Smart Private Landlords Pay Less Tax on their Rental Income

17 Jul, 2019

17 July 2019 Renting out property can be lucrative source of income. It yields many opportunities to landlords, but like with all potentially profitable ventures, it also comes with its fair share of downsides too; namely paying tax on rental income.

Paying tax is a positive thing when you look at the bigger picture. It helps the economy tick along and funds a wide range of public services. For landlords though, fees can be a heavy burden…but they are not always entirely necessary with the right (and legal) professional assistance.

Here’s a rundown on how private landlords can pay fewer taxes on their rental income.

What is a rental income?

A rental income is the sum of money a tenant pays to the landlord in exchange for living in their property. It also includes things like utility costs, parking fees, and use of furniture that’s owned by the landlord. It can also fluctuate based, where the property is located or its overall value, and if the landlord is employed or not.

Allowable Expenses

Although some landlords are starting to feel the system is stacked against them and overly favours tenants, rental income tax is one area where things are surprisingly fair. First, you need to really understand how the system works. If you make all your money from renting out properties, you need to register as a fully-fledged business with HMRC to be taxed as an independent firm. If you’re employed alongside renting out a property or two, you’ll only need to pay tax on the profit you make from renting your property to a tenant; which is often simpler and cheaper!

Private landlords can claim allowable expenses in certain scenarios, providing they were exclusive to renting out your property. This can all be deducted from your overall rental income, which means you’ll be liable for less tax. These tax-free expenses can include landlord insurance, mortgage interest, repairs and maintenance, service charges, household costs and more.

It’s worth keeping a close eye and making comprehensive records of these costs as they are vital to keep your tax bill to a minimum.

Be sure to carry out your own research on which allowable expenses might be allowable in your particular situation. Private phone calls and personal expenses can’t be included, so try to focus on the things that’re exclusive to your role as a landlord.


It’s possible to pay fewer taxes on rental income with the right level of awareness. You need to have a thorough understanding of what you’re taxed on and why, and then from there you can start to make distinctions between personal allowances in being a landlord. Take it seriously and research your tax obligations independently, and you should be able to make savings and put more cash in your pocket.