Residential property letting

Tax on rental business profits:
Unincorporated income tax rates - 20/40/45%
Incorporated2 corporation tax rates - 20%
Tax on chargeable gain on disposal:
Unincorporated 10% or 20% on excess over exempt amount
Incorporated3 corporation tax rate of 20% apart from CGT on certain high value property - rate is then 28%
Maximum letting relief exemption1 £40,000
Rent a room scheme income exemption £7,500


  1. Annual profits are not subject to national insurance
  2. The rate will be dependent on your taxable income for the year
  3. Letting relief is available on let property which has been occupied as your main home

Beyond 2016/17

Relief on finance costs, including mortgage interest payments, which individual landlords of residential property can get is to be restricted to the basic rate of tax. The restriction will be phased in over a 4-year period, starting from April 2017. This will dramatically affect the tax position of any landlords.

Further, it is intended to ban letting agents' fees to tenants which arise, for example, when the tenants sign a new tenancy agreement.