Tax Obligations for Landlords

Key facts

Rental income is subject to Income Tax at your marginal rate (20%, 40%, or 45%).
You must register for Self Assessment with HMRC if your rental income exceeds £1,000.
Landlords may also owe Class 2 NIC if HMRC considers the letting a trade (rare for most buy-to-let).
When you sell a rental property, Capital Gains Tax at 18% or 24% applies to the gain.
From April 2026, landlords with property income over £50,000 must comply with Making Tax Digital for Income Tax.

Overview

If you receive rental income from UK property, you have a legal obligation to declare it to HMRC and pay the appropriate taxes. This applies whether you let a single spare room, a buy-to-let flat, or a portfolio of properties.^[1]

The main taxes that affect landlords are:

Income Tax on rental profits
Capital Gains Tax (CGT) when you sell a rental property
Stamp Duty Land Tax (SDLT) when you buy an additional property
National Insurance Contributions (NIC) in certain circumstances

Income Tax on Rental Profits

Rental income is taxed as “property income” under Income Tax. You are taxed on your net rental profit — total rental income minus allowable expenses.^[1]

Tax Band (2026/27)	Taxable Income	Rate
Personal Allowance	Up to £12,570	0%
Basic rate	£12,571 – £50,270	20%
Higher rate	£50,271 – £125,140	40%
Additional rate	Over £125,140	45%

Your rental profit is added to your other income (employment, self-employment, pensions, etc.) to determine which band it falls into. This means a landlord who also has a salary of £45,000 will likely pay 40% tax on at least some of their rental income.

Self Assessment

Most landlords report rental income through Self Assessment. You complete the SA105 (UK property) supplementary pages alongside your main tax return.^[1]

The £1,000 property allowance: If your total gross property income is £1,000 or less in a tax year, you do not need to declare it. This is called the property income allowance and means many occasional landlords have no reporting obligation at all.

Capital Gains Tax on Property Sales

When you sell a rental property for more than you paid, the profit (gain) is subject to Capital Gains Tax. For residential property in 2026/27, the rates are:^[3]

18% for basic-rate taxpayers
24% for higher and additional-rate taxpayers

You must report the disposal and pay any CGT due within 60 days of completion using HMRC’s online service. See our full guide to CGT on rental property for details.

Stamp Duty Land Tax

When you purchase a buy-to-let or additional residential property in England or Northern Ireland, you pay SDLT at the standard rates plus a 5% surcharge on each band. This surcharge was increased from 3% in the Autumn Budget 2024. See our SDLT on buy-to-let guide.

National Insurance

Most buy-to-let landlords do not pay National Insurance on rental income, because HMRC generally treats property letting as an investment rather than a trade. However, NIC may apply if:^[2]

You run a property management business (e.g. providing significant services to tenants)
HMRC considers your letting activities to constitute a trade

Making Tax Digital for Income Tax

From April 2026, landlords with qualifying income over £50,000 must use MTD-compatible software to keep digital records and submit quarterly updates to HMRC. The threshold drops to £30,000 from April 2027.^[4]

Tip: Start keeping digital records now, even if you are below the threshold. Good digital record-keeping makes your annual tax return much easier and prepares you for MTD compliance.

Frequently Asked Questions

Do I have to pay tax on rental income?

Yes. Rental income is taxable as property income. You must report it to HMRC via Self Assessment and pay Income Tax at your marginal rate — 20%, 40%, or 45% depending on your total income. You can deduct allowable expenses first to reduce your tax bill.

When do I need to register with HMRC as a landlord?

You must register for Self Assessment by 5 October following the end of the tax year in which you first received rental income exceeding £1,000. For example, if you started letting in July 2025, you must register by 5 October 2026.

What taxes do landlords pay when selling a property?

When you sell a rental property at a profit, you pay Capital Gains Tax (CGT) at 18% (basic rate) or 24% (higher rate). You must report and pay within 60 days of completion using HMRC’s online service, and also include the disposal on your Self Assessment return.

Will Making Tax Digital affect landlords?

Yes. From April 2026, landlords with qualifying property income over £50,000 must keep digital records and submit quarterly updates to HMRC under MTD for Income Tax. Those with income over £30,000 will follow from April 2027.

Sources

Property income: tax return notes — GOV.UK
Income Tax: introduction — GOV.UK
Capital Gains Tax: what you pay it on, rates and allowances — GOV.UK
Making Tax Digital for Income Tax — GOV.UK