As a landlord, maximising your rental income is the aim of the game but taxes can often take a big bite out of your profits. The good news is, there are simple strategies you can use to pay less tax and keep more money in your pocket.
Whether you’re a seasoned property owner or new to the rental game, here is our practical guide to the steps you can take as a Landlord to pay less tax on your rental properties and to make the most of your investment.
1. Claim all eligible business expenses
That means all the little costs that you spend throughout the year to help you rent your property. All of the following are allowable expenses.
- Mileage for property-related travel at 45p per mile
- Training courses and conferences you may have attended that are industry-related
- Subscriptions, insurance, and marketing costs for your rental property
- Tenant find fees and Chapmans management fees
- Utility and council tax bills during void periods
- Mortgage interest (percentage) and potentially mortgage arrangement fees
2. Plan repairs and refurbishments strategically
Timing can be everything. If your property needs a bit of TLC, consider bringing forward planned repairs or refurbishments to offset a profitable year. As long as they qualify as revenue expenses, it can help lower your overall tax liability.
3. Stay informed on tax changes
Be aware of upcoming changes. For example, the transition of furnished holiday lets to the same tax treatment as long-term rentals may mean it’s worth exploring a change in your rental strategy. Could a move from furnished holiday lets to long-term rentals be beneficial? Understanding these potential shifts can help you to plan effectively.
4.Prepare for “Making Tax Digital” (MTD) requirements
Landlords with rental income over £50,000 per business will need to submit quarterly reports of their income to HMRC starting in April 2026 (£30,000-£50,000 from April 2027 and then £20,000 from 2028.) Ensure you have robust record-keeping systems in place to comply with the new MTD rules. (Read our blog on MTD here)
5. Keep up-to-date with tax-efficient structures
One way to optimise your tax position is by considering the benefits of holding your properties within a limited company structure, which may offer significant tax advantages such as lower corporate tax rates compared with personal income tax. Transferring properties between spouses or civil partners can also be a strategic move to fully benefit from individual tax allowances.
For jointly owned properties, gifting income to a spouse in a lower tax bracket can also be a smart approach to minimise the tax impact and maximise household income.
Managing your tax liability as a landlord can really boost your rental income, but tax rules can be tricky and change often. We always recommend seeking professional financial advice that fits your situation. A tax advisor or financial planner can help you understand the ins and outs of property taxes and make sure you’re getting the best financial results to suit you and your rental properties.
