Being a landlord has become more expensive. Mortgage interest relief was restricted, Stamp Duty on additional property went up, and from April 2026 many landlords have to send HMRC quarterly updates on top of their annual return. Plenty have watched their tax bill climb while their actual profit stood still.
There are still legitimate ways to bring that bill down, though, and most landlords are not using all of them. Here are eight, starting with the one that catches people out most often.
1. Check Whether You Owe Any Tax at All
Before anything else, it’s worth checking whether your rental income is taxable in the first place. Two allowances can wipe it out entirely.
The property allowance means that if your gross rental income is £1,000 or less a year, the income is tax free and you don’t need to report it. If you earn a little more than that, you have a choice: deduct the flat £1,000 allowance from your gross income, or work out your profit by deducting your actual expenses. Take whichever leaves you better off. If your expenses come to less than £1,000, use the allowance.
The Rent a Room scheme is more generous. Let a furnished room in your own home and you can earn up to £7,500 a year tax free. The exemption applies automatically below that threshold, and above it you can opt into the scheme on your tax return. It works whether you own or rent your home, though tenants should check their lease permits subletting. If someone else also receives income from the letting, the threshold halves to £3,750 each.
2. Claim Every Allowable Expense
Allowable expenses come off your rental income before your taxable profit is calculated, and this is where most landlords leave money behind. Anything spent wholly and exclusively on running the property counts, so keep the receipts.
The usual candidates are worth checking off:
- Letting agent and management fees, plus legal and professional fees relating to the lettings.
- Insurance premiums, buildings and contents.
- Repairs and maintenance, but not improvements, which are treated differently.
- Council tax and utilities during void periods, along with ground rent and service charges.
- Travel costs for genuine property management trips.
Smaller items add up too, and they’re the ones people forget: bank charges on the rental account, phone calls to tenants, landlord association subscriptions, and the cost of services provided to tenants such as cleaning communal areas.
Replacement of Domestic Items Relief is worth knowing about separately. When you replace furnishings or appliances in a let property – beds, sofas, curtains, fridges, washing machines – you can claim the cost of the new item, the disposal of the old one, and delivery and installation, less anything you get for the old item. It only covers like-for-like replacements, not the initial purchase or a significant upgrade.
Capital improvements work the other way. Genuine improvements aren’t deductible against rental income, but qualifying enhancement expenditure can be added to the property’s base cost for Capital Gains Tax when you sell, which reduces the eventual gain.
Two conditions matter: the work has to be a real improvement rather than a repair, and it has to still be reflected in the state of the property when you sell it. A renovation can be part repair and part improvement, so the split needs to be worked out properly. Keep those records, because you’ll want them years later.
3. Get Your Records Ready for Making Tax Digital
This is new, and it changes how the rest of these strategies work in practice. Making Tax Digital for Income Tax started on 6 April 2026 for landlords whose qualifying income – gross rental and self-employment income combined, before expenses – is over £50,000.
If you’re in scope, you now need to keep digital records and send HMRC a quarterly update, and you still file an annual return, in the form of a final declaration after the tax year ends.
The quarterly updates are an addition to the annual process, not a replacement for it. The threshold drops to £30,000 from April 2027 and, as proposed, £20,000 from April 2028, so more landlords will be brought in over the next two years, subject to the available exemptions.
There’s a small mercy in the first year: HMRC won’t apply late-filing penalty points for quarterly updates during the first 12 months, though points still apply to the final declaration and other obligations. You can check your position through the Gov.uk guidance on Making Tax Digital.
The practical upshot is that sloppy record-keeping now costs you four times a year instead of once. Landlords who capture expenses as they go will claim more of them, which is a tax saving in itself.
4. Time Your Major Expenses
Routine maintenance is deductible whenever you do it, but when you do it can affect its value.
If your income varies, spending on major repairs in a year when your other income is higher means those deductions offset income taxed at 40% or 45% rather than 20%.
Grouping larger jobs into a single tax year can have the same effect, and if it drops your total income below a threshold, the saving is larger still. Void periods between tenancies are often the natural moment for this, since you can claim council tax and utilities for the empty period while the work is done.
Under quarterly reporting this needs a bit more forethought than it used to, but the underlying logic hasn’t changed.
5. Share Ownership With a Lower-Rate Partner
If your spouse or civil partner pays tax at a lower rate than you, moving some of the property ownership to them moves some of the rental income into their band.
There’s a rule here that catches people out. Where spouses or civil partners living together own property jointly, HMRC taxes the rental income 50:50 by default, whatever the actual ownership split says. So transferring 70% of a property to a lower-rate partner does not, by itself, move 70% of the income to them. To be taxed on the real split, you need genuinely unequal beneficial interests and you must file a Form 17 declaration with supporting evidence, normally within 60 days of signing it.
Done properly, the saving is real. If you’re a higher-rate taxpayer and your partner is a basic-rate taxpayer, a 50:50 split means half the rental income is taxed at 20% rather than 40%. Transfers between spouses and civil partners are generally exempt from Capital Gains Tax, and Stamp Duty usually only arises where the partner takes on a share of the mortgage debt.
You’ll also need the legal documentation to reflect the new ownership, your tax returns updated to match, and your lender told if the property is mortgaged. Unmarried couples don’t get the same exemptions, so take advice first.
6. Offset Losses Against Future Profits
A loss-making year isn’t wasted. Property business losses are automatically carried forward and set against the first available profits of the same property business for as long as that business continues. No special claim is needed.
If you make a £3,000 loss this year after a major repair or a long void, and next year you turn a £5,000 profit, you’re taxed on £2,000. What you do need is accuracy: report the loss correctly on your tax return, keep the records that support it, and track the carried-forward figure so it’s actually deducted when profits arrive.
Losses can only be used against the same property business, and they lapse if that business ceases – so if you sell your last property, any unused losses go with it.
This matters most in the early years of a portfolio, or during a heavy maintenance period, when the losses can shelter profits later on.
7. Consider Whether a Company Structure Fits
For higher-rate landlords with substantial mortgage interest, a limited company can be more efficient, because companies still deduct their mortgage interest before calculating taxable profit while individual landlords only get a basic-rate tax reduction.
The comparison is real but it’s rarely as simple as it first looks:
- Corporation tax isn’t a flat 19%. It’s 19% up to £50,000 of profit and 25% above £250,000, with an effective 26.5% marginal rate in between.
- Getting the money out costs more. Dividend tax rose in April 2026 to 10.75% for basic-rate and 35.75% for higher-rate taxpayers.
- Moving existing properties in is expensive. It’s treated as a sale at market value, triggering Capital Gains Tax and usually Stamp Duty.
- It isn’t an inheritance tax fix. A property-letting company is an investment business, so its shares don’t normally qualify for Business Relief.
The structure tends to suit landlords who are building a portfolio and reinvesting profits, rather than those living off the rent. Our guide on whether landlords should set up a limited company works through it in detail.
8. Plan Ahead for What’s Coming
Two changes are worth planning around now rather than reacting to later.
From April 2027, property income in England, Wales and Northern Ireland will have its own tax rates: 22% at the basic rate, 42% at the higher rate, and 47% at the additional rate, with finance cost relief at 22%. Scotland runs its own system. That’s a straightforward increase on rental profits for individual landlords, and it makes everything else on this list more valuable.
Separately, the furnished holiday lettings regime was abolished in April 2025. If you have a holiday let, it’s now taxed like any other rental property, with the same finance-cost restriction as everyone else.
New capital allowances on furnishings generally ended with the regime, though allowances can continue on qualifying expenditure already in a capital allowances pool by 5 April 2025.
And when you do eventually sell, remember that the Capital Gains Tax annual exempt amount is now just £3,000. Keeping careful records of every capital improvement over the years is what protects you at that point, along with claiming Private Residence Relief for any period the property was genuinely your main home.
How Double Point Can Help
Property tax rules keep moving, and the right approach depends on your income, your borrowing and what you intend to do with the portfolio. What saves one landlord thousands does nothing for another.
At Double Point, our chartered accountants work with landlords to identify missed reliefs and expenses, get the ownership structure right, and keep everything compliant as Making Tax Digital beds in. It’s all part of a wider tax planning strategy built around your circumstances.
To find out what you could be saving, book a consultation with us today.