Landlord tax glossary
The terms you'll meet on HMRC forms and in this site's guides, explained in a sentence or two.
Adjusted net income
Total taxable income minus certain reliefs, such as pension contributions and Gift Aid. It decides whether you lose Personal Allowance above £100,000 and whether the Child Benefit charge applies.
Allowable expense
A revenue cost incurred wholly and exclusively for the letting business, deducted from rent to find profit.
Annual exempt amount
The tax-free slice of capital gains each year. It is £3,000 per person.
Beneficial ownership
Who is actually entitled to the income and value of a property, which can differ from the names on the title.
Capital improvement
Work that adds to or improves a property, such as an extension. It isn't deductible from rent, but it reduces the capital gain.
Cash basis
The default accounting method for most individual landlords with receipts under £150,000. Income and costs count when paid.
Finance costs
Mortgage interest and other borrowing costs. For individual residential landlords they are relieved through a basic-rate tax credit (Section 24).
Form 17
HMRC declaration letting married couples and civil partners be taxed on unequal shares of jointly owned property, where they really own it unequally.
Making Tax Digital (MTD)
HMRC's system requiring digital records and quarterly updates for landlords and sole traders above a gross income threshold.
Payments on account
Two advance payments towards next year's tax bill, due 31 January and 31 July, each 50% of the previous year's bill.
Personal Allowance
The amount of income you can have tax-free: £12,570, reduced above £100,000.
Private Residence Relief
The CGT relief that exempts gains on your main home, including the final 9 months of ownership.
Property allowance
£1,000 of gross property income you can receive tax-free, or deduct instead of actual expenses.
Property income rates
Separate income tax rates on rental profit from April 2027: 24%, 44% and 49%.
Qualifying income
For MTD: gross self-employment and property income before expenses.
Rent a Room relief
Up to £7,500 a year tax-free from letting furnished rooms in your own home.
Replacement of domestic items relief
Deduction for replacing furniture, appliances and furnishings like for like in a let property.
Section 24
The rule that replaced the mortgage interest deduction with a basic-rate tax credit for individual landlords.
Stamp Duty surcharge
The extra 5% on every SDLT band when buying an additional residential property.