, before expenses. That means many landlords with modest profits will still be brought in. If you own a property jointly, only your share of the income counts.
We can set up your software, collect figures from you or your letting agent, and file every quarterly update for you. As a Xero Silver Partner, we usually recommend Xero, which makes the record keeping straightforward.
Find out more on our Making Tax Digital page.
Mortgage interest and Section 24
If you own residential property in your own name, you cannot deduct mortgage interest and other finance costs from your rental income. Instead, you receive a tax reduction worth 20% of those costs, the basic rate of income tax. This rule is often called Section 24.
For basic rate taxpayers, the effect can be small. For higher and additional rate taxpayers, it can mean paying noticeably more tax, and in some cases it can push a landlord into a higher tax band.
[TODO: verify whether the finance cost tax reduction will rise to 22% from April 2027 alongside the new property income rates before mentioning it]
We work out your finance cost relief correctly on your return and show you the effect on your overall tax bill. If Section 24 is costing you more than you expected, we can talk through your options.
Buying through a limited company
More landlords are now asking whether to hold property through a limited company. The Section 24 restriction does not apply to companies, so a company can deduct its finance costs from its rental profits before corporation tax.
That does not make a company right for everyone. You also need to think about:
- How you will take money out, as salary or dividends, and the personal tax on it
- Mortgage availability and costs for company buy-to-let
- The extra admin of company accounts, a corporation tax return and a confirmation statement
- The tax cost of moving existing properties into a company, which can include Capital Gains Tax and Stamp Duty Land Tax
We will compare holding property personally and through a company using your own figures, so you can make an informed decision. If a company is right for you, we can help set it up. See our company formation and limited company accounts pages.
Capital gains tax when you sell
When you sell or give away a rental property, you may have to pay Capital Gains Tax on the gain. For the 2026 to 2027 tax year, the annual tax-free allowance is £3,000, and gains above it are taxed at 18% or 24% depending on your income.
If you are a UK resident and Capital Gains Tax is due on the sale of UK residential property, you must report and pay it within 60 days of completion. This is separate from your tax return, and the deadline comes round quickly.
Non-UK residents must report the sale of any UK property or land within 60 days, even if there is no tax to pay.
[TODO: Gaurav to confirm whether Ken Accounting prepares 60-day CGT property returns]
[TODO: Gaurav to confirm whether Ken Accounting acts for non-resident landlords]
We can work out your gain, check which costs and reliefs you can claim, and tell you what is due and when. It is best to speak to us before the sale completes, so there is time to plan.
FAQs
Do I need to file a tax return for rental income?
Usually, yes, if you receive rental income. Depending on your circumstances, you may need to register for self assessment and file a return each year. We can check what applies to you.
Does Making Tax Digital apply to landlords?
Yes. Landlords with qualifying income over £50,000 have had to use MTD since April 2026. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028, based on income before expenses.
Can I still claim mortgage interest?
If you own residential property personally, you receive a tax reduction worth 20% of your mortgage interest and other finance costs, rather than deducting them from your rental income. Companies are treated differently.
Should I put my rental property into a limited company?
It depends on your income, your plans and the cost of making the move. Transferring existing property can trigger Capital Gains Tax and Stamp Duty Land Tax, so it is important to get advice first.
When do I pay Capital Gains Tax on a property sale?
If you are a UK resident and tax is due on a UK residential property, you must report and pay within 60 days of completion. Non-UK residents must report any UK property sale within 60 days, even if no tax is due.