Do I pay tax on rental income?

Yes, if your property profit is above the £1,000 property allowance. You pay tax on the profit, which is the rent you receive less your allowable expenses, not the full rent. That profit is added to your other income and taxed at your normal rate of 20%, 40% or 45%. If your total property income for the year is £1,000 or less, it is covered by the property allowance and you generally do not need to report it.

The first £1,000 of property income each tax year is tax-free under the property allowance. Above that, you are taxed on your rental profit. If your income is just over £1,000 you can choose to deduct the £1,000 allowance instead of your actual expenses, whichever gives the better result. Beyond the property allowance there is no special tax-free band for rent, it simply uses your Personal Allowance and tax bands like other income.

Yes, once it is above the £1,000 property allowance you must declare it, normally through Self Assessment. This applies even if you make no profit after expenses, and even if the property is jointly owned (each owner reports their share). Not declaring rental income is a common reason people receive an HMRC enquiry, and HMRC runs a Let Property Campaign for landlords who need to bring things up to date. Declaring properly from the start is far simpler.

HMRC has a lot of data. It receives information from letting agents, the Land Registry, deposit schemes, mortgage lenders and other sources, and can match it against what you have declared. So if you are letting a property, you should assume HMRC can find out. The safe and straightforward approach is to declare the income correctly each year, which also lets you claim every expense you are entitled to and keep the tax down legitimately.

Legitimate ways include claiming every allowable expense (agent fees, repairs, insurance, professional costs), making the most of the finance cost tax credit, splitting ownership with a spouse in a lower tax band where genuinely appropriate, and considering whether holding property through a company suits your situation. The right approach depends on how many properties you have, your other income and your plans, which is exactly the kind of thing we look at for landlord clients.

Not in full, and not as a straight expense any more. For residential lets you can no longer deduct mortgage interest from your rental profit. Instead you get a 20% tax credit on the finance costs, which is less generous for higher-rate taxpayers than the old system. The interest still matters, but it is handled as a credit against your tax rather than a deduction from profit, which is one of the trickier parts of a landlord return to get right.