7 mistakes landlords make on their Self Assessment tax return

Mistake 1: Claiming the full mortgage interest

Due to Section 24, full mortgage interest relief is no longer an allowable expense when calculating your buy-to-let property profits.

Before this rule, landlords were able to offset the full amount of their mortgage interest against their rental income for tax purposes, which reduced the tax they had to pay on that income. However, under Section 24, buy-to-let landlords can only claim a basic rate of tax relief on their mortgage interest, regardless of their income tax rate.

Since the 2020/21 tax year, income tax relief landlords receive for residential property finance costs (mortgages) has been restricted to the basic rate of tax. This means that the amount of income tax paid on rental income has increased, particularly for higher or additional rate taxpayers.

When completing your tax return, you put your full finance costs (the mortgage interest) in box 44 on your SA105, and HMRC then works out the 20% tax reduction for you. Also, if you have any unused finance costs from previous years, ​​don't forget to roll these forward in box 45!

If you’re affected by Section 24, there are a number of strategies available to mitigate the impact:

• Consider incorporating your rental properties into a limited company structure. The long-term tax savings may outweigh the upfront costs of incorporation.

• Review your portfolio and consider selling weaker performing properties.

• Don’t overlook the long-term implications of Section 24. While the changes may seem significant in the short-term, landlords should consider how they will affect them over the long-term and plan accordingly. For instance, when purchasing new properties, consider using a limited company.

• Explore options to increase the rental income to balance out the increased tax bill.

Box 44 is one of the easiest places to slip up, and the cost falls hardest on higher rate taxpayers. Our guide to Section 24 and mortgage interest walks through how the relief is worked out.

Mistake 2: Claiming for capital expenses

You cannot claim any capital expenditure on your self assessment tax return, only revenue expenses. Capital expenses refer to the expenses incurred to acquire, improve or enhance a property while revenue costs refer to the ongoing expenses incurred to maintain and operate the property.

While it may be tempting to claim as many expenses as possible, HMRC only allows revenue costs, such as repairs, maintenance and other day to day running costs to be claimed on your tax return. However, capital expenses, like adding an extension or en-suite can be claimed when you sell the property.

Learn more about claiming property expenses in our expert guide

Mistake 3: Not declaring all of your rental income

Your return has to show all of your property income, not only the rent from your main let. That means rent from any other properties you let, and your share of income from anything you own jointly.

If you own with a spouse or civil partner, HMRC's default is a 50/50 split of the income regardless of who actually receives the money, unless you've made a Form 17 declaration to match your real shares. Get the split wrong and both returns are wrong.

HMRC sees more than landlords assume, cross-checking Land Registry records, letting agents and deposit schemes, so undeclared rent tends to surface. Failing to declare everything can mean penalties and interest. If you have rental income from earlier years you didn't declare, the Let Property Campaign is the way to put it right before HMRC comes to you.

Our guide to tax on rental income covers what to include and how joint shares work.

Mistake 4: Filing a holiday let under the old furnished holiday lettings rules

This one is new for 2025/26. The furnished holiday lettings (FHL) regime was abolished from 6 April 2025, so this is the first return where a holiday let is treated like any other residential property.

If you've let a holiday property for years, the way you've always filed it has changed. Capital allowances on furniture and equipment no longer apply in the old way. Your mortgage interest now falls under the Section 24 restriction in Mistake 1, rather than being fully deductible. The capital gains reliefs that made holiday lets attractive on sale, and the treatment of profits as earnings for pension contributions, have gone too.

The risk is filing on autopilot: repeating last year's treatment for a regime that no longer exists. For many holiday let owners, this return is the first time the change bites. HMRC's guidance on the abolition of the FHL regime sets out what's changed.

Mistake 5: Missing the 60-day Capital Gains Tax deadline

If you sold a UK residential property at a gain, reporting it on your annual return isn't enough. You have to report the gain and pay the Capital Gains Tax within 60 days of completion, through HMRC's separate property reporting service. It still goes on your Self Assessment return as well, but the 60-day report comes first.

This is the one that catches people out, because nothing prompts you. The deadline runs from completion, not from the end of the tax year, so you can be months late without realising. Late reporting means penalties, and late payment means interest on top.

Our guide to Capital Gains Tax and the 60-day rule walks through how and when to report, and HMRC's service is report and pay Capital Gains Tax on UK property.

Mistake 6: Being caught out by payments on account

Payments on account are advance payments towards your next tax bill. If your Self Assessment bill is over £1,000 and most of your tax isn't already collected at source, HMRC asks for two of them: the first by 31 January, the second by 31 July, each worth half of last year's tax bill.

The shock comes in your first big year. Alongside the tax you owe for the year just gone, your January bill also includes the first payment on account for the year ahead. That can make the bill around 50% larger than the figure you'd budgeted for. It isn't an extra tax, it's your next bill brought forward, but if you didn't see it coming the cashflow hit is real.

Our guide to payments on account explains how they're worked out and when you can reduce them.

Mistake 7: Not keeping good records

Proper record keeping is crucial for a successful self-assessment tax return. Regularly keep track of all income and expenses related to your rental property, including rent collected, repairs and maintenance costs, insurance, and any other expenses. Without good records, it will be difficult to accurately report your income and expenses on your tax return, meaning you could end up paying more tax.

Make sure to keep receipts and other documentation and set aside time to regularly update your record keeping. It's much better to spend fifteen minutes each month keeping up to date rather than a stressful weekend rushing at the end of January. Also, consider using property tools like Provestor to stay organised!

Good records are about to matter more, too. From April 2026, landlords with qualifying income over £50,000 move to Making Tax Digital for Income Tax, which means keeping digital records and sending updates through the year rather than one return at the end of it.

Summary

We hope these 7 tips help you to avoid making these mistakes on your tax return.

Remember, if you're ever unsure about anything, it's always a good idea to seek the advice of a tax professional to make sure you're paying the correct amount of tax and claiming all allowable reliefs.

By planning ahead and staying organised, you can ensure that your self assessment tax return is filed accurately and on time.