Property

Property Income (Rental)

Income from letting property, which is taxable and must be reported to HMRC.

Definition

Rental income from property is taxable as part of your overall income. You pay Income Tax on your rental profit (rent received minus allowable expenses). Mortgage interest relief is restricted — you cannot deduct it from rental income; instead, you receive a 20% tax credit on the interest. Most landlords need to file a Self Assessment tax return. Capital gains from selling a rental property are subject to CGT.

Why it matters

The restriction on mortgage interest relief (Section 24) has made buy-to-let significantly less tax-efficient for higher rate taxpayers.
Landlords can still deduct many expenses (agent fees, repairs, insurance) but not finance costs.

Common use cases

Calculating net rental yield
Filing a landlord Self Assessment
Deciding between cash purchase vs mortgage

Last reviewed: 2026 · Tax year: 2026/27Found a mistake? Let us know

Related terms

Capital Gains Tax (CGT)Self Assessment

Disclaimer

This definition is for informational purposes only and does not constitute tax, legal, or financial advice. Rules may change and outcomes depend on your circumstances.

Public resources and UK tax glossary sources

These GOV.UK and HMRC sources provide the official context for this glossary entry. The definition is educational and does not determine your individual tax position.

Loading tools