How to Fill out a Landlord Tax Return: Step-by-Step Guide

The downside of making money from renting out property is that you must pay tax on it via a self-assessment tax return. Rental income is subject to income tax at your usual tax rate, with some reductions for things like repairs and maintenance.

If you already do a self-assessment, then adding property income will be relatively straightforward. But if you have not done self-assessments before, we’re here to guide you through the process. The good news is, it can all be done online.

1. Register With HMRC

The deadline for submitting online tax returns is 31 January for the previous tax year. But if you have not previously registered for self-assessment, you must do this by 5 October of the tax year after you began receiving rental income.

Go to the Government’s self-assessment tax return, and you will be encouraged to register. Once you do this, you will receive your Government Gateway user ID and a password. Use these to set up your personal tax account, which lets you manage all your taxes online. You will be sent a Unique Tax Reference number (UTR) that is your code when you submit a return and come to pay.

You can then file your self-assessment online by the 31 January deadline. If you are late, you will be subject to a fine. If you prefer, you can still complete the return the old-fashioned way on paper, but if you select this method, you must do so before 31 October.

2. Prepare Your Paperwork

Even though you can submit all your information online, you still need to have proof of your numbers. Keeping all paperwork relating to your property income and expenses makes filing the return simpler – and you need it filed away just in case the taxman should have any queries…

The information you need to keep includes rental dates, the money you have received and spent. You should keep hold of relevant:

  • Contracts/tenancy agreements
  • Rent books
  • Receipts
  • Invoices
  • Bank statements
  • Mileage logs and vehicle costs if you use one in relation to a property business
  • Documents from the purchase of a property

3. Work out Your Income and Deductibles

You will need this information for the return, so ahead of time, add up your rental income for the given tax year. Then work out what deductions you can claim. These deductions include:

  • Repairs and maintenance
  • Replacement of domestic items (if you have items like wardrobes or beds in the property)
  • Accountancy and agent fees (you can reduce these by renting without an agent)
  • Landlord insurance
  • Running costs

Depending on your type of property and what your tenant pays, you may also be able to claim light and heating, service charges, ground rent, cleaning and advertising costs.

As you likely know, mortgage interest is no longer an allowable deduction. But you can claim a 20% tax credit on your mortgage interest payments.

4. Completing the Landlord Tax Return

Now the fun part. Log in to your personal tax account with your Government Gateway ID. Using your UTR, you can select the option to submit your self-assessment. The form is easy to use. It assumes you have more than just rental income to declare, so it has sections for things like other income, dividends, interest and the like. 

If these don’t apply for you, you don’t have to fill them out. Declare which sections you need to fill in, and the form adjusts accordingly. You’ll need to submit your rental income from UK land or property in the property section, including letting furnished rooms in your home, plus any income from furnished holiday lets.

There will be a section on deductions you wish to claim (so the figures you collected for repairs, landlord insurance, letting agent fees, etc.), together with the amount of mortgage interest so you can claim the 20% tax break.

Once all online form sections are complete, you can go back and change your data, save it for later, or submit it. If you are only adding your property income, you might have a good idea of how much tax you will need to pay. Some landlords will have many forms of income to add to their form, so the property-related tax might be swallowed up in a much larger figure.

5. How to Pay Your Landlord Tax Bill

And now to the point of the whole process – paying out the money. The tax portal will work out your tax bill, and you must pay up by the 31 January deadline. For those with a bill of over £1,000,  you will get a second payment deadline in July, which is payment on account for the following tax year (which will reduce your liability down the line).

You can pay by online or telephone banking, by debit or corporate credit card (if applicable) – but not a personal credit card or at your bank or building society. Further options include Bacs, cheque or direct debit, but leave a little more time for this to go through.

Clearly, life is much simpler if you plan ahead and keep part of your monthly income aside each month for your tax bill. If, for any reason, you do not have the cash to pay your tax bill, you can set up a payment plan with HMRC over the next 12 months.

And if you are in any doubt about the process, speak with your accountant. 

Notable Replies

  1. Would add here a recommendation to to sign up to HMRC updates. They have helpful videos on their you tube channel and also do regular webinars regarding income from property which is worth a listen - especially as people have the option to ask questions and you are able to save the Q&A log which is useful. Keep receipts - There are apps where you can scan and save as you go along.

  2. Avatar for Sam Sam says:

    That’s a great suggestion, Tracey!

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This article is not intended to form legal or investment advice. Investments in property are not guaranteed and can decrease in value as well as increase.