Gross or net: what a letting agent should report for a landlord

The two numbers

Take a flat let at £1,200 a month. You collect the rent, keep 10 per cent commission, pay a £90 plumbing bill out of it, and pay the landlord the rest.

• The tenant paid £1,200.
• Your commission was £120.
• The repair was £90.
• The landlord received £990.

Most landlord statements lead with £990, because that is the number the landlord cares about and the number that matches their bank.

HMRC wants three numbers, not one:

• Rent received: £1,200, as income.
• Professional fees: £120, as an expense.
• Repairs and maintenance: £90, as an expense.

Report £990 as income and you have understated the landlord's rent by £210 and their costs by £210 in the same breath.

Why the mistake survives

Because the tax usually comes out close. Understate income by £210 and expenses by £210 and the taxable profit is unchanged, so nothing looks wrong at the end of the year. The figures are still incorrect, and there are two places where it stops being harmless.

The threshold is tested on gross income

Whether a landlord is in Making Tax Digital at all is decided on income before costs. A landlord with £31,000 of rent and £2,800 of agent commission is above the £30,000 threshold for April 2027. Report them net at £28,200 and they look exempt. They are not, and the consequence of that error is a landlord who never files, rather than one who files imprecisely.

Finance costs are not a normal expense

Mortgage interest on residential property is not deducted from income. It is relieved separately as a basic rate credit. That means the income figure it is calculated against needs to be right in its own terms, and netting things off inside it produces the wrong answer rather than an offsetting one.

The short version. Never net anything off. Every pound the tenant paid is income. Every pound you took out is an expense with its own category. What the landlord actually received is a payment, not a tax figure.

What goes in which category

Quarterly updates for UK property use a fixed set of categories. The ones an agent touches most:

• Rent and other income from property. The full rent the tenant paid, before anything came out of it.
• Repairs and maintenance. Work restoring the property, including repairs you arranged and paid for from the rent.
• Professional fees. Your management commission, tenancy renewal fees, legal and accountancy costs.
• Rent, rates and insurance. Ground rent, service charges, landlord insurance.
• Cost of services provided. Services included in the rent, such as a gardener or a cleaner.
• Residential finance costs. Mortgage interest, kept separate because it is relieved differently.

Compliance certificates sit in this list too, and are frequently missed. A gas safety certificate or an electrical installation report is a deductible cost of letting the property. If the certificate lives in one system and the payment lives in another, the expense tends to go unclaimed.

What this means for your statements

A statement that supports correct reporting shows, per property, per period:

• Rent received in full.
• Each deduction on its own line, with a category, not rolled into a single “fees and costs” total.
• The amount paid over as a closing balance, clearly presented as a payment rather than as income.

That last distinction is worth being pedantic about. A statement headed “income” that shows the net figure is what teaches a landlord, or their accountant, to file the wrong number.

Filed Quarterly holds the gross rent, the deductions and the payment as separate figures, so the landlord statement and the quarterly update are drawn from the same records and cannot drift apart. See how the agent workflow fits together, or read the wider guide to Making Tax Digital for agents.