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Take advantage of the property rental toolkit

July 3, 2025

HMRC publish a property rental toolkit which can be used to avoid making common errors when reporting income from property on the Self Assesment tax return. It can be found on the Gov.uk website.

The toolkit was published in 2022 but has recently been updated to take account of the end of the favourable tax regime for furnished holiday lettings, which came to an end on 5 April 2025. However, it should be remembered when reporting income from furnished holiday lettings in the Self Assessment tax return for 2024/25 that the furnished holiday lettings tax rules still apply.

Nature of the toolkit

The toolkit highlights the main risk areas and contains a questionnaire with links to guidance which can be used to check income and expenses are treated correctly for tax purposes and, for example, deducted disallowable items have not been deducted when calculating their rental profit.

Key risk areas

1. Record-keeping

Poorly kept records may result in receipts other than rents being overlooked, expenditure or reliefs being wrongly claimed or deductions missed or property disposals being overlooked.

2. Property income receipts

All income from land, other than capital receipts, should be taken into account when computing the profit for the property rental business, including casual or one-off lettings. For 2024/25 and earlier years, profits from furnished holiday lettings are calculated separately. From 2025/26 onwards, they are included with other rental receipts.

3. Deductions and expenses

Expenses can only be deducted in computing rental profits if they are incurred wholly and exclusively for the purposes of the business. Problems may arise in relation to dual purpose expenditure which has both a business and private element and also in distinguishing between revenue and capital expenditure.

4. Reliefs and allowances

Rent-a-room relief can only be claimed by those letting furnished accommodation in their own home.

Plant and machinery capital allowances can be claimed by landlords of non-residential property and, for 2024/25 and earlier tax years, for furnished holiday lettings. They are not available in respect of residential lets.

The property allowance exempts rental income of less than £1,000 from tax. It can also be deducted instead of actual expenses when calculating rental profit. It is not available in some cases, for example where rent is paid by a personal or family company to a director.

5. General

There are particular issues in relation to property that will affect the completion of the property pages of the Self Assessment tax return, such as the use of losses, which must be carried forward and set against profits of the same property business.

Property Rental Toolkit

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