Your most-asked landlord questions on tax and insurance answered

Your most-asked landlord questions on tax and insurance answered
28th July 2022

Insurance and tax aren’t the most exciting topics, but they are two of the most important to understand. These are some of the top questions we get asked by landlords.

Do I need landlord insurance?

Insurers consider a tenanted property to be higher risk than an owner-occupied home so it’s definitely working getting landlord insurance. It’s important to be aware that if you only have standard home insurance for a property that you rent out, any claim is likely to be rejected, which could leave you significantly out of pocket.

What type of cover do I need?

Landlord insurance products are designed to be flexible and cover a range of issues so you can customise them to your specific type of let and tenant profile.

Most landlord policies include as standard:

  • Buildings insurance
  • Theft, fire and flood
  • Accidental damage
  • Property owner’s liability insurance to cover your costs if someone injures themselves in your property and seeks compensation

If not already included, it’s worth considering adding the following:

  • Malicious damage that might be caused by your tenant or visitors
  • Alternative accommodation costs if your tenants need to be temporarily re-homed following an insured event
  • Contents insurance for furnished properties 
  • Rent protection insurance
  • Home emergency cover

How much does landlord insurance cost?

The cost will vary. It will depend on the size and location of your property, the type of tenancy, optional extras you may have added, and your insurance history.

As a rough guide, to insure a 3-bed detached modern property that is let to working tenants, you can expect to pay between £500 and £700 a year / £42 to £58 a month for a landlord policy that includes liability insurance and loss of rent cover. For a modern 3-bed terrace, it would be between £300 and £500 a year / £25 to £42 a month.

Source: Quotes from 

What taxes do landlords have to pay?

Tax is very personal to your own circumstances. It isn’t just based on your property earnings, it’s applied across all your income and assets.

  1. Additional purchase tax. If the purchase means you’ll own more than one property, you have to pay a higher rate of tax. In England, it’s an additional 3% on top of standard Stamp Duty - and whereas the first £125,000 is tax-free for standard single property purchases, the higher rate applies to the whole purchase price, if you pay in excess of £40,000.

If you’re buying a property at £200,000, that’s £1,500 standard Stamp Duty (£75,000 x 2%) plus £6,000 higher rate tax (£200,000 x 3%).

  1. Income Tax. Your rental income is added to any other income you have and the whole amount - less the personal tax-free allowance (£12,570 until 2026) and any permitted deductions such as agent’s fees, repairs and maintenance - is liable to income tax. So it’s worth checking whether your income from property will take you into a higher-rate tax band before you buy.
  2. Capital Gains Tax. When you sell or pass on your rental property, any increase in the value since you bought it is liable to CGT – less your annual personal allowance (£12,300 for 2021/22 and 2022/23). If you’re a higher-rate tax payer, you’ll pay 28%. If you’re a basic-rate tax payer, the gain is added to your income, so be aware this may mean part of your income may be charged at the higher rate.

How do I find out what landlord tax I need to pay?

The best way to make sure you pay the right amount of tax is to consult a property tax specialist. By getting properly tailored advice, you’ll be able to judge what you’ll need to pay and when, so you can plan ahead.

When are tax payments due?

For landlords paying income tax via self-assessment, the deadline for payments is 31st January each year.

For the tax year 6th April 2021 to 5th April 2022, the deadlines for filing your return are:

  • 31st October 2022 for paper returns
  • 31st January 2023 for online returns

For more information on letting property, do get in touch with our experts. We're an introducer appointed representative of Bode Insurance Solutions who can provide you an instant landlord insurance quote.


Leaders Limited T/A Scottfraser is an introducer appointed representative of Bode Insurance Solutions (company no 03101637) Registered Address: Crowthorne House, Nine Mile Ride, Wokingham, Berkshire, RG40 3GZ. Bode Insurance Services Limited are authorised and regulated by the Financial Conduct Authority (FCA) under firm reference 313541. You may check this on the Financial Services Register by visiting the FCA’s website or by contacting the FCA on 0800 11 6768

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