For landlords

What you must do

• Rental income at or below the £1,000 Property Allowance can qualify for full relief. You usually do not need to tell HMRC if no exclusion applies, but you must keep records. Above it, choose between the allowance or claiming actual expenses — whichever gives the bigger deduction, never both.
• Renting a furnished room in your own home: the Rent-a-Room limit is £7,500, halved to £3,750 when you share the income with someone else. At or below the limit, relief is automatic; above it, you must actively elect between the Rent-a-Room method and the ordinary expenses method.
• You no longer deduct mortgage interest (or other residential finance costs) from rental income. Instead you get a 20% tax credit — the “Section 24” rule. Higher-rate landlords lose out most: the credit stays at basic rate whatever rate you actually pay. The exact rule: the credit is 20% of the lowest of three amounts — your finance costs, your property profit, or your adjusted total income.
• Cash basis (tax on rent received, not rent invoiced) is the default up to £150,000 of property receipts. Above that you can still elect into it, or use accruals accounting.

What you can safely skip

If your gross rental income is at or below the Property Allowance, you may not need to tell HMRC if no exclusion applies; keep records either way. Rent-a-Room relief is automatic below its limit, but other reasons to file a return can still exist.

How to optimise

Weigh the Property Allowance against your actual expenses every year — whichever is bigger wins, and the allowance can never create a loss. If you have residential finance costs, check whether the actual-expenses route (which keeps the Section 24 credit alive) beats the flat allowance before you claim it.

Making Tax Digital property categories

Once the Making Tax Digital rules apply to you, each quarterly update reports totals against HMRC's own property categories — the same fields our records tool sorts into:

• Total rent
• Other income from property
• Premiums for the grant of a lease
• Reverse premiums and inducements
• Rent, rates, insurance and ground rents
• Property repairs and maintenance
• Non-residential property finance costs
• Legal, management and other professional fees
• Costs of services provided, including wages
• Travel expenses
• Other allowable property expenses
• Residential property finance costs
• Residential finance costs brought forward

Mortgage interest and other finance costs are always tracked separately, even under simplified reporting — that's what feeds the Section 24 credit above.