Tax Changes for UK Landlords in 2025: What You Need to Know
The tax landscape for UK landlords is changing again in 2025. Whether you own a single rental property or a full portfolio, understanding these updates is crucial to avoid penalties and reduce your tax bill.
Here are the main 2025 landlord tax changes every property owner must prepare for.
1. New digital reporting rules begin
From April 2026, landlords earning over £50,000 must join Making Tax Digital (MTD) — but 2025 is the preparation year.
This means:
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Quarterly digital updates
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Digital record keeping
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Mandatory MTD-compatible software
Landlords in 2025 must ensure:
✔ Rent statements are digital
✔ Receipts are stored electronically
✔ Bookkeeping software is ready
Xero, QuickBooks, and FreeAgent are MTD-ready options.
2. Mortgage interest relief changes stabilise
Mortgage interest relief remains restricted at 20%, continuing rules from previous years.
However, in 2025, HMRC is increasing reviews on:
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Incorrect relief claims
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Misreported finance costs
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Mixed-use properties
Landlords with multiple mortgages should seek an accountant to ensure compliance.
3. Replacement domestic items relief tightening
From 2025, clearer HMRC guidance states what is NOT allowed:
❌ Extensions
❌ Full kitchen renovations
❌ Loft conversions
❌ Garden buildings
Allowed replacements:
✔ Washing machines
✔ Cookers
✔ Sofas
✔ Beds
Landlords in 2025 must keep itemised receipts to avoid HMRC challenges.
4. Capital gains tax updates
While the tax rates remain similar, 2025 focuses on:
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Property disposal reporting within 60 days
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Late filing penalties
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More HMRC audits
If selling a rental property, speak to a tax accountant before listing it.
5. EPC regulations expected to tighten
The government is discussing new EPC rules for rentals from 2025 onward.
Expected:
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Rentals must reach EPC C by 2028
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Limited exemptions available
Landlords should budget for:
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Insulation
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Heat pumps
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Double glazing
These may qualify for tax deductions.
Conclusion
2025 is a crucial year for UK landlords.
For help with:
✔ MTD compliance
✔ Rental bookkeeping
✔ Tax planning
✔ Property disposal tax
✔ Mortgage relief calculations
ATS Associate supports landlords across Wimbledon and the UK.
