Do I pay National Insurance on rental income?

Not normally. Rental income from letting property is investment income, not trading income. The position can differ only in unusual cases where letting amounts to a business with significant services.

Do I need to report rental income to HMRC?

Yes, if it is over £1,000 a year. Between £1,000 and £2,500 you contact HMRC. Above £2,500 after expenses, or £10,000 before expenses, you file a Self Assessment return.

When do I pay tax on rental income?

The balance for a tax year is due by 31 January after it ends.If last year's bill was £1,000 or more and less than 80% was collected at source, you also make payments on account by 31 January and 31 July, each half of last year's bill.

Is rental income taxed differently in Scotland?

Yes. Scottish taxpayers pay Scottish income tax rates and bands on rental profit.

How Is Rental Income Taxed in the UK? 2026/27 Guide

Short answer

Rental profit is rent less allowable expenses. It is added to your other income and taxed at your income tax rates: for 2026/27 in England and Wales, 20% up to £50,270, 40% above that and 45% above £125,140. Mortgage interest earns a 20% tax reduction, and no National Insurance is normally due.

Figures checked 11 October 2026 against GOV.UK and HMRC guidance.

How is rental income taxed, step by step?

Five steps: work out rent due for the year, deduct expenses or the £1,000 allowance, add the profit to your other income, take off 20% of finance costs, then report and pay HMRC. Scottish taxpayers use Scottish rates at step 3. — The five steps from rent received to tax paid.

Step 1: Work out the rent for the year

Include all rent due for the tax year (6 April to 5 April). Add payments for services you provide, such as cleaning or bills in a bills-inclusive rent.

Tenancy deposits are not income unless you keep some of them, for example to cover damage or unpaid rent.

Step 2: Deduct allowable expenses, or the property allowance

Deduct the revenue costs of the letting (see landlord allowable expenses), or the £1,000 property allowance if that is higher. You cannot use both. GOV.UK

Step 3: Add the profit to your other income

The profit is taxed at your marginal rate. For 2026/27 the personal allowance is £12,570. The basic rate of 20% applies up to £50,270, the higher rate of 40% above that, and the additional rate of 45% above £125,140. GOV.UK

Above £100,000 of income the personal allowance is reduced by £1 for every £2.

Step 4: Take off the finance cost reduction

Mortgage interest gives a 20% reduction in your tax bill. See how the mortgage interest restriction works.

Step 5: Report and pay

Report on your Self Assessment return by 31 January, or through Making Tax Digital if your qualifying income is over £50,000. Qualifying income is your gross rent plus any self-employed turnover, before expenses. GOV.UK

Pay the balance by 31 January after the tax year ends. Larger bills also bring payments on account, explained in the questions below.

Illustrative example

A basic-rate landlord in 2026/27

Assumptions: England, salary £25,000, one flat owned personally, rent £9,600, allowable costs £2,100, mortgage interest £3,000.

Rent	£9,600
Less allowable costs	(£2,100)
Rental profit (interest not deducted)	£7,500
Income tax on the profit at 20%	£1,500
Less tax reduction: 20% × £3,000 interest	(£600)
Tax due on the rental	£900

Salary of £25,000 plus profit of £7,500 is £32,500, well within the basic rate band, so the whole profit is taxed at 20%.

Try your own figures in the rental income tax calculator.

What mistakes do landlords make when reporting rental income to HMRC?

Claiming the property allowance and expenses together. It is one or the other.
Reporting the whole rent on a jointly owned property. Each owner is taxed on their own share.
Missing payments on account. A first return with rental profit can bring a bill for that year plus a first payment towards the next.
Leaving out rent that was due but not yet paid. Rent is generally taxed for the year it is due.

When is rental income taxed differently?

Scotland: Scottish taxpayers pay Scottish income tax rates and bands on rental profit.
From 2027/28: rental profit gets its own set of rates, 22% (property basic rate), 42% (property higher rate) and 47% (property additional rate), two points above the rates on earned income. HM Treasury
Company ownership: a company pays Corporation Tax instead. See our accountants for buy-to-let limited companies.
Living in the property: letting a furnished room in your own home may fall under rent-a-room relief instead. GOV.UK

The bottom line

Rental income is taxed as part of your total income, so the same rental profit can cost one landlord 20% and another 40% or more.

Work out the profit, add it to your other income, take off 20% of your finance costs, and you have the tax.

The figures change from April 2027, so recheck any estimate made on 2026/27 rates.

For every filing and payment date in one place, use the landlord tax checklist.

Official sources

Figures were checked against these sources on 11 October 2026. Tax rules change: check the source or ask us before acting.

Please note: this guide is general information on UK tax rules at the review date shown. It is not advice for your situation. Rules change and the right answer depends on your circumstances, so check the sources or speak to us before acting.

How is rental income taxed in the UK?