# Property income, recorded properly

Canonical: https://taxmo.co.uk/landlord-tax-software-uk
Last updated: 2026-04-25

Rental income is reported through Self Assessment, and the rules diverged from ordinary business expenses in a way that still surprises landlords who have not looked recently.

## The finance cost restriction

Mortgage interest on residential property is no longer deducted from rental income as an ordinary expense for individual landlords. Relief is given as a basic-rate reduction against the tax due instead. The practical effect is that higher-rate taxpayers get less relief than they used to, and reported profit is higher than cash flow suggests.

## Repairs versus improvements

A repair restores something to its former condition and is deductible against rental income. An improvement makes it better than it was and is capital, relieved against capital gains when you sell rather than against rent now. Replacing a broken boiler with a similar one is a repair; adding an extension is not. The boundary is where most enquiries land.

## Records per property

If you have more than one property, keeping income and costs per property rather than as a pot makes both the return and any future sale calculation possible. It is much harder to reconstruct later than to record at the time.

## Common questions

### Do I need to file a return for rental income?

Generally yes above a small level of property income, and there is a separate property allowance that may cover very small amounts. The thresholds are set by HMRC, so check the current figures for your circumstances.

### Does MTD apply to landlords?

MTD for Income Tax is intended to cover landlords above an income level, on a timetable that has been revised more than once. Check the current mandation date and threshold on GOV.UK rather than relying on an older article.

### Can I deduct the whole mortgage payment?

No, and this catches people out twice. Only the interest element was ever deductible, not the capital repayment, and the interest is now relieved as a basic-rate tax reduction rather than as an expense.

## Related pages

- [Self Assessment without the January reconstruction](https://taxmo.co.uk/self-assessment-software)
- [Track expenses without the shoebox](https://taxmo.co.uk/expenses-tracker-uk)
- [Accounting software for UK sole traders](https://taxmo.co.uk/accounting-software-sole-traders)

---

This page explains how UK rules work rather than quoting thresholds, rates or allowances, which are indexed or reset at fiscal events. Check current amounts on GOV.UK.