Ownership
Finance costs (Section 24)
Allowable expenses
Scottish rates and property taxes
Short-term lets
Deadlines and Making Tax Digital
What's different in Scotland
Rental profit is taxed at Scottish Income Tax rates if you're a Scottish taxpayer, and property purchases pay Land and Buildings Transaction Tax to Revenue Scotland rather than Stamp Duty. Buying a dwelling when you already own one usually adds the Additional Dwelling Supplement, which Revenue Scotland repays if you sell your previous main residence within 36 months.
Short-term lets need a licence, applied for through your local council's website, before you take bookings or receive guests.
Why finance costs go in their own pile
HMRC gives relief for residential finance costs as a tax reduction at the basic rate, worked out on the lowest of your finance costs, your property profits and your income above the Personal Allowance. Anything unused carries forward. Mixing mortgage interest in with other expenses overstates the deduction and understates the tax.
Related
What else will you need?
- SA105SA105 UK property pagesSA105 is the UK property section of the Self Assessment return.
- ChecklistLandlord expense checklistLandlords can deduct running costs such as letting agent fees, insurance, repairs, ground rent, service charges and bills they pay, plus like-for-like replacement of furnishings.
- TemplateLandlord income and expenses trackerA landlord income and expenses tracker records every rent receipt and cost through the tax year, so the property pages of your tax return take minutes.Excel
- SA100SA100 tax returnThe SA100 is HMRC's main Self Assessment tax return.
Rather we did it?
Countify can handle this for you, for a fixed fee agreed upfront.
Questions
Frequently asked questions.
Can I claim my mortgage payments against rent?
Not as an expense. Only the interest part counts, and it gives a tax credit at the basic rate instead of a deduction. Capital repayments get no relief at all.
When can I reclaim the Additional Dwelling Supplement?
When you sell your previous main residence within 36 months of buying the new one. For purchases before 1 April 2024 the window was 18 months.
Do I need a licence for a holiday let in Scotland?
Yes, for a short-term let you need a licence before taking bookings or receiving guests. You apply through your local council's website.
Checked against GOV.UK on · Reviewed by Kamran Ishaq FCCA, Founder & CEO, on .
Sources: Work out your rental income when you let property (opens in a new tab) (HM Revenue & Customs); Changes to tax relief for residential landlords: how it's worked out (opens in a new tab) (HM Revenue & Customs); Income Tax: declaration of beneficial interests in joint property and income (Form 17) (opens in a new tab) (HM Revenue & Customs); Income Tax in Scotland (opens in a new tab) (HM Revenue & Customs); Additional Dwelling Supplement (ADS) (opens in a new tab) (Revenue Scotland); How to apply for a short-term let licence (opens in a new tab) (Scottish Government); Work out your qualifying income for Making Tax Digital for Income Tax (opens in a new tab) (HM Revenue & Customs); Payments on account (opens in a new tab) (HM Revenue & Customs).