New guidance on tax for landlords has been released by HMRC


Working out the various tax implications involved in being a buy-to-let landlord or property investor can be a minefield, particularly as regulations continue to change.

The majority of landlords who earn money through renting out a property will need to pay income tax on the profits, which involves registering for self-assessment through the government’s website by 5 October following the tax year of your first rental income.

The amount of tax owed is worked out based on how much profit you make, as well as your personal circumstances, and an updated version of this information has just been released on HMRC’s website to improve clarity surrounding the hurdles faced by landlords and investors.

Since April 2017, the government has been gradually phasing in new restrictions on how much tax relief landlords can claim from their mortgage and loan repayments and overdrafts related to the property – which will reduce from 100% down to 0% by 2021. Alternative finance returns, fees and other incidental costs involved in obtaining financing, and discounts, premiums and disguised interests are also affected by the changes.

How the tax relief will be phased out

Tax year Percentage of finance costs
deductible from rental income
Percentage of basic rate tax reduction
2017-2018 75% 25%
2018-2019 50% 50%
2019-2020 25% 75%
2020-2021 0% 100%

The information included on the government’s website also covers how to work out your rental income, what expenses can be claimed and mileage rate deductions.

A new self-assessment help sheet for the government’s Rent a Room scheme has also been published, detailing how occupiers and tenants can make a tax-free income by providing furnished accommodation in their only or main home.

To read more about how the changes are expected to affect the buy-to-let market, click here.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800


Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator


Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.


Not a member? Sign up for free

HMRC tax

New guidance on tax for landlords has been released by HMRC


By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.