Things To Keep Track of as a Landlord

As a landlord, there are certain things you need to keep track of. Like your tax commitments.

Your expenditure.

Your sanity.

But why should you even care about all this?

Well, for UK tax purposes, if multiple properties owned by the same person or legal entity are let out, they’re considered to be part of one single property rental business, with taxable profit being worked out on a ‘global’ basis.

It’s all very complicated, so, to keep it simple (we like simple), let’s go through the things you shouldn’t forget about.

Expenses (because they can help you reduce your tax bill)

This one’s really important, as you can’t claim for allowable expenses unless you track each and every expense incurred and keep all receipts. As a business owner you pay tax on your profits, not on everything you earn, so good record keeping is a surefire way to reduce your tax bill.

These allowable expenses could include things like your accountant’s fees, cleaning costs, council tax, utility bills, and mortgage interest. And yes, any subscription fees you pay for bookkeeping software.

How can I record my expenses?

Your financial records should be as detailed as possible, and include any receipts, invoices, or rental statements.

Quality accounting software (and this seems like a good time to mention Pandle) can help you do this in as stress-free a way as possible. If you manage more than one property then you ideally want to find software which allows you to manage the finances of each one separately, as well as your business as a whole.

For example, with Pandle, you can create a dedicated ‘project’ for each property you own, meaning you’re able to take a kind of bird’s eye view of your business. From this vantage point, it’s then easier to spot patterns and see what’s working (and what’s not).

Capital expenditure (and how it affects your tax bill)

It’s a bit different when you buy big assets like machinery or equipment which you expect to continue using in your business for longer than 12 months. You can still use these purchases to reduce your tax bill, but in a different way – known as claiming capital allowances.

It can be a bit confusing because there are different types of capital allowances available, depending on what your asset is eligible for. Some types mean your business can write off the asset’s entire cost in one year. Another type of capital allowance lets you offset the asset’s value as it depreciates over its lifetime.

It’s well worth chatting to an accountant about this because the rules are pretty complicated. You’ll need to record everything!

Making Tax Digital Income Tax (MTD IT)

On the subject of record keeping, it’s also worth mentioning Making Tax Digital (MTD). This initiative is in the process of being introduced by HMRC to try and simplify the tax system and bring it into the modern age. In short, you’ll need to keep your financial records digitally, and use special software to send this information to HMRC.

From April 2026 the MTD Income Tax rules will apply to anyone earning more than £50,000 a year from self-employment or property. The threshold reduces to £30,000 the following year, so getting a head start won’t hurt!

Profit and loss

Money, money, money.

As with any business, you need to keep one eye trained on your profit margins. Just bear in mind that profit and loss relate to all properties within a single property rental business. In this way, a landlord’s properties are interdependent and rely on one another.

Capital Gains

You might need to pay capital gains tax if you sell a property which isn’t your main home and make a profit on the sale. It’s a bit different if you own the property through a limited company.

This is because the business is legally separate to you as an individual, so it’s the company which owns the property – not you. It means that any profits will also belong to the company. Rather than paying capital gains tax on them, you’ll pay Corporation Tax.

What to record for Capital Gains

Now, I know you’ve got enough records to keep at this point, but…

You should be sure to record such things as the date of acquisition, how much the property cost (and incidental costs surrounding its purchase), details regarding any subsequent improvements, and the date of disposal.

You’ll also need to record whether the property was your main residence, residency dates, and dates relating to when it was let out.

Other income

Earning other sources of income alongside your property income, such as wages from an employer, can affect the rate of tax you need to pay. It could even move you into a higher tax bracket. This can have an impact on the way you structure your business to be tax efficient.

You might even earn different kinds of property income from the same property, such as a grant from the council or rent from a film production.

It means it is Very Important that you record everything (last time, promise) in detail – with records supported by statements, receipts, or invoices.

Is your head spinning a bit? Congratulations; you’re human. Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.