How to improve buy-to-let income
We can’t say it enough – every buy-to-let portfolio is different. Strategies that save tax or protect income for one landlord won’t necessarily work for another.
That said, there are lots of options you can consider. We take a look at some of the most common below, but be sure to get specialist advice before you rush into any of them!
Pension contributions and tax planning
As we explain in our guide to transferring rental property income between spouses and civil partners, the residential finance-cost restriction can increase taxable property profit and push part of a landlord’s income into a higher tax band.
In our example, a landlord who would previously have declared £5,400 of taxable property profit may now have taxable property profit of £13,800 before the finance-cost reduction. For 2026/27 in England, Wales and Northern Ireland, the standard Personal Allowance is £12,570 and the basic-rate band is £37,700. A person with the full allowance and no other adjustments normally begins paying higher-rate tax when total income exceeds £50,270. Scottish bands differ.
Increasing pension contributions may extend the basic-rate band or reduce adjusted net income, depending on how the contribution is made. Relief is limited by factors including relevant UK earnings and the annual allowance. Ordinary rental profit is not relevant UK earnings, so landlords should not assume that property income alone supports a large relievable personal contribution. Consider regulated financial advice on pensions as well as tax advice.
Borrowing against your home
You may pay a lower interest rate on borrowing secured on your home than on a buy-to-let mortgage. Some landlords therefore consider remortgaging their home to reduce buy-to-let debt. Compare the interest, arrangement fees, early repayment charges, term, repayment basis and tax treatment of both loans. For Income Tax, the use of the borrowed money – not the property used as security – normally determines whether the interest relates to the property business; the residential finance-cost restriction can still apply. Your home is at risk if repayments are not maintained, so obtain any required consent from the lenders and take regulated mortgage advice.
Review the rent
You could increase income by raising rents, but the proposed rent should reflect the open market and the correct legal process must be followed. For assured periodic tenancies in England from 1st May 2026, rent can normally be increased only once a year and not during the first year. The landlord must use the section 13 process, give the tenant Form 4A and provide at least two months' notice. A tenant can challenge a proposed increase that is above the open-market rent. Rules elsewhere in the UK differ. Review affordability, tenant retention, void risk and local evidence rather than applying inflation automatically.
Get an accountant who understands buy-to-let
This is so important, especially given the huge numbers of tax changes affecting the buy-to-let market over recent years. Make sure your accountant has a good track record of advising landlords accurately and explaining both tax savings and risks – and if they haven’t, find a new one that has!
Consider short-term letting
Consider short-term letting only if it makes commercial and operational sense. The special furnished holiday lettings tax regime ended on 1st April 2025 for Corporation Tax and on 6th April 2025 for Income Tax and Capital Gains Tax. Former furnished holiday letting income and gains are now generally treated in line with other property businesses, including the residential finance-cost restriction for individuals where applicable.
Before changing use, model occupancy, platform fees, cleaning, utilities, insurance, management time and seasonality. Check the planning, lease, mortgage, safety, business rates or council tax, and VAT implications too.
Review your letting agent
If you’ve used the same letting agent for a long time, compare their fees and service with those of other agents. Check reviews, ask what each fee covers and meet the strongest candidates. If you have several properties, ask whether a portfolio rate is available.
Another option is to manage the letting yourself. Make sure you have enough time and reliable systems to meet your legal duties. Using an agent does not remove the landlord's legal responsibilities, so agree who will handle each task and check that the property has suitable insurance.
More in this series:
- Making Buy-to-Let More Profitable
- Why Buy-to-Let Profits are Under Pressure
- Should I transfer my BTL properties into a limited company?
- Could transferring rental property to your spouse or civil partner reduce your tax bill?
- How to improve Buy-to-Let income
- Personal Buy-to-Let mortgages & re-mortgages – the facts
- Selling a buy-to-let property: tax points to check
- How THP can help you as a Landlord
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How THP can help you as a Landlord
The information included on this page should be regarded as general advice only. You should always seek professional advice tailored to your own specific circumstances before taking any action based upon it.
