What Records Do Landlords Need to Keep for Tax?

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 What records do landlords need to keep for tax 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.

As a chartered accountant running my own firm, poor record keeping is one of the biggest reasons landlords run into tax problems with HMRC. In many cases, the issue is not deliberate non compliance. It is disorganisation, missing paperwork, or assumptions about what does and does not matter. Unfortunately, HMRC do not judge landlords on intent alone. They judge them on evidence.

Good record keeping is not just about filling in a tax return. It underpins income tax calculations, Capital Gains Tax when you sell, VAT obligations where relevant, and your ability to defend yourself if HMRC ever raise questions. With Making Tax Digital approaching for landlords, record keeping is no longer something that can be left until January. It needs to be ongoing, accurate, and increasingly digital.

In this article, I want to explain clearly and practically what records landlords need to keep for tax, how long they need to keep them, and why certain documents matter far more than people realise. This is written exactly how I explain it to clients, focused on real world HMRC expectations rather than theory.

The basic legal requirement for landlord record keeping

At its most basic level, HMRC require landlords to keep records that support the figures shown on their tax returns.

This applies to:

• Rental income

• Allowable expenses

• Capital costs

• Capital Gains Tax calculations

• VAT where applicable

If you cannot evidence a figure, HMRC are entitled to disallow it.

The burden of proof sits with the landlord, not with HMRC.

How long landlords must keep tax records

Landlords must usually keep records for at least six years after the end of the relevant tax year.

In practice, this means:

• Records for the 2024 to 2025 tax year should be kept until at least April 2031

Where Capital Gains Tax is involved, records often need to be kept much longer.

This includes:

• Purchase documents

• Improvement costs

• Ownership records

These may be needed decades later when a property is sold.

Why record keeping matters more now than it used to

Record keeping has always mattered, but it matters more now for three main reasons.

• HMRC have better data from third parties

• HMRC compliance activity in property has increased

• Making Tax Digital will require ongoing digital records

Landlords who rely on memory or rough spreadsheets are far more exposed than they realise.

Records of rental income landlords must keep

The starting point for all landlord tax is rental income.

You must keep records that show exactly how much rent you received and when.

This includes:

• Tenancy agreements

• Letting agent statements

• Bank statements showing rental receipts

• Airbnb or platform income reports

• Records of advance rent received

• Records of rent refunds or adjustments

HMRC expect rental income to be reported on an accruals basis in most cases, meaning income is taxed when it is due, not just when it is received.

Letting agent statements and why they matter

If you use a letting agent, their statements are critical.

They show:

• Gross rent charged

• Fees deducted

• Repairs paid on your behalf

• Timing of transactions

HMRC will expect your reported income to reconcile to these statements.

Relying only on net amounts received into your bank account is a common and costly mistake.

Airbnb and short term letting income records

For Airbnb and holiday lets, record keeping needs to be particularly robust.

You should keep:

• Airbnb income summaries

• Booking confirmations

• Platform fee breakdowns

• Cancellation records

• Refund records

• Payout statements

HMRC increasingly receive data directly from platforms, so your figures need to match.

Records of allowable expenses landlords must keep

Expenses are where most HMRC challenges arise.

You must keep evidence for all expenses claimed against rental income.

Common expense records include:

• Letting agent invoices

• Repair and maintenance invoices

• Utility bills

• Insurance policies and invoices

• Council tax or business rates bills

• Cleaning and gardening invoices

• Safety certificates

• Advertising costs

• Accountancy fees

• Legal fees relating to letting

Each expense must be wholly and exclusively for the property business or apportioned correctly if mixed use.

Repairs versus improvements and supporting records

One of the most important distinctions in property tax is between repairs and capital improvements.

Repairs are deductible against rental income.
Improvements are not deductible against income but may reduce Capital Gains Tax later.

You should keep records that clearly show:

• What work was done

• Why it was necessary

• Whether it replaced an existing item

• Whether it improved the property beyond its original condition

Invoices should be detailed, not vague.

Descriptions such as “general works” are often challenged by HMRC.

Replacement of Domestic Items relief records

If you claim Replacement of Domestic Items relief, you must keep records showing:

• The original item existed

• The original item was provided for tenant use

• The replacement item was like for like or broadly equivalent

• The cost of the replacement

HMRC do not allow claims for initial purchases, only replacements.

Mortgage interest and finance cost records

Mortgage interest is no longer deducted directly for most landlords, but records are still essential.

You should keep:

• Mortgage statements

• Annual interest summaries

• Loan agreements

• Records showing which property the loan relates to

Errors in finance cost calculations often carry forward year after year if not corrected early.

Records for jointly owned properties

If a property is jointly owned, record keeping becomes even more important.

You should keep:

• Land Registry title documents

• Declarations of trust if ownership is not equal

• Form 17 submissions where relevant

• Records showing ownership percentages

• Evidence supporting income splits

HMRC will default to a 50 50 split for married couples unless evidence shows otherwise.

Records of ownership changes and transfers

Any change in ownership should be carefully documented.

This includes:

• Transfers between spouses

• Gifts of property

• Changes in beneficial ownership

• Changes due to refinancing

These records are critical for both income tax and Capital Gains Tax.

Capital expenditure records landlords must keep

Capital expenditure records are essential for future Capital Gains Tax calculations.

You should keep records of:

• Original purchase price

• Stamp Duty Land Tax paid

• Legal fees on purchase

• Survey fees

• Improvement costs

• Legal fees on sale

• Estate agent fees

These costs directly reduce the taxable gain when you sell.

Many landlords lose thousands in CGT relief simply because records were not kept.

Records relating to Capital Gains Tax reliefs

If a property was ever your main home, additional records are required.

You should keep:

• Dates you lived in the property

• Council tax bills

• Utility bills

• Electoral register entries

• Correspondence showing occupation

• Tenancy agreements showing letting periods

These help support Private Residence Relief claims.

HMRC frequently challenge PRR where evidence is weak.

60 day Capital Gains Tax reporting records

If you sell a UK residential property and CGT is due, you must report and pay within 60 days.

You should keep:

• Completion statements

• Sale contracts

• CGT calculations

• Evidence supporting estimates

• Proof of payment to HMRC

• Copies of the 60 day return

These records will later be needed for your Self Assessment return.

VAT records for landlords where relevant

Not all landlords are VAT registered, but where VAT applies, record keeping requirements increase significantly.

You must keep:

• VAT invoices for expenses

• VAT invoices issued to tenants where applicable

• Records of VAT exempt and taxable income

• VAT return workings

• Option to tax documentation if applicable

VAT errors are expensive and often arise from poor records.

Furnished Holiday Let record requirements

Furnished Holiday Lets have additional record keeping needs.

You should keep:

• Availability calendars

• Booking records

• Letting day counts

• Evidence of meeting qualifying conditions

• Capital allowance records

• Furniture and equipment invoices

HMRC frequently challenge FHL status, and records are the first line of defence.

Business rates and council tax records

For holiday lets and mixed use properties, you should keep:

• Council tax bills

• Business rates bills

• Small business rate relief confirmations

These affect both expenses and classification of the property.

Bank statements and why they matter

Bank statements are often used by HMRC as a starting point.

You should keep:

• Bank statements showing rental income

• Bank statements showing expense payments

• Separate accounts where possible for property activity

HMRC often reconcile bank statements to declared income.

Unexplained differences raise questions.

Mileage and travel records where applicable

If you claim travel or mileage expenses, you must keep:

• Mileage logs

• Dates and purposes of journeys

• Distances travelled

HMRC will disallow mileage claims without proper logs.

Records required under Making Tax Digital

Under Making Tax Digital, landlords will need to keep digital records.

This means:

• Income and expenses recorded digitally

• Records kept in compatible software

• Quarterly updates submitted to HMRC

Paper records alone will no longer be sufficient for landlords within scope.

Digital storage and acceptable formats

HMRC accept digital storage of records.

This includes:

• Scanned receipts

• Digital invoices

• Cloud storage

• Accounting software attachments

Paper receipts can be scanned and stored digitally, but originals should be kept where possible.

Common record keeping mistakes landlords make

From real world experience, the most common mistakes are:

• Only keeping net figures

• Losing purchase and improvement records

• Not distinguishing repairs from improvements

• Poor joint ownership documentation

• Relying on memory

• Leaving record keeping until year end

• Assuming small amounts do not matter

• Ignoring digital requirements

These mistakes often surface during HMRC enquiries.

How HMRC use records during enquiries

When HMRC open a property enquiry, they will usually ask for:

• Income records

• Expense evidence

• Ownership documents

• Bank statements

• CGT calculations

If records are incomplete, HMRC may:

• Disallow expenses

• Estimate income

• Impose penalties

• Extend the enquiry to more years

Good records shorten enquiries significantly.

Practical tips for better landlord record keeping

Based on experience, the most effective approach includes:

• Keeping records monthly rather than annually

• Using a separate bank account for property

• Scanning and storing receipts promptly

• Using consistent expense categories

• Keeping a property specific folder or system

• Retaining capital records permanently

• Reviewing records quarterly

Small habits make a big difference.

Do landlords need to keep records even if no tax is due

Yes.

Even if no tax is due because profits are low or covered by allowances, HMRC still expect records to be kept.

This is particularly important where:

• Losses are carried forward

• Properties are later sold

• Ownership changes occur

No tax due does not mean no records required.

The role of accountants in record keeping

A good accountant does not just use your records. They help improve them.

They may:

• Advise on what to keep

• Help structure record systems

• Identify missing documents

• Reconstruct historic records

• Prepare you for MTD requirements

This support often prevents problems years later.

When poor records become expensive

Poor records usually become expensive at one of three points:

• During an HMRC enquiry

• When selling a property

• When transitioning to Making Tax Digital

At that point, reconstructing records is time consuming, stressful, and often incomplete.

Final thoughts from real world experience

So, what records do landlords need to keep for tax. The honest answer is more than most people expect, and for longer than they realise. Rental income tax is built on evidence, not estimates, and HMRC are increasingly data driven in how they check compliance.

In my experience, landlords who keep good records pay the right amount of tax, avoid unnecessary stress, and make better decisions about their property portfolios. Those who do not often pay more tax than necessary or face avoidable penalties.

Good record keeping is not admin for admin’s sake. It is one of the most effective tax planning tools a landlord has.

You may also find our guidance on What is Making Tax Digital for landlords and How do I report property income to HMRC 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.