Rental income needs to be assessed under the rules applying to the owner and property business. Individuals generally deal with taxable property profits through Income Tax; companies use Corporation Tax.
Work out allowable expenses
Keep records of rent and spending, separating business costs from private use. Repairs and improvements can have different treatment, so describe the work accurately and retain invoices.
Replacing domestic items may qualify for relief under the relevant conditions. Buying something for a property does not automatically make its cost deductible from rent.
Treat borrowing correctly
Residential finance costs for individual landlords are subject to restrictions and may give a tax reduction rather than an ordinary deduction from rental income.
Review the official residential finance-cost guidance. The treatment differs from simply deducting every mortgage payment.
Consider the wider property business
Losses, jointly owned properties and overseas properties need their own review. A non-resident landlord of UK property may also face deduction and reporting arrangements.
Use the official rental-income guidance for current allowances and reporting requirements.
Plan for disposal
Selling a rental property can produce a taxable gain and may require reporting before the ordinary tax-return deadline. Keep acquisition and improvement records throughout ownership.
Former furnished holiday letting treatment should not be assumed to continue. Review the actual activity and the rules applicable to the period concerned.
Our CGT reference provides headline figures; we can help assess the property-specific calculation.