Income and Tax

Income and Tax

You main source of Buy to Let (BTL) income will be rent. It is vitally important that they get a true sense of likely rental levels by speaking to local estate agents and generally researching the local rental market.

Most landlords will also be interested in the potential resale value of their BTL property. So the local market, transport links, schools etc. may also be important considerations.

Rental income and tax



Tax is payable on the profits made from letting a BTL property. It’s normally calculated on the gross annual rental income less any allowable expenses incurred as a result of renting out the property, as well any other allowances that the client is entitled to.

Losses incurred in any year may possibly be carried forward to set against profits made in future years.

You will have to declare this income on your tax return so they should keep a record of rental payments received and any associated expenditure for the rental property. An accountant will be able to ensure that HMRC are properly advised and all allowable expenses and allowances are correctly identified.

These are examples of some expenses that may be deducted. It’s not a comprehensive list and it is offered as a guide only:

  • Utility bills
  • Building and contents insurance
  • Mortgage interest payments
  • Property maintenance and repair – but not property improvements
  • Letting agent and accountant fees
  • Costs of services including cleaners, plumbers, electricians and gardeners
  • Other directly-attributable costs such as phone calls and advertising for tenant

Sale Proceeds and Tax

The proceeds from the sale of a BTL property are subject to capital gains tax. Calculating this tax liability can be quite complicated and you should take expert advice from a qualified accountant.

For estate agents we act as introducers only.

Your property may be repossessed if you do not keep up repayments on your mortgage.