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January is a tense time for landlords who face fines for missing the end-of-month self-assessment filing deadline.
Landlords must file their returns for the 2024-2025 tax year and pay any tax due by midnight on January 31 2026.
Many do not realise self-assessment rules apply to them, leading to common errors that trigger fines.
HM Revenue & Customs has compiled a list of the 10 top mistakes trapping thousands of landlords time and again. They are:
Couples moving in together often rent out a former home. Many believe they do not need to report the income because they barely make a profit, as the rent barely covers the mortgage payments.
However, only the interest amount of the mortgage repayment is an allowable expense.
Whether tax is due depends on how much profit is made from renting and the landlord's personal circumstances.
Find out more about landlord tax when renting out property
Tax is due on rental profits if someone inherits a property which is let out, even if a letting agent manages the let - the tax rules are the same as those for letting out a former home.
Keeping a home while living elsewhere, inheriting a property or buying as an investment are triggers for income tax when let to tenants and capital gains tax when the property is disposed of to someone else. A disposal covers gifting as well as selling.
If owners divorce or separate and then move to new homes while renting out the former joint home, they must declare any rental profits to HMRC together with any capital gain if they dispose of their shares in the home.
Landlords should tell HMRC if they make a profit from renting out a former home while living elsewhere.
An elderly homeowner who moves into care and rents out the property to cover their costs must pay tax on any rental profits, even if they are swallowed by the care costs.
In addition, if a relative manages rent collection and the property for someone in care, the taxable profits belong to the property owner, not whoever acts as their agent.
Couples often allocate too many expenses to the top taxpayer to reduce how much they pay, but this is a complicated strategy governed by strict rules. Couples can't decide how to allocate income and expenses without HMRC's agreement.
Find out more about tax and jointly owned letting property here
A typical arrangement is that parents buy a flat and let the home rent-free to a child at university. The flat has a couple of spare rooms, so two more students share the property, but pay rent and contribute to the bills. Their rent leaves a small profit each month. The parents should declare the income, but feel they don't have to, as the relationship with the flatmates is informal.
Expats renting out a UK home while living abroad must declare their rental profits like any other landlord - and in some cases, special rules apply.
A typical uncommercial let is when one family member buys a home for a relative who pays the mortgage instead of rent.
Rental income and expenses are different for this arrangement, often resulting in no tax on rental profits and no offsetting expenses. Capital gains tax is also charged on any gain in value.