Report property income on your Self Assessment

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 a furnished holiday letting)

If this is the first time you have received rental income and you are not registered for Self Assessment, 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.

If your expenses are higher than the allowance, 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)

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.

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. On it you enter:

• the gross rent you received (or were entitled to) during the tax year
• your allowable expenses, by category (insurance, repairs, finance costs, professional fees, other expenses)
• mortgage interest and other finance costs for residential property, which are claimed as a tax reduction, not a deduction
• tax adjustments, including any losses brought forward from previous years

The online service works out your adjusted profit or loss.

Mortgage interest restriction

If you let residential property, you cannot deduct mortgage interest and other finance costs from your rental income. You get a tax reduction instead, which matters most if you 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. Their taxable rental profit is £12,000 minus £3,000, which is £9,000, because the mortgage interest is not deducted. Tax at 40% on £9,000 is £3,600. The tax reduction of 20% of the £4,000 finance costs takes off £800, leaving £2,800 to pay on the rental income.

If the interest could be deducted, this landlord would pay 40% on £5,000 (£12,000 minus £3,000 minus £4,000), which is £2,000. The restriction costs this landlord an extra £800 a year.

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

Former furnished holiday lettings

The furnished holiday lettings (FHL) tax regime was abolished on 6 April 2025. A property that qualified for FHL treatment is taxed as a standard residential letting, so:

• mortgage interest gets the 20% tax reduction rather than a full deduction
• capital allowances are not available on new purchases, although existing capital allowance pools can continue until used up
• the income does not count as relevant UK earnings for pension relief
• Business Asset Disposal Relief is not available on a sale, unless the FHL business ceased before 6 April 2025

Report former FHL income in the standard property income section of SA105, not the old FHL boxes.

Business rates are unaffected. If your holiday let in England is available for 140 days and actually let for 70 days, 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. The tax-free threshold is £7,500 a year, or £3,750 if you share the income with another person.

• If your gross income from the lodger is £7,500 or less, the relief is automatic and you do not need to report it.
• If it is more than £7,500, you can either elect to use the relief and pay tax only on the amount above £7,500 (with no expenses deducted), or report the full income and claim actual expenses.

Rent-a-room relief does not apply to properties you do not live in, unfurnished rooms, or a self-contained flat that is not part of your home.

Property losses

If your allowable expenses are more than your rental income, you make a property loss.

• You can set UK property losses only against future UK property income, not against your salary, self-employment profits or other income.
• HMRC's online system carries the loss forward automatically when you file each year.
• There is no time limit, so you can carry a loss forward until you have enough property income to use it.

Because mortgage interest is claimed as a tax reduction rather than deducted from rental profits, it is harder to make a property loss.