If your gross income from property is £1,000 or less in a tax year, the property allowance normally means you do not need to tell HMRC. Above that, GOV.UK says to contact HMRC if it is up to £2,500, and to report it on a Self Assessment return if it is more than £2,500 after allowable expenses or more than £10,000 before them. A new landlord who does not already file returns must register by 5 October after the end of the tax year in which the rent started.

Which threshold applies to you?

HMRC’s published guidance gives three bands for property you personally own:

Your property income in the tax year What to do
£1,000 or less gross Usually nothing, if the property allowance applies
Over £1,000, up to £2,500 Contact HMRC
Over £2,500 after expenses, or over £10,000 before expenses Report it on a Self Assessment tax return

The same tests appear in HMRC’s internal criteria for setting up a Self Assessment record (SAM100060): property income that exceeds £10,000 gross, irrespective of expenses, or a net amount over £2,500. The gross test catches landlords with high costs. Rent of £12,000 with £10,500 of expenses leaves £1,500 of profit, but the return is still required because the gross figure is over £10,000.

Each figure is per person. Where a property is jointly owned, each owner looks at their own share, and HMRC confirms that each joint owner can set the £1,000 property allowance against their share of the gross rent. A couple sharing rent of £1,800 equally each has £900, inside the allowance.

When can you not rely on the property allowance?

The property allowance gives full relief only where total gross property income from all your property businesses is £1,000 or less. HMRC says it cannot be used in a tax year if you have property income from a company you or a connected person owns or controls, from a partnership in which you or a connected person is a partner, or from your employer or your spouse’s or civil partner’s employer. It also cannot be used if you claim the tax reducer for residential finance costs such as mortgage interest.

Letting a furnished room in your own home is handled separately. Under the Rent a Room Scheme the first £7,500 a year is tax free, or £3,750 if someone else also receives income from letting in the same home. GOV.UK says the exemption is automatic below the threshold and that you must complete a tax return if you earn more. See rent a room relief.

How does the tax code route work for small amounts?

For an employee or pensioner with modest rental profit, HMRC can collect the tax through the PAYE code rather than a return. HMRC’s PAYE Manual at PAYE12060 explains that regulation 14(1)(f) of the PAYE Regulations 2003 allows income that is not PAYE income to be included in a code, that the individual can object, and that income from property is one of the items that can be coded. For customer service reasons HMRC applies a normal limit of £10,000 of coding deductions for non PAYE income.

In practice you contact HMRC with the expected profit and your tax code is reduced so the tax is collected from your salary or pension. This only works if you have PAYE income to collect it from. PAYE80025 tells HMRC staff to examine coded cases where rents exceed £2,500 and expenses are more than half the rent, and, where rents exceed £10,000, to set up a Self Assessment record so that a return is issued.

Being in the coding route does not remove the duty to keep records. If your profit rises above the bands, you move into Self Assessment.

What are the deadlines for a new landlord?

Section 7 of the Taxes Management Act 1970 requires a person who is chargeable to income tax and has not been sent a return to give notice within six months from the end of the tax year. As tax years end on 5 April, that is 5 October. Registering for Self Assessment gives that notice; the routes are in registering for Self Assessment.

For the 2025 to 2026 tax year, GOV.UK gives these dates:

  • tell HMRC by 5 October 2026 if you have not filed before or did not need to file for 2024 to 2025;
  • paper returns by 31 October 2026;
  • online returns by 31 January 2027;
  • payment of the tax owed by 31 January 2027.

If you register after 5 October, HMRC sets a filing deadline three months from the date of its letter or email, but the tax is still due by 31 January. A landlord who first lets a property in June 2026 is in the 2026 to 2027 tax year, so the same pattern moves on a year: register by 5 October 2027, file online and pay by 31 January 2028. A landlord already in Self Assessment for other reasons simply adds the UK property pages to their next return. Payments on account may also apply, as explained in payments on account.

Does Making Tax Digital change this?

For larger landlords it adds quarterly updates on top of the annual return. GOV.UK says you need to use Making Tax Digital for Income Tax from 6 April 2026 if your qualifying income was over £50,000 in 2024 to 2025, from 6 April 2027 if it was over £30,000 in 2025 to 2026, and from 6 April 2028 if it is over £20,000 in 2026 to 2027. Qualifying income is your total self employment and property income before expenses. A joint owner counts their share of the property income; a partner’s share of partnership profit does not count.

What if you should have told HMRC earlier?

GOV.UK says you can tell HMRC about rental income from earlier years, and that any penalty will be lower than if HMRC finds out about the income itself. After you notify, you are given a disclosure reference number and then have three months to work out what you owe and pay it. The property allowance is not available for years before 2017 to 2018. The process is explained in the Let Property Campaign, and the penalty ranges in failure to notify penalties.

How might this look in practice?

Illustration only. Three people start letting in the 2026 to 2027 tax year:

  • Amira, a nurse, rents her driveway for £70 a month, £840 a year. That is under £1,000, so she does nothing unless she has other property income.
  • Ben, an engineer, lets a small flat for £9,000 a year with £7,000 of allowable expenses. Profit is £2,000 and gross rent is under £10,000, so he contacts HMRC and the tax can be collected through his tax code.
  • Carla, who is retired, lets a house for £12,000 with £10,500 of costs. Her profit is only £1,500, but gross rent is over £10,000, so she must register by 5 October 2027 and file a return.

What mistakes come up?

  • Looking only at profit and missing the £10,000 gross test.
  • Assuming a letting agent or deposit scheme tells HMRC on your behalf. Notifying is your responsibility.
  • Joint owners assuming one of them reports for both. Each reports their own share.
  • Using the property allowance in the same year as claiming the finance costs tax reducer, or on rent from your own company.
  • Waiting for HMRC to send a return. The duty to notify by 5 October applies whether or not HMRC writes to you.

If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.

Related Accountapedia entries

Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.