How Much Tax Does A Landlord Need To Pay?

Want to find out how much tax landlords have to pay? Well, by the end of this blog, you’ll understand everything about landlord tax in the UK.

Arjun Kumar
Arjun Kumar
Feb 28, 2024

In this article, we will talk about landlords' tax obligations, including earnings, expenses, and tax reporting requirements. Finally, we'll stress how important it is to tell the tax people exactly how much money you make from renting.

The Basics of Landlord Taxation

Before we look at the complexities of landlord taxation, let's explore some fundamentals. As a landlord, when you earn money from renting a property, you are liable to pay tax on this income.

In short, just like most income earned in the UK, the government takes a percentage of the money that you make from renting out your property. Let's break down how much tax you will need to pay as a landlord in the UK.

Taxable Income for Landlords

As we've just mentioned, 'taxable income' for landlords it the money that you are liable to pay tax on. As a landlord, your taxable income is the money you earn from renting out your property. This tax rate can reach up to 45%, depending on your income.

  1. If your rental income is less than the £12,570 basic rate threshold, you won't be taxed on it.

  2. 20% of your rental income, over £12,570 but under the higher rate threshold of £50,270, is subject to tax.

  3. Rent income over £50,270 and under the £150,000 extra rate threshold is subject to 40% tax.

  4. If your rental income exceeds the £150,000 extra rate threshold, you will be required to pay 45% in tax.

Picture it as breaking down your earnings into categories. Whilst rent is classified as taxable income, any expenses such as necessary repairs and home improvements may be tax deductible. Understanding these details can help you save money in your final tax return.

Deductible Expenses

Now, let's talk about deductible expenses. Deductible expenses are an intelligent way for landlords to manage their money and pay less taxes. These are the things related to your rental property that you can use to lower your taxable income.

Imagine you spend money on fixing things or keeping your property in good shape—those expenses can often be deducted.

And here's a tip: If you're a non-resident landlord, understanding deductible expenses is even more crucial.

Capital Gains Tax on Property Sales

Whether you're doing your tax returns online, using UK tax return services, or dealing with non-resident landlord tax returns, understanding capital gains tax is critical. When landlords sell a property, if your property's value increased from when you bought it to when you sold it, that gain will be taxed. It's like sharing a bit of the profit you made.

But here's the silver lining: There are certain situations, like selling your main home, where you might not need to pay this tax.

Reporting Rental Income

When you're a landlord, you must let HMRC know exactly how much money you're making from renting out your property.

Imagine it as a simple task: you report your rental income, and the HMRC use this information to ensure everything adds up. Accuracy is critical here. If you fail to do so, you may get caught up with some issues with HMRC.


So, there you have it—our guide to landlord taxes made as simple as possible. We explored the basics, talked about deductible expenses, checked out capital gains tax, and emphasised the importance of reporting rental income accurately. Whether you're navigating tax returns online, using UK tax return services, or handling a non-resident landlord tax return, remember to keep it clear, share the correct info, and you'll ace the landlord tax game.

If you’re looking for ways to save up some money on taxes, consider using Taxd, an online tax software.

Frequently Asked Questions

1: How much tax do I pay as a landlord on the money I earn from renting out my place?

You'll have to pay up to 45% tax on the money you make from renting.

2: What are deductible expenses, and how do they help me as a landlord?

Deductible expenses are like special coupons. They help you lower the money HMRC want from your rental income.

3: Do I have to pay extra tax when I sell a property I own?

Yes, when you sell, you will have to pay capital gains tax on the profit you made.

4: Why is it important to report my rental income accurately?

Reporting accurately helps HMRC make sure everything adds up.

5: Can I do my landlord tax returns online, and how do I use UK tax return services?

Absolutely! You can manage your taxes online. UK tax return services like Taxd can guide you through the process quickly.

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