In short
- Keep each property’s rent and costs apart, and record your share if you own it jointly.
- Mortgage interest isn’t an expense: it gives a 20% tax reduction instead, so keep it separate.
- Property income counts towards the Making Tax Digital thresholds.
Letting a flat or a house is a business in HMRC’s eyes, with its own section of your tax return and, from 2026 onwards, its own quarterly updates under Making Tax Digital. The good news: a landlord’s books are simpler than most. A few records, kept the same way every month, do the job.
One set of records per property
- Rent received, with the date and the tenant.
- Costs: letting agent fees, repairs, insurance, ground rent and service charges, safety certificates, cleaning between tenants.
- Mortgage or loan interest, kept on its own.
- Your share, if you own the property with someone else. You record your share of the rent and costs.
Holiday lets. Furnished holiday lettings used to have their own rules. They were abolished from April 2025, so those properties are now treated like any other let.
Repairs or improvements?
Repairing something back to how it was is an allowable cost: fixing a leaking roof, replacing a broken boiler with a similar one, repainting between tenants. Improving the property, like an extension or a loft conversion, isn’t; it’s a capital cost that may reduce tax when you sell. Replacing furniture, appliances and furnishings in a let home is usually allowable as replacement of domestic items.
Mortgage interest works differently
For residential lets you can’t deduct mortgage interest from your rent. Instead you get a tax reduction of 20% of the interest. That’s why it needs to be kept apart: it goes into a different box, and your accountant needs the full figure.
- Rent received, 12 × £800
- £9,600
- Letting agent, insurance, repairs
- −£1,840
- Profit before mortgage interest
- £7,760
- Mortgage interest paid (kept apart)
- £3,000
- Tax reduction for the interest (20%)
- £600
Illustrative figures. Income tax is charged on the £7,760 at your own rate, then £600 comes off the bill.
The £1,000 property allowance
If your property income is small, you can take £1,000 off it instead of claiming actual costs. You can’t use it together with the mortgage interest reduction, so it rarely suits a mortgaged let, but it can suit renting out a driveway or a room occasionally.
Same day, same way: record the rent when it lands and the cost when you pay it, and the quarter takes care of itself.
Rates, thresholds and dates in this guide are as of 14 October 2026. They’re illustrative: rules change, so check with your accountant before a big decision. It’s general information, not tax or legal advice.
Rates shown are illustrative and are checked against gov.uk before launch.