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Landlord tax terms
Rental profit is taxed as income, but the rules on what you can deduct, how mortgage interest is treated and what happens when you sell are specific to property.
These definitions follow HMRC's guidance and manuals. They explain what each term means on a Self Assessment return and in your quarterly updates, with a worked example where it helps.
67 terms
- 60 day Capital Gains Tax reporting
The 60 day rule means that when you sell a UK residential property and have Capital Gains Tax to pay, you must report the sale and pay the tax within 60 days of completion.
- Accruals basis
The accruals basis is a way of working out profit by counting income and costs in the period they belong to, not the day money moves.
- Allowable expenses
Allowable expenses are costs you can deduct from rental income because they are spent wholly and exclusively on letting the property.
- Annual Tax on Enveloped Dwellings (ATED)
The Annual Tax on Enveloped Dwellings (ATED) is a yearly tax on UK residential property held by certain companies and similar owners.
- Balancing payment
A balancing payment is the tax still owed for a tax year after your payments on account are taken off.
- Base cost
Base cost is the starting figure used to work out a capital gain on a property: normally what you paid for it, plus allowable costs of buying and improving it.
- Basic rate tax reduction
The basic rate tax reduction is the 20% reduction in your Income Tax bill that replaced a full deduction for mortgage interest on residential lets.
- Business rates for holiday lets
Business rates for holiday lets means a self-catering property in England is rated as a business instead of paying council tax, but only when it passes three tests on how often it is available and let.
- Capital allowances
Capital allowances are a tax relief that lets a business deduct some or all of the value of an item from its profits before tax.
- Capital Gains Tax (CGT)
Capital Gains Tax (CGT) is the tax on the profit when you sell or give away an asset such as a rental property.
- Capital Gains Tax annual exempt amount
The annual exempt amount is the gain you can make each tax year before paying Capital Gains Tax.
- Capital vs revenue expenditure
Revenue expenditure is the day to day cost of running a let, such as repairs, and is deducted from rental income.
- Cash basis
Cash basis means you record income when you receive it and expenses when you pay them, rather than when they are due.
- Corporation tax
Corporation Tax is the tax a limited company pays on its profits.
- Council tax for landlords
Council tax for landlords is the question of who is liable for the bill on a let home and how a bill the landlord pays is treated for tax.
- Declaration of trust
A declaration of trust is a document that records who owns the beneficial interest in a property and in what shares.
- Dividend tax
Dividend tax is the Income Tax you pay on dividends, which are payments a company makes to its shareholders out of profit.
- Empty homes premium
The empty homes premium is an extra council tax charge that councils in England can add to a home that has been empty for a year or more.
- Enhancement expenditure
Enhancement expenditure is spending that improves a property rather than just maintaining it, such as building an extension.
- Finance cost restriction
The finance cost restriction is HMRC's term for the Section 24 rules.
- Finance costs
Finance costs are the costs of borrowing to buy or run a let residential property.
- Furnished holiday lets (FHL) abolition
Furnished holiday lets (FHL) were a special tax category for qualifying short term holiday properties.
- High Income Child Benefit Charge
The High Income Child Benefit Charge is an Income Tax charge on a person whose individual income is over £60,000 when they or their partner receive Child Benefit.
- Income Tax bands
Income Tax bands are the slices of taxable income that are charged at different rates.
- Incorporation Relief
Incorporation Relief lets a sole trader or partnership defer Capital Gains Tax when they transfer their business to a company in exchange for shares.
- Inheritance Tax
Inheritance Tax is a tax on the value of a person's estate when they die, which includes any let properties they own.
- Land and Buildings Transaction Tax (LBTT)
Land and Buildings Transaction Tax is the tax paid on buying property or land in Scotland.
- Land Transaction Tax (LTT)
Land Transaction Tax is the tax paid on buying property or land in Wales.
- Lease premium
A lease premium is a lump sum paid by a tenant up front for the grant of a lease.
- Legal and professional fees
Legal and professional fees are charges from solicitors, accountants, surveyors and similar advisers.
- Let Property Campaign
The Let Property Campaign is HMRC's route for individual landlords to disclose and pay tax on rental income they have not previously declared.
- Letting agent fees
Letting agent fees are the charges an agent makes for finding tenants, collecting rent and managing a let property.
- Lettings Relief
Lettings Relief is a Capital Gains Tax relief for people who sell a home they lived in while letting part of it to a tenant.
- Main residence nomination
A main residence nomination is a notice to HMRC saying which of your homes counts as your main residence for Private Residence Relief.
- Marriage Allowance
Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner.
- Multiple dwellings relief
Multiple dwellings relief was a Stamp Duty Land Tax relief that let a buyer of two or more dwellings in one transaction pay tax on the average value of each dwelling rather than the combined price.
- National Insurance for landlords
National Insurance for landlords covers whether renting out property means paying National Insurance contributions.
- No gain, no loss transfer
A no gain, no loss transfer is a gift or sale of an asset to your husband, wife or civil partner on which no Capital Gains Tax is charged.
- Non-resident Capital Gains Tax
Non-resident Capital Gains Tax is the Capital Gains Tax charged when someone who is not UK resident disposes of UK property or land, residential or not.
- Non-Resident Landlord Scheme
The Non-Resident Landlord Scheme is HMRC's system for collecting tax on UK rent paid to landlords who live abroad.
- Payments on account
Payments on account are advance payments towards your next tax bill.
- Personal Allowance
The Personal Allowance is the amount of income you can receive each tax year before paying Income Tax.
- Pre-letting expenses
Pre-letting expenses are costs you pay before your property business starts, such as advertising or legal fees for a first tenancy.
- Private residence relief
Private residence relief removes Capital Gains Tax on the part of a gain that relates to time a property was your only or main home.
- Property allowance
The property allowance is a £1,000 tax free allowance for property income.
- Property income rates
Property income rates are separate Income Tax rates for rental and other property income, starting in the 2027 to 2028 tax year.
- Property losses
A property loss happens when your allowable expenses for a tax year are higher than your rental income.
- Record keeping
Record keeping is the duty to keep accurate figures and supporting documents for your rental income and expenses.
- Rent a Room scheme
The Rent a Room scheme lets you earn up to £7,500 a year tax free from letting furnished accommodation in your own home, for example to a lodger.
- Rental income
Rental income is the money you receive for letting out property.
- Rental profit
Rental profit is your rental income minus your allowable expenses, or minus the property allowance if you claim that instead.
- Replacement of domestic items relief
Replacement of domestic items relief lets landlords of residential lets deduct the cost of replacing furniture, furnishings, appliances and kitchenware provided for the tenant.
- Retained deposit income
Retained deposit income is the part of a tenant's deposit that you keep at the end of a tenancy, which HMRC treats as property income.
- SA100 tax return
The SA100 is HMRC's main Self Assessment tax return.
- SA105 (UK property pages)
The SA105 is the UK property section of the Self Assessment tax return.
- Scottish Income Tax
Scottish Income Tax is the set of Income Tax rates and bands that applies if you live in Scotland.
- SDLT higher rates surcharge
The SDLT higher rates surcharge is an extra 5% of Stamp Duty Land Tax on top of the normal rates when you buy an additional residential property, such as a buy-to-let, in England or Northern Ireland.
- Section 24
Section 24 is the common name for the rule that stops individual landlords deducting mortgage interest and other finance costs from rental income.
- Self Assessment
Self Assessment is the system HMRC uses to collect Income Tax from people whose tax is not all taken at source, including landlords.
- Self Assessment deadlines
Self Assessment deadlines are the fixed dates by which you must register, file your tax return and pay Income Tax for a tax year.
- Service charges and ground rent
Service charges and ground rent are the payments a leaseholder makes to the freeholder or managing agent for upkeep of the building and for the right to occupy the land.
- Stamp Duty Land Tax (SDLT)
Stamp Duty Land Tax is a tax paid by the buyer of property or land over a certain price in England and Northern Ireland.
- Structures and buildings allowance
The structures and buildings allowance is a capital allowance for the cost of building or buying a non-residential structure.
- Tax code
A tax code is the code your employer or pension provider uses to work out how much Income Tax to take from your pay or pension.
- Tax year
The UK tax year runs from 6 April to 5 April the following year.
- Travel expenses for landlords
Travel expenses for landlords are the running costs of journeys made solely for the rental business, such as driving to a let property to meet a contractor.
- Wear and tear allowance
The wear and tear allowance was an optional flat deduction of 10% of net rent for furnished residential lettings.