A Landlord's Guide to Tax in 2026: What London Property Owners Need to Know

Being a landlord in London can be rewarding, but the tax rules have grown steadily more complex over the past few years. Whether you own one flat or a small portfolio, staying on top of your obligations is the key to protecting your returns. Here is an overview of what matters in 2026 — always check current figures, as thresholds and rates can change.

Income tax on rental profits

Rental income, less allowable expenses, is added to your other income and taxed at your usual rate through Self Assessment. Since the rules changed, mortgage interest is no longer deducted from your rental profit; instead landlords receive a basic-rate tax reduction, which is worth understanding if you have a mortgage on the property.

What you can and cannot claim

You can generally claim expenses incurred wholly for the rental, such as letting agent fees, insurance, repairs and maintenance, and the replacement of domestic items. Improvements that add value are usually capital rather than allowable expenses, which is a common area of confusion.

Making Tax Digital is coming for landlords

Making Tax Digital for Income Tax is being phased in, starting with landlords and the self-employed who have higher qualifying income and extending to more people after that. It will mean keeping digital records and sending HMRC quarterly updates, so it is worth getting your record-keeping ready now rather than later.

Selling up: Capital Gains Tax

If you sell a rental property at a profit, Capital Gains Tax may be due, and gains on UK residential property must be reported and paid to HMRC within a short window after completion. Planning a sale in advance can make a real difference to the tax you pay.

How BES helps landlords

We prepare landlords' tax returns, claim every allowable expense, keep you ready for Making Tax Digital, and advise on the tax side of buying and selling — all for a fixed fee. Call BES Accountancy on 0333 224 4111 or request a free quote today.