First-Time Landlord: 5 Tax Tips You Need to Know

1. Register for Self Assessment

If you earn rental income, you must register for Self Assessment with HMRC. Do this before 5 October following the tax year you first received rent. Late registration can result in penalties.

You will need to complete the property pages (SA105) of your tax return each year.

2. Understand the Repairs vs Improvements Rule

Repairs are tax deductible. Improvements are not. If you buy a property and renovate it before your first tenant, HMRC may treat much of the work as capital expenditure (not deductible against rental income). Once the property is let, ongoing repairs become deductible.

Keep clear records and separate repair invoices from improvement invoices.

3. Know About Section 24

You cannot deduct mortgage interest from your rental income. Instead, you receive a 20% tax credit. If you are a higher rate taxpayer, this means you pay more tax than you might expect. Factor this into your investment calculations.

4. Claim All Your Expenses

Many new landlords under-claim. Common expenses you might miss:

• Mileage to the property (45p per mile)
• Phone calls about the property
• Accountancy fees for your rental accounts
• Safety certificate costs
• Insurance premiums
• Advertising for tenants

5. Set Aside Money for Tax

Your rental income arrives gross — no tax is deducted at source. You are responsible for paying the tax through Self Assessment. Set aside 20-40% of your rental profit (depending on your tax rate) each month so the money is ready when the bill arrives.

For first-year landlords, HMRC may also set up payments on account for the following year, meaning your first tax bill could be larger than expected.

Start tracking from day one with Accounted.

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Get it right from the start. Sign up for Accounted and let Penny help you navigate your first year as a landlord.