Rental income, Section 24 and Making Tax Digital for landlords in Brighton & Hove
Rental income is reported on the property pages of your Self Assessment return. You declare gross rent, deduct allowable costs such as letting agent fees, insurance, repairs and maintenance, and are taxed on the profit at your normal income tax rates.
Mortgage interest is not an allowable deduction for individuals. Instead, Section 24 gives a tax reduction of 20% of the interest. That makes the return more complicated than it looks, especially for higher-rate taxpayers and jointly owned properties.
A landlord earns a £30,000 salary and has one buy-to-let. Rent is £24,000, allowable costs are £6,000 and mortgage interest is £8,000.
| Item | Amount |
|---|---|
| Rental profit (interest not deducted) | £18,000 |
| Salary | £30,000 |
| Total income | £48,000 |
| Less personal allowance | £12,570 |
| Taxable income | £35,430 |
| Income tax at 20% | £7,086 |
| Less 20% credit on £8,000 interest | £1,600 |
| Total income tax for the year | £5,486 |
Part of that tax is collected through PAYE on the salary, so the balance owed on the return is lower. The point is that the interest gives a credit, not a deduction.
Sources: GOV.UK renting out a property, GOV.UK Income Tax rates, GOV.UK Making Tax Digital for Income Tax.
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Usually yes. If your rental profit is over £1,000 after the property allowance, or you have income HMRC has not taxed at source, you need to register for Self Assessment and file a return by 31 January after the tax year ends.
Not as an expense. For individual landlords, mortgage interest is restricted under Section 24 and instead gives a tax reduction worth 20% of the interest. Limited companies still deduct interest in full.
It is a £1,000 allowance on gross property income. If your rent is £1,000 or less it is tax-free and does not need reporting. Above that you can deduct the allowance instead of actual expenses, which only helps if your real costs are lower.
From April 2026 if combined gross property and self-employment income is over £50,000, from April 2027 if over £30,000 and from April 2028 if over £20,000. Quarterly updates then replace the single annual return.