How do I report property income to HMRC?

At Towerstone Accountants we provide specialist property accountant services for landlords property investors and individuals dealing with property tax and reporting obligations across the UK. This article has been written to explain How do I report property income to HMRC in clear practical terms so you understand how the rules apply in real situations. Our aim is to help you make informed decisions avoid costly mistakes and know when professional advice is worthwhile.

This is one of the most common questions I am asked by landlords and it is also one of the areas where mistakes are most easily made. Reporting property income to HMRC is not optional and it is not something you can leave until you feel ready. Whether you rent out a single room, a former home, or a growing portfolio, HMRC expects rental income to be declared correctly and on time.

For some landlords the process is relatively straightforward. For others it becomes more complex because of joint ownership, mortgages, overseas property, or changes in personal circumstances. The challenge is not just filling in a form. It is understanding what counts as property income, what expenses you can deduct, how profits are calculated, and how everything fits into your wider tax position.

In this article I will explain step by step how to report property income to HMRC, which forms you need, when you need to register, what information you must keep, and the common traps I see landlords fall into. I will use the same practical approach I take with clients so you can apply it confidently rather than guessing.

What Counts as Property Income?

Before you can report property income you need to be clear about what HMRC considers to be property income.

Property income usually includes:

Rent received from residential property

Rent received from commercial property

Payments from tenants for utilities or services

Lease premiums spread over time

Income from jointly owned property

Income from overseas property

It does not matter whether the income is paid monthly, quarterly, or irregularly. If you receive it in connection with letting property it is usually taxable.

Even if the property makes a loss or only generates small amounts of income it still needs to be reported unless a specific exemption applies.

When Do I Need to Tell HMRC About Property Income?

You must tell HM Revenue & Customs about property income if:

Your gross rental income exceeds £1,000 in a tax year

You already complete a Self Assessment tax return

HMRC has asked you to submit a return

The £1,000 figure refers to gross income before expenses. If your income is below this you may be able to use the property allowance instead of reporting actual income and expenses. However this is optional and not always beneficial.

If you start renting out property and HMRC is not already aware you must register for Self Assessment by 5 October following the end of the tax year in which the income first arises.

The Main Way to Report Property Income: Self Assessment

For most landlords property income is reported through the Self Assessment tax system.

This involves:

Registering for Self Assessment

Completing an annual tax return

Including a property income section

Paying any tax due by the deadline

Self Assessment runs on a tax year basis from 6 April to 5 April.

Registering for Self Assessment as a Landlord

If you have never completed a tax return before you must register.

You usually need to provide:

Your personal details

National Insurance number

Date rental income started

HMRC will then issue you with a Unique Taxpayer Reference and instructions for completing your return.

This step is often overlooked by new landlords and late registration can lead to penalties.

Which Part of the Tax Return Covers Property Income?

Property income is reported on the property pages of the Self Assessment return.

For UK property this is usually:

SA105 for UK property income

For overseas property there is a separate section.

You must complete the relevant pages even if the property makes a loss.

How Do I Calculate Property Profit for HMRC?

HMRC taxes you on profit not on rent received.

The basic calculation is:

Total rental income

Less allowable expenses

Equals taxable rental profit

That profit is then added to your other income such as employment or self employment income to determine how much tax you pay.

Understanding allowable expenses is critical to getting this right.

Allowable Expenses You Can Deduct

When reporting property income you can usually deduct expenses that are incurred wholly and exclusively for the property business.

Common allowable expenses include:

Letting agent fees

Repairs and maintenance

Insurance

Council tax and utilities paid by you

Accountant fees relating to the property

Advertising costs

Ground rent and service charges

Replacement of domestic items

Expenses must relate to maintaining the property not improving it. Improvements are treated differently for tax.

Mortgage Interest and Finance Costs

Mortgage interest is one of the most misunderstood areas.

You no longer deduct mortgage interest from rental income to calculate profit. Instead you calculate profit before interest and then claim a basic rate tax reduction separately.

This means:

Taxable profit appears higher

The tax calculation includes a separate credit

Higher and additional rate taxpayers are affected most

The Self Assessment return includes specific boxes for this so it is important to enter the figures correctly.

Cash Basis vs Accruals Basis

Most individual landlords use the cash basis by default.

Under the cash basis:

Income is reported when received

Expenses are reported when paid

This keeps things simple and is suitable for most landlords.

Some landlords use the accruals basis which matches income and expenses to the period they relate to. This is more complex but sometimes necessary.

You must be consistent once a method is chosen.

Reporting Jointly Owned Property Income

If you own property jointly you usually report your share of the income and expenses.

The default position is that income is split according to ownership shares.

Each owner reports their share on their own tax return.

There are exceptions particularly for married couples and civil partners but these require formal elections and evidence.

Reporting Losses From Property

Property businesses can make losses particularly in early years.

If your allowable expenses exceed your rental income you have a property loss.

This loss is not wasted. It can usually be:

Carried forward

Set against future property profits

Property losses cannot normally be set against employment income.

Losses must still be reported on the tax return to be carried forward.

Reporting Overseas Property Income

Overseas rental income must also be reported to HMRC.

It is reported separately from UK property income.

You must:

Declare overseas income in sterling

Deduct allowable expenses

Claim double taxation relief where applicable

Overseas tax paid does not remove the need to report income in the UK.

Using the Property Allowance

If your gross property income is £1,000 or less you may choose to use the property allowance.

This means:

You do not report income and expenses in detail

The £1,000 allowance covers the income

However you cannot claim both the allowance and actual expenses. For landlords with letting agent fees or repairs this allowance is often not beneficial.

Deadlines for Reporting Property Income

Self Assessment deadlines are strict.

Key dates include:

Register by 5 October after the tax year ends

Submit the online tax return by 31 January

Pay any tax due by 31 January

Missing deadlines can result in penalties even if no tax is owed.

Paying Tax on Property Income

Tax on property income is paid as part of your overall tax bill.

Depending on your circumstances you may also need to make payments on account which are advance payments towards the next year’s tax.

These can catch new landlords by surprise so it is important to plan for cash flow.

Common Mistakes I See When Reporting Property Income

Over the years I see the same errors repeatedly.

The most common include:

Not registering for Self Assessment on time

Forgetting to report small amounts of income

Missing allowable expenses

Incorrect mortgage interest treatment

Incorrect joint ownership splits

Assuming letting agents report income to HMRC

Letting agents do not report your income for you. The responsibility always sits with the landlord.

What Records Do I Need to Keep?

HMRC expects landlords to keep records for several years.

You should keep:

Rental statements

Bank records

Invoices for expenses

Mortgage interest statements

Insurance documents

Good records make reporting easier and protect you if HMRC asks questions later.

HMRC Checks and Enquiries

HMRC increasingly cross checks property income using data from letting agents and other sources.

If figures do not match expectations HMRC may ask questions.

Clear and accurate reporting is the best defence.

When Professional Help Is Worth Considering

Some landlords manage reporting themselves without issue.

However professional help is often worthwhile if:

You have multiple properties

You are a higher rate taxpayer

You have joint ownership or overseas income

You are unsure about expenses or finance costs

You plan to sell property

Fixing mistakes later is usually more expensive than getting it right first time.

Practical Advice I Give Landlords

When landlords ask me how to report property income I usually give the same advice.

I recommend:

Register early

Keep records throughout the year

Do not guess figures

Understand how profit is calculated

Ask questions before submitting

Property tax is manageable when handled properly but costly when assumed.

So How Do I Report Property Income to HMRC?

In summary you report property income to HMRC through the Self Assessment tax system. You must register if required, complete the property pages, calculate profit correctly, and submit the return by the deadline.

The process itself is not complicated but the detail matters. Understanding what counts as income, which expenses are allowable, and how special rules such as mortgage interest relief apply makes the difference between a correct return and an expensive mistake.

If you rent out property and are unsure whether you are reporting income correctly it is worth reviewing your position sooner rather than later. HMRC expects compliance whether the income is large or small and getting it right gives you confidence that you are paying the right tax and nothing more.

You may also find our guidance on Do I need to register for Self Assessment as a landlord and How do I set up accounting for multiple rental properties useful when exploring related property tax questions. For a broader overview of property tax reporting and planning topics you can visit our property hub which brings all related guidance together.