Landlord accountants in Liverpool for rental property tax

You pay tax on your rental profit, not the rent itself. Profit is the rent you receive minus allowable expenses. Allowable expenses are costs you pay wholly to run the letting.

• Repairs and maintenance, such as fixing a boiler or repainting between tenants
• Letting agent and management fees
• Landlord insurance
• Ground rent and service charges
• Council tax and utilities, when you pay them rather than the tenant
• Advertising for tenants
• Our accountancy fees
• Replacing domestic items such as furniture, white goods and carpets, through replacement of domestic items relief

Improvements, such as adding an extension or upgrading a basic kitchen to a much better one, are not allowable against rent. They may reduce your gain when you sell instead. We go through your costs with you and put each one in the right place.

If you own a property jointly, for example with a spouse or civil partner, the rental profit is usually split between you and each owner reports their share on their own tax return. How it is split can affect how much tax you pay as a household, so it is worth checking. We can prepare returns for both of you so the figures match.

Good records make all of this easier. Keep your tenancy agreements, rent statements from your letting agent, mortgage statements and receipts for every cost. A separate bank account for the rent is not required, but it makes the year end much quicker. If you are not sure what to keep, our landlord tax return guide goes into more detail.

If you own residential lets in your own name, you cannot deduct mortgage interest from your rental income. Instead you get a tax credit worth 20% of your finance costs. This is often called the Section 24 rule.

Say your mortgage interest is £6,000 a year. The interest is not taken off your rent when your profit is worked out. Instead your tax bill is reduced by 20% of £6,000, which is £1,200. If you are a basic rate taxpayer, the result is similar to the old rules. If your rent pushes you into the 40% band, you pay noticeably more.

Properties held in a limited company are not affected by this rule. Moving properties into a company has its own costs, though, so it needs a proper look at your figures first. We can do that as part of our company formation and advisory service.

Yes, if your qualifying income is over the limit. Qualifying income is your gross rent plus any self-employed turnover, before expenses.

If you are in, you keep digital records in compatible software and send quarterly updates, then file a final return by 31 January as now. We set up the software, keep the records and file the updates through our Making Tax Digital service. Our guide to Making Tax Digital for landlords has the detail.

Capital Gains Tax is charged on the gain, which is broadly the sale price minus what you paid and allowable costs such as improvements and legal fees. From 6 April 2026 the rate is 18% for gains within your basic rate band and 24% above it. Everyone has an annual exempt amount of £3,000.

You must report the sale and pay the tax within 60 days of completion. That is a short window, so speak to us before you complete if you can. We work out the figure and file the report for you. If you have owned the property for many years, gather your purchase papers and receipts for improvements early, as they reduce the gain.

Our fixed fees for landlords start from £99 a month. That covers your landlord tax return, help through the year and Making Tax Digital if it applies to you. After a free 20-minute chat we send you the exact price in writing within one working day. It stays fixed for 12 months unless your situation changes. See our fees page for more.