Navigating the 2025/2026 Tax Year: A Guide for Yorkshire Landlords

Navigating the 2025/2026 Tax Year: A Guide for Yorkshire Landlords

As a landlord in Yorkshire, staying on top of your finances and tax obligations is crucial for the success of your property investment. The 2025/2026 tax year brings some important changes, particularly for those with larger portfolios, as the government continues its drive to digitise the tax system.

Understanding these changes and how to manage your expenses correctly will help you stay compliant and maximise your returns.

The Rise of Making Tax Digital (MTD) for Landlords

The biggest change on the horizon is the phased rollout of Making Tax Digital for Income Tax (MTD for ITSA). This initiative is designed to simplify tax reporting by moving it online, but it requires a new way of working for many landlords.

• Who is affected? From April 2026, landlords with a total gross income (from property and/or self-employment) of over £50,000 will be required to comply with MTD. The threshold will be lowered in subsequent years.

• What does this mean? Instead of a single annual Self Assessment tax return, affected landlords will need to:

  • Keep digital records of their income and expenses using MTD-compatible software.

  • Submit quarterly updates to HMRC.

  • Submit a final annual declaration.

• What to do now: If you think you'll be affected, it's a great idea to get ahead of the curve. Consider moving to digital record-keeping and familiarise yourself with the process to ensure a smooth transition.

Understanding Allowable Expenses

Regardless of MTD, landlords can reduce their tax liability by deducting "allowable expenses" from their rental income. An allowable expense must be incurred "wholly and exclusively" for the purpose of your rental business.

Here are some common examples of allowable expenses you should be tracking:

• Letting Agent Fees: Any fees paid to a letting agent for services like tenant finding, rent collection, and property management are fully tax-deductible.

• Repairs and Maintenance: Costs for routine repairs and maintenance (e.g., fixing a leaky tap, repairing a boiler, or redecorating between tenancies) can be claimed. However, it’s important to distinguish these from 'capital improvements' (e.g., adding an extension), which are not an allowable expense.

• Insurance: Premiums for landlord insurance, buildings insurance, and contents insurance are all deductible.

• Legal & Professional Fees: Fees for solicitors, accountants, and other professionals related to your property business are allowable.

• Utility Bills & Council Tax: If you are responsible for paying these costs during void periods, you can claim them as an expense.

• Replacement of Domestic Items: Under Replacement Domestic Items Relief, you can claim relief for the cost of replacing items such as furniture, white goods, and household appliances on a like-for-like basis.

A Note on Mortgage Interest: Since April 2020, landlords can no longer deduct their full mortgage interest payments from their rental income. Instead, they receive a basic rate tax credit (at 20%) on their finance costs.

Staying informed about your financial obligations is key to being a successful landlord. At Neskey Lettings, we provide comprehensive management services that can help you with digital record-keeping and ensuring your property is professionally managed, giving you peace of mind.