People often become accidental landlords if they move in with a partner, inherit a property, or are unable to sell a former home 

If you become the owner of a second property and decide to rent it out, the advantages are that it will be inhabited and you will gain additional income.

But there is a lot of administration involved, both in taking on a tenant and managing a tenancy, which is mounting due to the new Renters' Rights Act and other pending changes, as well as tax.

What taxes will you face?

Income tax

You have to declare the rent and any other payments you receive from your tenant - though not the deposit - to HMRC but you can deduct expenses.

Currently rental income is treated as investment income and there is no National Insurance payable on it, but that could change in the Budget on 26 November 2025.

You can claim the following expenses against your rental income when you report it to HMRC.

- General maintenance and repairs to the property

- Water rates, council tax, gas and electricity paid by you – normally the tenant pays

- Insurance, such as landlords’ policies for buildings, contents and public liability

- Costs of services, including the payments made to any gardeners or cleaners in between tenancies or during them

- Letting agent fees and management fees

- Legal fees for lets of a year or less, or for renewing a lease for less than 50 years

- Accountant and solicitor fees

- Any ground rents and service charges, or if you are subletting a property the rent you pay

- Direct costs such as phone calls, stationery and advertising for new tenants

- Vehicle running costs - but only the proportion used for your rental business - including mileage rate deductions for business motoring costs

If you have a mortgage on the property the finance costs - meaning the interest you pay - are restricted to basic rate tax relief only. You receive a credit against your tax bill of 20 per cent of the allowable finance costs paid.

You have to tell HMRC about any taxable profits on a self-assessment return if you already file one.

If you do not, you need to register for self-assessment by 5 October following the tax year you had profits in.

Gov.uk has a guide to income tax and rental income here.

If you receive rent but don't need to pay tax you might need to report it anyway.

Capital gains tax

This must be paid when you sell a rental property.

When you sell your own home, one which is your main residence, you do not usually have to pay any CGT because you can claim something called Private Residence Relief on any gain made on the sale.

PRR is a relief from capital gains tax which would otherwise be due on the sale of a property.

PRR generally ceases to apply the moment a property is no longer your main residence, for whatever reason: whether you move to a new property and elect that as your main residence or you let a property out.

If your property does not qualify for PRR in full, then you could have CGT to pay.

The gain is calculated on the amount you sold the property for, less the amount you purchased it for.

You can deduct the following from the gain.

Acquisition costs: Stamp duty paid; Solicitors’ fees; Surveyor fees; Other fees paid at the time of purchase.

Sale costs: Estate agent fees; Solicitor and surveyor fees; Other fees paid at the time of sale or that are directly related to the disposal.

Costs of improvements which have added value to the property (not repairs and maintenance or replacement of something which is not an improvement) which can include: Extensions; Garden landscaping; Solar panels.

If your rental property used to be covered by PRR, the period the gain has accrued over needs to be split between the period that you lived in the property as your main residence, which is covered by PRR, and the period after you moved out to your new main residence, which is not covered by PRR.

You can deduct the last nine months of ownership, regardless of whether you were living there or not, if you are renting out your own old home.

And you can deduct your CGT allowance of £3,000 from your share of the gain providing you have not used your allowance against any other gains in the tax year in which the gain was made.

You can also deduct any allowable capital losses made in this tax year or brought forward from earlier years.

You will need to report the gain and pay any CGT due to HMRC within 60 days of completing the sale of the relevant property.

If you fill in a self-assessment tax return you should report the gain and the tax paid on that as well.

You will pay at 18 per cent on the sale of residential property if the gain combined with your income for the year does not take you into the higher rate band, or 24 per cent if the gain or part of it when combined with your income takes you into the higher or additional rate bands.

Gov.uk has more details and a calculator here. But many people prefer to pay a professional accountant to sort out their CGT bill for them, My guide to finding a good accountant is here.

One other thing to note is that if you paid a higher rate of Stamp Duty Land Tax as you bought a new home and had not sold your previous one, you can claim a refund if you sell your former home within three years of buying your new home. Gov.uk has more on Stamp Duty Land Tax refunds here.

What other admin is there to do?

It is often easier to use a rental agent to find a tenant for you and carry out the necessary checks prior to renting.

There are certain legal requirements and this guide to renting out a property on gov.uk is very helpful. 

The tenants’ deposit must also be protected: you cannot hold this yourself. It will need to be paid to and registered with one of the government deposit protection schemes.

If you use an agent they will deal with this as well.

They will also be able to advise you on the rent you can charge and will be able to arrange repairs on your behalf rather than you having to find someone to come out quickly.

They will on average, charge around 12-13 per cent of your gross rent. They will collect the rent on your behalf and deduct their fees and payment for any repairs you have authorised them to carry out and pay you the rest. They will assist where issues arise as well.

If you decide to rent a property out you will need your mortgage company’s permission and you should get landlord insurance as well.

You should also speak to a solicitor about having a tenancy agreement if you don’t use a rental agent. 

Do note that some local authorities in a few cities (and only within certain areas) have special rules on selective licensing regarding renting. This means you need permission to rent. 

It’s not that common to be honest. It’s best to check though, as penalties can be steep for failure to comply. 

Three changes you need to know about

Making Tax Digital

From April 2026, private landlords filling in self-assessment tax returns whose gross rental income - meaning before expenses - exceeds £50,000 a year will have to register for Making Tax Digital.

In April 2028, the threshold drops to £20,000. If you are self-employed, then you also need to register.

The threshold test applies to the combined gross income of an individual’s trade(s) and property income, including overseas property income.

For example, an individual with trading sales of £30,000 and £21,000 gross rental income must report under MTD from 6 April 2026.

You will need to report quarterly to HMRC using MTD software, and then make a fifth report annually – meaning your tax return - as well.

This doesn’t apply to limited companies.

If you are affected, the starting date depends on your gross income before expenses are deducted and is mandatory in phases starting from 6 April 2026.

From 6 April 2026: Gross income threshold from the sources explained above is more than £50,000;

From 6 April 2027: Gross income threshold from these sources is more than £30,000;

From 6 April 2028: Gross income threshold from these sources is more than £20,000.

Renters' Rights Act

The Act is passed but not yet in force. It is designed to give tenants more stability - 'no fault' evictions are banned and renters will be able to give two months' notice and challenge poor conditions and rent increases.

Landlords can still evict tenants if they want to move into the property or sell it, but they need to give four months’ notice. They will not be able to do this within the first 12 months of a new tenancy. 

There are good and bad points about the Act and we will have to see how it works in practice.

The full details are on gov.uk and This is Money has a guide to the Renters' Right Act here.

Energy Performance Certificates

Changes are still under discussion as to the finer points but will require landlords to upgrade properties to a certain energy performance level.