PROPERTY & INVESTMENT INCOME
Rental and investment income, handled clearly
Rental income, savings interest and dividends can all need reporting to HMRC, even if you’re already taxed through PAYE. We work out your property profit, check the allowances and reliefs available, and prepare your Self Assessment return.
Led by Chris Clark, Fellow of the AAT (FMAAT) · AAT licensed practice · Reviewed on Trustpilot
WHO WE HELP
Landlords and investors we help
Whether you let one flat or several properties, or simply have savings and shares, the starting point is the same: what you received, who owns it and how it should be reported.
First-time and accidental landlords
Letting a former home, or a property you’ve inherited, and reporting rental income for the first time.
Landlords with several properties
Rental accounts and Self Assessment for a portfolio held in your own name.
Jointly owned property
How rental profit is shared between spouses, civil partners and other co-owners, including Form 17.
Overseas property
UK reporting of rent from a property abroad, considered case by case once we’ve reviewed your circumstances.
Savings and dividends
Interest and dividends above your allowances, and how they affect your tax rate and your adjusted net income.
Moving in or out of the UK
Letting UK property while living abroad, or returning to the UK. See our International Tax & UK Residence page.
RENTAL PROFITS
How your rental profit is worked out
Income and expenses. Your profit is the rent you receive less allowable running costs, such as letting agent fees, insurance, repairs, and safety certificates. Most individual landlords use the cash basis, so income and costs are counted when they’re received or paid.
Repairs and improvements. Repairs that restore a property to its previous condition are usually deductible. Improvements and extensions aren’t deducted from rental income, but may be relevant for Capital Gains Tax when you sell.
Property allowance. If your gross property income is small, the £1,000 property allowance may be used instead of claiming actual expenses. It can’t be combined with them.
Losses. A rental loss is usually carried forward and set against future profits from your property business.
How we can help
Rental accounts and Self Assessment: we prepare your property figures and report them on your tax return.
Joint ownership reviews: we look at how profit should be taxed, including Form 17 where shares are genuinely unequal.
Undeclared rental income: we help you put things right with HMRC, including through the Let Property Campaign.
MORTGAGE INTEREST AND RATES
Mortgage interest and the rate you pay
Figures are for 2026/27 and apply outside Scotland.
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Mortgage interest
Interest on a residential buy-to-let mortgage isn’t deducted from your rent. Instead, you get a tax reduction at the basic rate: 20% for 2026/27.
Higher-rate landlords can pay more tax than their cash profit suggests.
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Your rate
Rental profit is added to your other income, so the rate depends on your salary, pension and other income for the year.
Profit falling in the higher-rate band is taxed at 40%.
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Higher earners
Rental profit, interest and dividends all count towards your adjusted net income.
This can affect your Personal Allowance above £100,000 and the High Income Child Benefit Charge above £60,000.
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From April 2027
Property income and savings income will be taxed at separate rates of their own, with mortgage-interest relief following the property basic rate.
Finance Act 2026 set them at 22%, 42% and 47%; the Budget on 28 October 2026 announced 24%, 44% and 49% instead, which still needs to be legislated. We’ll confirm the rates that apply when we prepare your return.
JOINT OWNERSHIP
Who owns the property, and who pays the tax
How rental profit is taxed follows who genuinely owns the property and how. Legal title, beneficial ownership and the way profit is taxed aren’t always the same thing.
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If you’re married or in a civil partnership, live together and own a let property in both names, the rental profit is normally taxed 50:50, whatever your actual shares.
This rule is for Income Tax only. It doesn’t change who owns the property or how a future gain is shared.
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If you genuinely own the property in unequal shares, you can jointly declare this to HMRC on Form 17 so that the profit is taxed in line with your actual beneficial interests.
The form must reach HMRC within 60 days of the declaration date, with evidence of your shares. It must reflect real ownership: it can’t be used to split income in a way your ownership doesn’t support.
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A gift of part of a property between spouses or civil partners who live together doesn’t normally create Capital Gains Tax. Stamp Duty Land Tax can apply where the recipient takes on a share of the mortgage, and a return may be needed even when no tax is due.
A transfer must be genuine and permanent, and usually needs your lender’s consent and a solicitor. We advise on the tax position; we don’t provide conveyancing, trust deeds or mortgage arrangements.
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If you aren’t married or in a civil partnership, rental profit is normally shared according to your actual entitlement to the income, which usually follows your ownership shares.
Any different arrangement for sharing profit should be documented and reflect what actually happens.
SAVINGS AND DIVIDENDS
Interest and dividends
The Personal Savings Allowance lets basic-rate taxpayers receive £1,000 of interest tax-free, and higher-rate taxpayers £500. Additional-rate taxpayers have no allowance. The first £500 of dividends is covered by the dividend allowance. Interest and dividends above these amounts may need to be reported through Self Assessment if they aren’t taxed through your tax code.
Savings and dividend income also count towards your adjusted net income. If you earn close to £60,000 or £100,000, see our Higher Earners, Employment & Pensions page.
OVERSEAS PROPERTY AND CHANGES OF USE
Letting out your home or a property abroad
Letting a former home. When you move out and let your home, rental income becomes taxable from the start of the letting. When you later sell, Private Residence Relief usually covers the years you lived there and the final nine months of ownership. See our Capital Gains Tax page.
Property abroad. UK residents are generally taxable on rent from overseas property, with credit for some foreign tax. We consider overseas property case by case. We don’t prepare foreign tax returns.
Living abroad. If you live overseas and let UK property, see our International Tax & UK Residence page.
What we’ll look at
When the property stopped being your home, and when the letting began
Who owns the property, and in what shares
The rent, costs and mortgage interest for each year
Any foreign tax paid on overseas rent
Whether we can help: we’ll confirm after reviewing your circumstances
ILLUSTRATIVE SCENARIO
Harriet Homeswap: same flat, new tax position
Harriet Homeswap is a fictional client. Her circumstances and figures are illustrative and simplified.
Harriet lived in her flat for nine years. When she married Sam, she moved into his house and let the flat. As a higher-rate taxpayer, her rental profit was taxed at 40% on top of her salary, while her mortgage interest only received tax relief at 20%.
For their own reasons, and with her lender’s written consent, Harriet gave Sam a genuine half-share of the flat, registered in their joint names. It was a permanent change with legal and financial consequences: Sam now owns half the flat and shares the mortgage. Because they’re married and live together, the rental profit is now taxed 50:50, and £7,750 of it falls in Sam’s basic-rate band.
On their figures, the transfer didn’t create Capital Gains Tax. On the illustrative assumption that the share of the mortgage Sam took on was more than £40,000 but not more than £125,000, no Stamp Duty Land Tax was payable, although a return was still needed. The higher rates for additional dwellings don’t apply to a purchase from a spouse living with the buyer. We also checked whether either of them needed to use Making Tax Digital. If the flat is sold, the Capital Gains Tax and Private Residence Relief position will need a separate review at that time.
Harriet Homeswap – at a glance (2026/27)
Rent received £18,000
Allowable expenses (£2,500)
Rental profit £15,500
Mortgage interest (relief at 20%: £1,200) £6,000
Combined Income Tax – Harriet owns 100% £21,918
Combined Income Tax – owned 50:50 £20,368
Profit taxed on Sam’s half at 20% £7,750
Combined annual Income Tax saving £1,550
This is a combined saving for the couple, not for Harriet alone. It arises because £7,750 of profit is taxed on Sam at 20% instead of on Harriet at 40%. The mortgage-interest relief is £1,200 either way.
Fictional example using 2026/27 rates in England. The result depends on genuine joint legal and beneficial ownership, the couple living together, each spouse’s other income, the finance-cost restrictions and their wider circumstances. It can’t be assumed for every couple. It isn’t a guaranteed saving or a recommendation to transfer property, which shouldn’t be done just to save tax.
HOW CJC CAN HELP
Your property figures, prepared and filed
What we do
Prepare rental accounts and Self Assessment returns, including savings and dividend income
Review how jointly owned property is taxed, including Form 17
Work out the position when a former home is let, and link it to any future sale
Help put undeclared rental income right with HMRC
Advise on Making Tax Digital, scoped individually for your circumstances
What to have ready
Rent statements from your letting agent, or your own rent records
Receipts for expenses, repairs and improvements
Mortgage statements showing the interest charged
Land Registry title and any declaration of trust, if jointly owned
Bank and building society interest certificates
Dividend vouchers or broker tax summaries
FAQ
Questions from landlords and investors
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Usually, yes, if your gross property income is more than £1,000 in a tax year. If you need to complete a Self Assessment return for the first time, you should register by 5 October after the end of that tax year.
If your profit is under £2,500 and your gross rent is under £10,000, HMRC may be able to collect the tax through your tax code instead. Above those amounts, a Self Assessment return is needed.
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Not directly for a residential let. Instead, you get a tax reduction at the basic rate on the interest, which is 20% for 2026/27. It’s limited by your property profit and your income for the year, and any unused amount can be carried forward.
This restriction applies to residential property. Interest on loans for commercial property is treated differently.
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Repairs that put a property back to its previous condition are usually deductible from rent. Improvements, such as an extension or a substantially better kitchen, aren’t, but they may reduce a future gain for Capital Gains Tax.
Replacing furniture, appliances and furnishings in a residential let can usually be claimed as replacement of domestic items, but not the first purchase.
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It depends on your qualifying income: your gross self-employment and property income before expenses, including your own share of any jointly owned property. HMRC looks at the tax year two years earlier.
It applies from April 2026 where that income was over £50,000, from April 2027 over £30,000, and from April 2028 over £20,000. We scope any Making Tax Digital support individually, so please ask for a quote.
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It’s usually better to come forward before HMRC contacts you. The Let Property Campaign is HMRC’s disclosure route for individual landlords with undeclared residential rental income.
We can help you work out what’s owed and make the disclosure. The outcome, including any interest and penalties, depends on your circumstances and is decided by HMRC.
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Property and investment work is quoted individually once we understand your circumstances and records. You can request a quote or book a Personal Tax Advisory Consultation (a 30-minute video call with Chris Clark, normally via Zoom, for £150 including VAT where applicable, with a concise written summary emailed within three working days) to talk through your position first.
Letting property or receiving investment income?
Book a consultation to talk through your position, or request a quote for your rental accounts and tax return.
Related: Personal Tax · Capital Gains Tax · Higher Earners