Property rental income: what ambitious landlords need to know now

HMRC’s latest data on property rental income offers a wake-up call for landlords. Despite rising costs and inflation averaging 4.4% annually over the past five years, rental receipts have barely moved — increasing just 9% overall and remaining flat between 2022/23 and 2023/24. If you’re not reviewing your tax position annually, claiming all eligible expenses, or considering incorporation, you could be leaving serious money on the table.

Missed expenses are costing landlords thousands

The data shows a surprising number of landlords are failing to claim basic, fully allowable costs:

• One third didn’t claim for rent, rates, or insurance

• One third claimed nothing for repairs or maintenance

• 58% reported no finance costs, suggesting either no mortgage or missed relief

• 40% didn’t deduct legal, management, or professional fees

• 12% claimed no expenses at all

Whether this is due to poor record-keeping, reliance on the £1,000 property income allowance, or lack of awareness, it represents a significant missed opportunity for tax relief.

Furnished holiday lets: a short-lived boom

Furnished Holiday Lets (FHLs) saw a 68% jump in rental receipts over the same period. But this tax regime ended this year, meaning landlords must prepare for a shift in how income is taxed and expenses are claimed. If you own FHLs, now’s the time to revisit your structure and forecast the impact.

Small portfolios dominate, but incorporation is rising

Just over half of all landlords had property income below £10,000, suggesting most unincorporated landlords hold small portfolios. However, incorporation is on the rise. There are now nearly 400,000 companies set up to hold rental properties, three-quarters of which were created since 2016, when mortgage interest relief began to phase out.

Incorporation isn’t right for everyone, but it can offer benefits such as:

• Full relief for mortgage interest

• Corporation tax rates lower than personal income tax

• Greater flexibility in profit extraction and succession planning

We help landlords assess whether incorporation suits their goals and structure.

At BlueFox Accounting, we work with landlords to optimise their tax position, improve record-keeping, and explore strategic options like incorporation. Whether you own one property or a growing portfolio, we’ll help you claim what you’re entitled to and plan for what’s next.