IndividualsAny revenue that you receive from residential lettings and furnished holiday lets counts as taxable income. You can reduce the tax that you pay by making sure that you calculate your profits correctly.
You can claim back allowable expenses to reduce your tax bill. Allowable expenses include letting fees, buildings insurance and Council Tax. You cannot claim back the cost of furnishing a property but you can claim either a wear and tear allowance or a renewals allowance on furnishings.
|Band||Taxable Income||Tax Rate|
|Personal Allowance||Up to £11,850||0%|
|Basic Rate||£11,851 to £46,350||20%|
|Higher Rate||£46,351 to £150,000||40%|
|Additional Rate||Over £150,001||45%|
The rate of tax that you pay will depend on your total income.
Companies pay tax on their profits from rental income at the rate of 20%. Letting fees, buildings insurance and council tax are allowable expenses.
Income Tax Rates & Bands
The table below shows the tax rates you pay in each band if you have a standard Personal Allowance of £11,850. Income tax bands are different if you live in Scotland.