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What financial records do you need to keep?

You'll need to keep the same sorts of records whatever type of property letting business you have. Whether it's a residential or holiday letting, in the UK or overseas the records should include details of your:

Rental income

You'll need to keep a note of:

• the rent you charge and receive
• any services charged separately - for example meals, laundry service, etc
• the dates you rent out each property

Allowable expenses

Your records should include details of all your costs of letting or managing your property. Allowable expenses reduce your taxable profit. They include all or part of the following costs:

'Capital' costs

You can reduce your taxable profit by claiming allowances for the cost of furniture and equipment you provide with the property. These are called capital allowances. However, you cannot claim capital allowances for equipment to be used in a dwelling house. Most residential accommodation is classed as a dwelling house. A property that qualifies as a furnished holiday letting has different rules for capital allowances purposes. You can see further guidance on furnished holiday lettings using the 'More useful links' at the bottom of this page.

You may also be able to claim capital allowances for the cost of equipment relating more generally to your lettings business.

You'll need to record how much all of these things cost and when you ordered and paid for them.

To back up your records you should keep rent books, receipts, invoices and bank statements. Also make sure that you can separate your business from your personal expenses.

• Expenses and allowances on income from property

• Self Assessment - record keeping Opens new window

• Helpsheet HS252 Capital allowances and balancing charges Opens new window

If you complete a Self Assessment form

If your total income from UK property for the 2010-11 tax year is under £70,000 before expenses, you can group your expenses as a single total on your tax return. If it's £70,000 or more, you'll need to show your expenses separately.

HM Revenue & Customs (HMRC) can ask to see your records at any time. So hold onto the detailed information even if your income's less than £70,000.

• Completing your tax return

If you don't complete a Self Assessment form

If you're employed, or getting a pension through Pay As You Earn (PAYE) your tax code can be adjusted to collect the tax on your property income each year. However, your taxable income from property must be less than £2,500. You should contact HMRC and ask them to send you form P810 to report your income each year.

However, you'll still need to keep records because HMRC can ask to see your records to check your figures.

If your income from rent is £2,500 or more you'll need to complete a tax return.

• Contact HMRC - Income Tax enquiries for individuals, pensioners and employees Opens new window

How long do you need to keep the records?

You'll need to keep your records for six years after the tax year to which they apply - whether you complete a tax return or not.

If you get rent under the Rent a Room scheme

If you use the Rent a Room scheme you don't have to keep a record of your expenses - you can't claim these under the scheme. If your rent goes over the limit (£4,250) you can opt to pay tax on all of the rent after taking off your expenses instead. If you're renting out jointly with someone else the limit is £2,125 each. It may be worth keeping a record of your income and expenses anyway. You can read more about opting in or out of the scheme in 'The Rent a Room scheme'.

• The Rent a Room scheme

Records relating to the purchase or sale of a let property

If you sell or dispose of a property that’s not your main home and its value has increased since you acquired it, you may have to pay Capital Gains Tax. Some of your property costs can be deducted when working out your gain, so you'll need a record of:

You may qualify for other reliefs or allowances depending on how long you've owned the property and if it was ever your main home.

If you have a single lodger, this will not affect your entitlement to relief when you sell your main home. However, they must live as part of your family. If you have more than one lodger, you will be treated as letting part of your home and might have to pay some Capital Gains Tax.

If the property was used for a furnished holiday letting business there are special Capital Gains Tax reliefs.

• Tax on furnished holiday lettings

• Tax on selling property

• Property and Capital Gains Tax Opens new window

Non-financial records

You'll also need to keep other records to show that your property's safe to let out.

• Health and safety in privately rented accommodation (home and community section)

More useful links

• Tax on furnished holiday lettings

• Private renting (home and community section)

• Furnished holiday lettings: changes to the rules - 2011-12 and following Opens new window

• Self Assessment tax return UK property pages and help notes Opens new window

• Download a guide to Landlords' duties - gas safety' (PDF, 95K) Opens new window

• Landlords' and tenants' responsibilities from the Citizens Advice Bureau Opens new window

• Help with PDF files

Useful contacts

• Money, tax and benefits contacts