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More than 300,000 property investors pay too much tax because they need to offset business expenses in their self-assessment returns, according to new data from HMRC.
HMRC has released an analysis of property self-assessment returns for 2022-23 that shows landlords earned £44.7 billion in rent.
However, although 2.81 million landlords declared their income, only 2.5 million claimed tax relief by offsetting business costs worth £22.98 billion.
HMRC says 12 per cent of landlords - amounting to 297,500 property investors - made no business expense claims. Average allowable expense claims climbed slightly from £9,100 a landlord in 2019-20 to £9,200 in 2022-23.
The figures do not include rent or expenses for corporate landlords.
The most common expense claims for 2022-23 were:
| Expense | No. declaring (millions) | % of landlords declaring | Total declared (£ billions) |
| Rent, rates and insurance | 1.89 | 66.7 | 2.7 |
| Repairs and maintenance | 1.88 | 66.3 | 5.6 |
| Residential finance costs | 1.19 | 42 | 6.87 |
| Non-residential finance costs | 0.11 | 3.8 | 1.16 |
| Legal, management and professional fees | 1.75 | 61.8 | 3.45 |
| Services, including wages | 0.01 | 0.2 | 0.19 |
| Other allowable expenses | 1.14 | 40 | 3.46 |
| Total | 2.5 | 88.1 | 22.98 |
Source: HMRC
The statistics also revealed 130,000 UK furnished holiday let owners earned £2.29 billion in 2022-23, amounting to five per cent of all income from private property rentals.
Income from holiday lets soared by 67 per cent between 2018-19 and 2022-23, fuelled by a rise in average property income and an increasing number of properties. Holiday let income peaked at £2.5 million in 2021-22.
Based on postcodes from self-assessment returns, landlords in London and the South East earned the most rental income in 2022-23, while those in the North East earned the least.
A third of landlords live in London and the South East, declaring 41 per cent of the UK’s private rental income on their 2022-23 self-assessment returns. Landlords in the North East declared two per cent of total landlord income.
Most landlords earned a property income of less than £10,000 in 2022-23 - the group numbers 1.47 million, representing 52 per cent of landlords.
Another 800,000 earned between £10,000 and £20,000, while 280,000 earned between £20,000 and £30,000. Just 130,000 landlords earned rent of more than £50,000 a year.