Updated for 2025-26
Rental Accounts London: Get Your Landlord Tax Done Right in 2025-26
If you earn rental income in the UK, you must declare it to HMRC and pay tax on your profits. The Self Assessment deadline for online returns is 31 January 2027 for the 2025-26 tax year. If your gross rental income exceeds £50,000, Making Tax Digital for Income Tax (MTD for ITSA) has been mandatory since 6 April 2026. GM Professional Accountants helps landlords across London and Essex prepare accurate rental accounts, claim every allowable expense, and stay fully compliant with HMRC rules.
| 2.86m UK Landlords Filed Self Assessment 2023-24 (HMRC) | £19,400 Average Rental Income per Landlord 2023-24 | £50k MTD for ITSA Threshold from April 2026 | 27% of All UK Rental Income Comes from London Landlords |
Written by Sharaz Zaman, Founder of GM Professional Accountants, AAT Member with 15+ years London accounting experience.
Key Takeaways
1 Rental profit is taxed at your marginal rate (20%, 40% or 45%) on top of your other income.
2 Section 24 restricts mortgage interest relief to a 20% tax credit only. This hits higher-rate taxpayers hardest.
3 MTD for ITSA is live from April 2026 for landlords with gross income over £50,000 and expands to £30,000 from April 2027.
4 Capital Gains Tax on residential property disposals must be reported to HMRC within 60 days of completion.
5 GM Professional Accountants serves landlords across London (Ilford, Wimbledon, Old Street, East London) and Essex.
Definition Rental accounts are the annual financial records a UK landlord prepares to calculate taxable profit from property lettings, covering rental income, allowable expenses, mortgage interest relief, and any Capital Gains Tax due on disposal, submitted via Self Assessment or Making Tax Digital for ITSA to HMRC.
What Tax Do You Pay on Rental Income in the UK?
Rental profits are added to your total income and taxed at your marginal rate. This means a basic-rate taxpayer pays 20%, a higher-rate taxpayer pays 40%, and an additional-rate taxpayer pays 45%. You do not pay tax on gross rent. You pay tax on what is left after deducting all allowable expenses as set out by HMRC. One important point that catches many London landlords off guard: mortgage interest is no longer a deductible expense. Since April 2020, Section 24 of the Finance Act has restricted relief to a 20% basic-rate tax credit on interest paid. If you are a higher or additional rate taxpayer, your effective tax bill on property profits has risen sharply and specialist advice from a rental accounts expert is no longer optional. Allowable vs. Non-Allowable Landlord Expenses| Allowable Expenses (Deductible) | Non-Allowable Costs (Not Deductible) |
|---|---|
| Letting agent fees and management charges | Mortgage capital repayments |
| Repairs and maintenance (not improvements) | Capital improvements (e.g. extensions, conversions) |
| Buildings and contents insurance | Personal use of the property |
| Council Tax and utility bills (if paid by landlord) | Fines and HMRC penalties |
| Accountancy and professional fees | Initial property purchase costs (these affect CGT) |
| Mortgage interest (as a 20% tax credit only, via Section 24) | Wages paid to yourself |
| Ground rent and service charges | Depreciation |
How Does Making Tax Digital Affect London Landlords in 2026?
MTD for Income Tax Self Assessment (MTD for ITSA) is now live. From 6 April 2026, landlords whose gross rental income (plus any self-employment income) exceeded £50,000 in the 2024-25 tax year must keep digital records and submit quarterly updates to HMRC using approved software. The threshold drops to £30,000 from April 2027 and is expected to fall further to £20,000 from April 2028.| Date | Who Must Comply |
|---|---|
| 6 April 2026 (Now) | Landlords with gross qualifying income over £50,000 |
| 6 April 2027 | Landlords with gross qualifying income over £30,000 |
| 6 April 2028 | Landlords with gross qualifying income over £20,000 |
What Services Do Our Rental Account Specialists Provide?
GM Professional Accountants offers a complete rental accounts and landlord tax service for property investors across London, Essex, and the wider UK. Our team works with first-time landlords, buy-to-let portfolio investors, HMO operators, SPV directors, and non-resident landlords under the HMRC Non-Resident Landlord (NRL) Scheme.| Self Assessment (SA100 / SA105) We prepare and file your annual Self Assessment return, including the SA105 property pages, ensuring all rental income is declared and every allowable expense is claimed. | MTD for ITSA Quarterly Updates For landlords now mandated under MTD, we handle all four quarterly submissions and your Final Declaration so you never miss an HMRC deadline. |
| Section 24 Tax Planning We model the impact of the mortgage interest restriction on your personal tax position and advise on restructuring through an SPV limited company where it makes financial sense. | Capital Gains Tax on Property We calculate your CGT liability on property disposals, apply Private Residence Relief and Letting Relief where applicable, and handle the mandatory 60-day report to HMRC. |
| Non-Resident Landlord (NRL) Scheme We complete NRL1 and NRL6 forms, apply for gross rental approval, and file Self Assessment returns for overseas landlords renting UK property. | SPV Limited Company Accounts Full year-end accounts and CT600 Corporation Tax returns for property holding companies, including dormant company filings and director loan account tracking. |
Related Services from GM Professional Accountants Property Rental Accountants — Full rental accounts and SA105 filing service for individual landlords. Accountants for Rent-to-Serviced Accommodation Business — Specialist accounting for R2SA operators converting residential lets into short-term serviced apartments.
How Does Section 24 Affect Your Rental Tax Bill?
Section 24 of the Finance (No. 2) Act 2015 fundamentally changed how landlords claim mortgage interest relief. Before April 2020, mortgage interest was deducted directly from rental income before tax was calculated. Now you cannot deduct interest at all. Instead, you receive a 20% tax credit on the interest you paid. For a basic-rate taxpayer, the practical difference is minimal. For a higher-rate taxpayer, the change can more than double the tax they owe on the same property. A landlord in East London earning £24,000 in rent with £12,000 in mortgage interest would previously have been taxed on £12,000 of profit. Under Section 24, they are taxed on the full £24,000 minus other allowable expenses, then given a £2,400 tax credit. If they are a 40% taxpayer, the difference is substantial. Our Old Street and Wimbledon-based advisers regularly model the break-even point at which transferring a property portfolio to a limited company SPV becomes advantageous. The decision depends on your income level, the number of properties, your mortgage terms, and your long-term plans for the portfolio.What Landlord Types Does GM Professional Accountants Work With?
We serve landlords across London and Essex with a wide range of portfolio types. We confirm GM Professional Accountants serves clients from our London offices covering Ilford, Wimbledon, Old Street, and East London, as well as clients across Essex and remotely nationwide.| Landlord Type | Key Tax Consideration |
|---|---|
| First-time / Accidental Landlord | Self Assessment registration, SA105 property pages, HMRC Let Property Campaign if income was undeclared |
| Buy-to-Let Portfolio Investor | Section 24 planning, MTD quarterly compliance, SPV comparison modelling |
| HMO Landlord | Multiple occupancy expense allocation, council tax liability, potential VAT on commercial conversions |
| SPV Limited Company Director | CT600 Corporation Tax, ATED (Annual Tax on Enveloped Dwellings) for high-value properties, SDLT at higher rates |
| Non-Resident / Expat Landlord | NRL1 / NRL6 filings, gross rental approval, treaty relief on double taxation |
| Rent-to-Serviced Accommodation Operator | Post-FHL abolition (April 2025), trading income treatment, VAT implications on short-term lets |
When Do You Need to Report Capital Gains Tax on a Rental Property?
If you sell a residential rental property, you must report the gain and pay any CGT owed within 60 days of the completion date using HMRC’s online Capital Gains Tax on UK property service. Missing this deadline triggers automatic penalties and interest charges. The CGT rate on residential property for basic-rate taxpayers is 18% and for higher and additional-rate taxpayers it is 24% (as of 2025-26, following the Autumn 2024 Budget changes). Reliefs including Private Residence Relief (if you ever lived in the property) and the Annual Exempt Amount of £3,000 for 2025-26 may reduce the amount due. Our team also handles the full CGT calculation for joint owners, where each party’s share must be reported separately. If you purchased property before CGT records were commonly kept, we can work with historical completion statements and improvement costs to reconstruct your base cost accurately.What HMRC Changes Should London Landlords Know About in 2026 and 2027?
The tax landscape for landlords has changed more in the past five years than in the previous two decades. Here are the key changes affecting landlords in the current and next tax year: 2025-26 Furnished Holiday Lettings abolished. From 6 April 2025, FHL properties are taxed as ordinary rental income. Landlords who previously benefited from FHL tax rules (pension contributions, CGT reliefs, capital allowances) now fall under standard property income rules.
2026 MTD for ITSA live from 6 April 2026 for those with gross qualifying income over £50,000. Late payment penalties under the new accelerated schedule: 3% of unpaid tax from day 15, a further 3% from day 30, and 10% per annum from day 31.
2027 MTD threshold drops to £30,000 from 6 April 2027, drawing in a large proportion of the 2.86 million landlords currently filing Self Assessment.
2028 MTD threshold falls to £20,000 from 6 April 2028, per the Spring Statement 2025 announcement, covering almost all unincorporated landlords in the UK.
Why Do London Landlords Choose GM Professional Accountants?
GM Professional Accountants is an AAT-regulated practice founded by Sharaz Zaman with over 15 years of experience advising landlords across London and Essex. We have prepared more than 2,000 property tax returns and represent landlords ranging from single-flat owners to multi-property portfolio investors holding assets through SPV companies. We serve clients from our offices in Ilford, Wimbledon, Old Street, and East London, and we support landlords across Essex and the rest of the UK remotely. Every return we file is reviewed by a senior accountant before submission. You will always speak to someone who knows your property portfolio, not a call centre.| 2,000+ Property Returns Filed | 15+ Years London Experience | AAT Regulated Practice |
Frequently Asked Questions: Rental Accounts and Landlord Tax
Do I need an accountant if I only have one rental property?
Yes, in most cases. Even a single rental property requires a Self Assessment tax return (SA100 with SA105 property pages), correct application of Section 24 mortgage interest restrictions, and claims for every allowable expense. A single missed expense claim or filing error can cost more than the accountancy fee. From April 2027 onwards, most single-property landlords with income over £30,000 will also need to comply with MTD for ITSA quarterly reporting.What is the Self Assessment deadline for rental income in 2025-26?
For the 2025-26 tax year (6 April 2025 to 5 April 2026), the deadline for filing an online Self Assessment tax return is 31 January 2027. Paper returns must be submitted by 31 October 2026. Any tax owed must also be paid by 31 January 2027 to avoid HMRC penalties and interest charges.Is it better to hold rental property personally or through a limited company?
It depends on your individual tax position, the number of properties you own, your mortgage situation, and your long-term plans. Higher and additional-rate taxpayers often find that a limited company SPV (Special Purpose Vehicle) reduces their effective tax rate on rental profits, because the company pays Corporation Tax at 19% to 25% rather than income tax at 40% or 45%. However, transferring existing properties into a company can trigger Stamp Duty Land Tax (SDLT) and Capital Gains Tax, so the decision requires careful financial modelling before acting.I have undeclared rental income from previous years. What should I do?
HMRC operates the Let Property Campaign specifically for residential landlords who have not declared all their rental income. Voluntary disclosure through this campaign typically results in lower penalties than if HMRC discovers the underpayment through investigation. Our team regularly assists landlords in making disclosures through the Let Property Campaign, calculating the correct tax owed, and negotiating the settlement with HMRC on your behalf.Does Making Tax Digital apply to landlords who hold property through a limited company?
No. MTD for Income Tax Self Assessment applies only to sole traders and individuals (unincorporated landlords) filing through Self Assessment. Limited companies file Corporation Tax returns through a completely separate system that is not subject to the MTD for ITSA quarterly reporting requirements. This is one practical reason some landlords consider incorporating their portfolio, though the decision should never be made on MTD compliance grounds alone.What is the Rent a Room Scheme and does it apply to me?
The Rent a Room Scheme allows you to earn up to £7,500 per year tax-free from renting out a furnished room in your own home. If your total rental income from the room is below this threshold you do not even need to complete a tax return for it. Above £7,500, you either pay tax on the profit over £7,500 under the normal rules, or on the profit calculated in the usual way by deducting allowable expenses. We can advise which method produces the lower tax bill for your circumstances. Ready to Get Your Rental Accounts in Order? Book a free consultation with our landlord tax specialists at GM Professional Accountants. We serve landlords across Ilford, Wimbledon, Old Street, East London, Essex, and the rest of the UK.
| Book Free Consultation | View Our Services |
Written by the GM Professional Accountants Team
Sharaz Zaman, Founder and AAT Member with 15+ years of specialist accounting experience for London landlords and property investors. GM Professional Accountants is an AAT-regulated practice with offices in Ilford, Wimbledon, Old Street, and East London, serving clients across London and Essex.
This article is for general information purposes only and does not constitute personal tax advice. Please contact us to discuss your specific circumstances.
Sharaz Zaman, Founder and AAT Member with 15+ years of specialist accounting experience for London landlords and property investors. GM Professional Accountants is an AAT-regulated practice with offices in Ilford, Wimbledon, Old Street, and East London, serving clients across London and Essex.
This article is for general information purposes only and does not constitute personal tax advice. Please contact us to discuss your specific circumstances.
