Self Assessment

Report property income on your Self Assessment

How to report rental income on your Self Assessment using SA105 - allowable expenses, mortgage interest restriction, property allowance, and FHL abolition.

UK-wide
Guide summary

You must report rental income from UK property to HMRC using the SA105 form with your Self Assessment. Choose between claiming actual expenses or using the £1,000 property allowance. Register by 5 October if this is your first time reporting rental income.

  • Report rental income using SA105 with your Self Assessment
  • Register with HMRC by 5 October if first time reporting
  • Choose between £1,000 property allowance or actual expenses
  • Mortgage interest relief is now a 20% tax credit
  • Allowable expenses include repairs, insurance, and letting agent fees
  • Furnished Holiday Lettings rules abolished from April 2025
  • Rent-a-room relief allows £7,500 tax-free income
  • Commercial property gets full mortgage interest deduction
  • Keep records of all rental income and expenses
  • HMRC can penalise late registration or incorrect reporting
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UK-wide Limited Company

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If you receive rental income from UK land or property, you must report it to HMRC through Self Assessment. You do this by completing the SA105 supplementary page alongside your main SA100 tax return.

Who must report property income?

You need to report property income if you:

  • Rent out a residential property such as a buy-to-let, inherited property, or second home
  • Rent out a commercial property such as a shop, office, or warehouse
  • Receive rent from land including grazing rights, car parking, or advertising hoardings
  • Have a holiday let (formerly Furnished Holiday Letting)

Not yet registered for Self Assessment? If this is the first time you have received rental income, you must register with HMRC by 5 October following the end of the tax year in which you first received it. For example, if you start letting a property in September 2026 (tax year 2026/27), register by 5 October 2027.

Property allowance or actual expenses?

Before you begin, decide whether to use the property allowance or claim actual expenses. You cannot use both.

When to use the property allowance: If your gross rental income is £1,000 or less, you do not need to report it at all. If your income exceeds £1,000 but your actual expenses are less than £1,000, you can deduct the £1,000 allowance instead of itemising expenses.

When to claim actual expenses: If your expenses exceed £1,000, or you want to claim a property loss, you must use actual expenses. Common allowable expenses include:

  • Letting agent and management fees
  • Repairs and maintenance (not improvements)
  • Buildings and contents insurance
  • Ground rent and service charges
  • Accountancy fees for rental accounts
  • Council tax and utility bills (if you pay them as landlord)
  • Advertising for tenants
  • Legal fees for lets of a year or less
  • Replacement of domestic items (like-for-like only)

Important: You cannot claim for capital improvements such as extensions, conversions, or upgrading a kitchen beyond its original standard. These may qualify for Capital Gains Tax relief when you sell.

INCOME £1,000

Property allowance may mean you do not need to report

If your total gross property income is £1,000 or less in the tax year, the property allowance covers it automatically.

Above threshold:

You must report the full income on SA105. You can either deduct the £1,000 property allowance or claim actual expenses - whichever gives you the lower taxable profit. You cannot use both.

Below threshold:

You do not need to report this income or complete the SA105 supplementary page. You do not need to register for Self Assessment solely because of this income.

Strategic considerations: If your expenses are less than £1,000, the property allowance saves paperwork. If you have a mortgage or significant repair costs, actual expenses will almost certainly give a better result.
Property and trading allowances (GOV.UK) (opens in a new tab)

Completing the SA105 supplementary page

The SA105 is the supplementary page for UK property income. When you file online, HMRC's system adds it automatically when you indicate you have property income. The key sections are:

  • Total rents and other income: The gross rent you received (or were entitled to) during the tax year
  • Allowable expenses: Itemised by category (insurance, repairs, finance costs, professional fees, other expenses)
  • Residential finance costs: Mortgage interest and other finance costs for residential property (claimed as a tax reduction, not a deduction)
  • Adjusted profit or loss: Calculated automatically in the online service
  • Tax adjustments: Including any losses brought forward from previous years

Mortgage interest restriction

Since April 2020, residential landlords can no longer deduct mortgage interest and other finance costs directly from rental income. Instead, you receive a tax reduction (credit) at the basic rate of 20%.

This is one of the most significant tax rules affecting buy-to-let landlords, particularly those who pay higher-rate tax.

Worked example: mortgage interest restriction

A higher-rate taxpayer receives £12,000 rental income with £3,000 in allowable expenses and £4,000 in mortgage interest:

  • Taxable rental profit: £12,000 minus £3,000 expenses = £9,000 (mortgage interest is not deducted)
  • Tax at 40% on £9,000: £3,600
  • Tax reduction at 20% of £4,000 finance costs: minus £800
  • Net tax on rental income: £2,800

Under the old rules, this landlord would have paid 40% on £5,000 (£12,000 minus £3,000 minus £4,000) = £2,000. The restriction costs this landlord an additional £800 per year.

Note: The restriction only applies to residential lettings. If you let commercial property, you can still deduct finance costs in full from your rental profits.

Furnished Holiday Lettings: what changed from April 2025

The Furnished Holiday Lettings (FHL) tax regime was abolished on 6 April 2025. If you previously qualified for FHL treatment, your property is now taxed as a standard residential letting. This means:

  • Mortgage interest: Now restricted to a 20% tax credit (previously deductible in full for FHL)
  • Capital allowances: No longer available on new purchases (existing capital allowance pools can continue until exhausted)
  • Pension contributions: FHL income no longer counts as relevant UK earnings for pension relief
  • Business Asset Disposal Relief: No longer available on sale (unless the FHL business ceased before 6 April 2025)

What to do for your 2026/27 return: Report former FHL income in the standard property income section of SA105. Do not use the old FHL boxes.

Business rates are unaffected: If your holiday let meets the availability and letting tests (140 days available, 70 days let in England), it can still be assessed for business rates rather than council tax.

Rent-a-room relief

If you let a furnished room in your own home, you may be able to use rent-a-room relief instead of reporting the income on SA105:

  • Tax-free threshold: £7,500 per year (£3,750 if sharing the income with another person)
  • Automatic relief: If your gross income from the lodger is £7,500 or less, you do not need to report it
  • Optional reporting: If income exceeds £7,500, you can elect to use rent-a-room relief and pay tax only on the excess above £7,500 (with no expenses deduction), or report full income and claim actual expenses

Rent-a-room does not apply to: properties you do not live in, unfurnished rooms, or rooms in a converted or self-contained flat (unless it is within your home).

Property losses

If your allowable expenses exceed your rental income, you make a property loss. The rules for property losses are:

  • Carry forward only: UK property losses can only be set against future UK property income
  • No sideways relief: You cannot offset property losses against your salary, self-employment profits, or other income
  • Automatic carry forward: HMRC's online system carries the loss forward automatically when you file each year
  • No time limit: Losses can be carried forward indefinitely until you have sufficient property income to use them

Note on the mortgage interest restriction and losses: Because mortgage interest is no longer deducted from rental profits (it is claimed as a tax reduction instead), it is harder to generate a property loss than it was under the old rules.

  1. 1

    Register for Self Assessment (if not already done)

    If this is your first year receiving rental income, register by 5 October following the end of the tax year. You will receive your UTR within 10 working days.

  2. 2

    Decide between property allowance and actual expenses

    If your gross property income is under £1,000, the property allowance covers it. If over £1,000, compare the £1,000 allowance against your actual expenses and use whichever is higher.

  3. 3

    Gather your property income records

    Collect rental statements from agents, bank records of rent received, mortgage statements, insurance policies, and receipts for repairs and other expenses.

  4. 4

    Calculate your rental profit

    Total rent received minus allowable expenses (excluding mortgage interest for residential property). Mortgage interest is entered separately for the 20% tax reduction.

  5. 5

    Complete SA105 within your Self Assessment return

    Log in to HMRC's online Self Assessment service. Complete the property income section, entering income, expenses, and finance costs in the relevant boxes.

  6. 6

    Claim any losses brought forward

    If you made a property loss in a previous year, enter the amount brought forward. The online service calculates how much can be offset against this year's profit.

  7. 7

    Submit your return by 31 January

    File online by 31 January following the end of the tax year. Pay any tax owed by the same date.

Work out your rental income when you rent out a property (opens in a new tab)
LIMITED COMPANY Exemption

Limited companies are not affected by the mortgage interest restriction

If you hold rental property through a limited company, the mortgage interest restriction does not apply. Companies can deduct mortgage interest in full as a business expense before calculating Corporation Tax.

This is one reason some landlords have transferred properties into a company structure. However, transferring existing properties triggers Stamp Duty Land Tax, Capital Gains Tax, and potentially higher mortgage costs, so take professional advice before doing so.

Comparison to other structures:

Individual landlords receive only a 20% tax credit on finance costs. Company landlords deduct finance costs in full. The right structure depends on your overall tax position, mortgage arrangements, and long-term plans.
When this matters: The choice between personal and company ownership is most significant for higher-rate taxpayers with substantial mortgage debt.
Mortgage interest restriction (GOV.UK) (opens in a new tab)