Landlords - Are you ready for Making Tax Digital?
Are you ready for the shift to Digital Record Keeping?
From 2026, all self-employed businesses, sole traders,
and landlords with income over £10,000
will need to comply with Making Tax Digital rules.
We’ll take care of everything for you,
starting from just £10 + VAT per month.
Making Tax Digital Rules
These rules increase the number of HMRC filings from one to five per year and require taxpayers to keep digital records.
Digital Record Keeping doesn’t allow you to file directly on the HMRC website, you’ll need to use third-party software to do so.
Confused? Don’t worry Oakstone Accountants can handle everything for you from just £10 + VAT per month.
Our team of expert accountants for landlords will take care of data entry, bookkeeping, HMRC filings, and tax returns. You’ll also get access to our secure online portal and invoicing tools.
Claim Replacement of Domestic Item Relief
The replacement of domestic items relief has been in place since April 2016. This relief allows landlords to claim tax relief when they replace movable furniture, furnishings, appliances, and kitchenware in a rental property. The relief only applies to items that are actually replaced. Landlords must also keep records of any capital expenditure incurred on their investment properties.
It’s important to ensure that any domestic items included with a property purchase are listed in the contract. Doing so can make relief available when these items are later replaced. Additionally, in certain cases, allocating a reasonable portion of the purchase price to domestic items may reduce the stamp duty payable.
Please note that no relief is available for the initial purchase cost of domestic items in a new or existing rental property.
Property in Joint Ownership
As a general rule, rental income from property held jointly by a married couple or civil partners is split 50:50, regardless of the actual ownership share.
However, if the ownership is unequal, the couple can choose to have the rental income taxed according to the actual ownership by submitting a Form 17 declaration. This can be beneficial if the majority owner pays tax at a lower marginal rate than their partner.
The declaration remains in effect until there is a change in the couple’s status (e.g., separation or divorce) or a change in the ownership structure, at which point the 50:50 split would apply again. There are also certain situations where a Form 17 cannot be used, such as for commercial letting of furnished holiday accommodation or for partnership income.
Claim Tax Relief on Finance Costs
Since 6 April 2020, tax relief on finance costs for investment properties has been limited to the basic rate of tax (20%). While the relief is restricted, it remains important to claim it.
Finance costs include interest on mortgages and loans (including those for furnishings), overdrafts, alternative finance returns, mortgage fees, and other related costs such as discounts, premiums, and disguised interest.
Cash Basis for Landlords
The cash basis scheme offers landlords a simpler way to manage their finances. Under this scheme, landlords record income and expenses based on actual cash flows, money received and paid, rather than on an accruals basis.
The scheme is not available to limited companies or limited liability partnerships. Landlords can join the cash basis scheme if their business turnover is below £150,000 and remain in it until their turnover reaches £300,000.
Claim Allowable Expenses Wholly & Exclusively
It may seem obvious, but it’s important for landlords to claim all their tax-deductible expenses. Read our article on what expenses you can claim as a landlord.
Expenses that can be claimed include:
- Business mileage, including travel to and from rental properties
- Ground rent on the property
- Services such as gardening and cleaning
- Utility bills and council tax, if the property is not rented
- Insurance costs
- Advertisement costs
- Cost of safety certificates
- Advisory fees, such as legal and accountancy
- Letting agent fees
- Subscription to property-related services
- Costs of running a home office
Landlords can also claim the costs of running a home office.
Let property disclosure campaign
The Let Property Campaign offers landlords with undeclared income from residential property lettings either in the UK or abroad the chance to regularise their affairs. This includes disclosing any outstanding tax liabilities, whether resulting from a misunderstanding of the rules or deliberate tax evasion.
The campaign is open to all residential property landlords with undisclosed taxes, but it does not apply to landlords of non-residential properties.
Use a limited company
Landlords who already have a property business or are planning to invest in properties should carefully consider the best structure for their business.
For some, incorporating can be beneficial, but it’s not a straightforward decision. Incorporated landlords pay Corporation Tax on their profits, currently at 19%, but there are additional tax costs when withdrawing money from the company. These costs can be partially offset by a high dividend / low salary approach. Additionally, mortgage interest remains an allowable expense for incorporated landlords.