Tax planning for UK property income

For you, as a property investor, we have outlined some important tax planning considerations. It’s not an exhaustive list as every situation and portfolio is unique. Talk to us well in advance of preparing your tax return so we can maximise your property income efficiently.

Six key steps for every property investor:

Step 1:

Complete an income tax return

This may sound simple but you’ll need to register and allow yourself time to complete the form.

You will be liable for tax on the profit you make for any tax year – up to 5th April and if you make losses you are able to carry these forward to set off in the future.

Step 2:

Work out your property income

Your property income is the total amount of rental income you receive and will include all UK properties owned.

The rules are different if you a) rent a room out in your own home, b) let out a property as a furnished holiday home c) rent a foreign property or d) let out a property in the UK while you are abroad.

Also be aware that if you own a percentage of a property you will need to calculate the split.

Step 3:

Work out your expenses

You need to calculate how much it has cost you to run the properties you receive income from. The watchwords here are ‘wholly and exclusively for the property’ and ‘like for like’ but, as you’d expect, there are a number of rules that we can clarify and advise on.


There is a significant difference between improvements and repairs in the eyes of HMRC.

We can help you navigate which of your expenses qualify.

Finance costs:

There has been a change to tax relief on residential property which means it is restricted to basic rate relief only from 20/21. Talk to us as we can advise you on any exceptions and assess this for your own situation.

Step 4:

Arrive at your calculation

Deduct your expenses from your income to complete the calculation. This is the figure you will need to pay tax on. We can work with you to make sure you have everything recorded correctly.

Step 5:

Maintain records

You need to keep records for at least five years after the 31 January tax deadline for each tax year.

Step 6:

Take advice to reduce your property tax liability

Now that finance costs are restricted to relief at basic rate it really is time to plan for a) the additional tax you may pay in 20/21 and b) how you manage your property portfolio going forward.

We have the knowledge you need to minimise your tax liability and be fully compliant.

Property tax review offer

Until the end of July 2021, we are offering a discounted cost to review your property portfolio.

Talk to us now to take up this offer!


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