This is one of the most common questions Landlords ask.
“The rent is small.”
“It barely covers the costs.”
“Surely HMRC aren’t interested?”
Unfortunately, size alone does not decide whether rental income needs to be declared.
🎥 If you prefer to watch rather than read, this video explains whether small amounts of rental income still need to be declared to HMRC and the common misconceptions Landlords have.
You can continue reading the full written guide below.
1. There is no ‘too small to declare’ rule
HMRC do not operate a general “ignore it if it’s small” rule.
If rental income exists, HMRC expect you to:
- assess whether it is taxable
- report it where required
Whether tax is actually due comes after that Assessment.
2. Why this misunderstanding is so common
This assumption often arises where:
- someone is employed under PAYE
- the property was inherited
- only one room is rented
- the letting feels informal or temporary
In most cases, there is no intention to do anything wrong.
3. What matters more than the amount
HMRC look at:
- whether rental income exists
- whether it has been considered properly
- whether reporting obligations were met
A small amount that is not declared can still cause issues if HMRC later identify it.
4. Losses and low profits
Even where:
- Expenses exceed income, or
- Profits are minimal
HMRC may still expect:
- the rental income to be reported
- losses to be recorded
Losses don’t remove the reporting requirement.
Even where rental income results in a loss, HMRC may still expect a Tax Return, which I explain in my guide on Rental Property Losses and Tax Returns.
5. PAYE does not cover rental income
Employment income taxed through PAYE does not automatically include rental income.
This catches many people out, especially first-time or accidental Landlords.
Many people assume HMRC aren’t interested because the income is small, but silence does not mean approval, which I explain in my guide on What it means if You Never Received a Letter from HMRC.
Final word
The question isn’t “is the rent small?”
The real question is:
Was the rental income assessed and reported correctly?
If you’re unsure, it’s better to clarify now than assume HMRC aren’t interested.
Unsure where you stand?
Rental income rules are often misunderstood, especially for PAYE taxpayers and accidental landlords.
If you’d like clarity on your position, you can contact us to discuss your circumstances.