Renting Out Your First Property: Landlord Tax Guide

Renting out your first property to tenants can be daunting at times, not least because of the tax obligations incurred. Whether you have a single buy-to-let property or a whole portfolio of rental houses, you need to be aware of what taxes apply to your earnings and how to pay them. This guide will detail everything you need to know about taxes, including reliefs and exemptions when renting out your first property.

Table of Contents

What Taxes do I Need To Pay as a Landlord?
What Tax Exemptions and Reliefs Are Landlords Entitled To?
How to Pay Taxes as a Landlord

What Taxes do I Need To Pay as a Landlord?

There are several taxes that landlords and other property investors are potentially subject to, although your actual tax bill will rely on several factors. I recommend that you keep accurate records of all your earnings and expenses and find an accountant who specialises in property taxes to help you determine your tax obligations. Here are the different kinds of taxes that you will have to pay as a landlord.

Tax on Rental Income

Income from your rental property counts as taxable income. Your income tax is calculated based on the profits you make from your rent payments, less any eligible expenses. The amount of income tax you will pay depends on what tax band you are in, which is worked out based on your total amount of income. If you earn less than £1000 per year from your rental property, you do not need to pay taxes on this or even declare it to HMRC, although you should keep records of your income to prove this. The current income tax bands in the UK in 2025 are as follows:

Band	Taxable Income	Tax Rate
Personal Allowance	Up to £12,570	0%
Basic Rate	£12,571 to £50,270	20%
Higher Rate	£50,271 to £125,140	40%
Additional Rate	Over £125,140	45%

As you can see, you can earn up to £12,570 without paying tax, however, if you earn more than £1000 per year, you must declare your earnings to HMRC and submit a tax return, even if your tax rate is 0%.

You can offset your expenses against your earnings to reduce your income tax bill. You can claim the following expenses:

Property maintenance and repairs
Marketing and advertising costs
Phone calls and texts relating to your property rental – it can be useful to have a separate phone for business use
Accountancy and legal fees
20% of mortgage interest payments
Insurance, e.g. landlord and property insurance
Expenses incurred during void periods, e.g. council tax while the property is empty
Any other general business costs, i.e. stationery, printer ink, subscriptions to property-investment magazines, travel costs to and from the property

National Insurance

If you earn more than £12,570 per year, you are eligible to pay Class 4 National Insurance. This is calculated as 6% of profits for basic rate taxpayers, and 2% of profits for higher rate taxpayers. If you make less than £12,570 per year but more than £6,725, you can pay voluntary Class 2 National Insurance payments to ensure you keep up with your NI contributions so you can benefit from them later on, e.g. in the form of a state pension or other benefits. Your National Insurance contributions can be paid at the same time as your taxes through HMRC.

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Stamp Duty Land Tax

You pay stamp duty land tax, or SDLT. when you purchase property or land in the UK that is over £125,000. The stamp duty rates at the time of writing (April 2025) are as follows:

Property Price	Stamp Duty Land Tax Rate
Up to £125,000	0%
From £125,001 to £250,000	2%
From £250,001 to £925,000	5%
From £925,001 to £1.5 million	10%
Over £1.5 million	12%

People who buy a second property for any reason including as a rental property will have to pay a higher rate of SDLT, as per the chart below:

Property Price	Stamp Duty Land Tax Rate
Up to £125,000	5%
From £125,001 to £250,000	7%
From £250,001 to £925,000	10%
From £925,001 to £1.5 million	15%
Over £1.5 million	17%

If your rental property is subject to SDLT, you will need to complete an SDLT return form on the government website – your solicitor or conveyancer can also do this for you. You must complete this form and pay any SDLT owed within 14 days of the transaction date, or run the risk of getting fined.

Capital Gains Tax

When you sell a property or other assets worth more than £3000, you are subject to Capital Gains Tax, or CGT. when you sell a property, if you make more than £3000 profit, you will have to pay CGT. The amount of CGT you pay on the sale of a house depends on the amount of profit you make, minus any costs of buying, selling or improvement works such as extensions. You need to complete a form on the government website within 60 days of the sale – calculate your CGT and access this form here. If you make a loss when selling a property, you have to report this too, and you can potentially claim this as an allowable loss on your taxes for up to four years after the sale of the property.

How to Pay Taxes as a Landlord

You will pay income tax when you complete your tax return with HMRC, which will happen every year. Other taxes such as the stamp duty land tax or capital gains tax will be paid when you buy or sell a property. You must report your profits and losses accurately to HMRC to make sure you are not overpaying or underpaying tax – an accountant can help you with this, especially one who is experienced in property taxes.
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