If you own rental property in Glasgow, your tax position in 2026/27 is significantly more complex than it was five years ago. HMRC has intensified enforcement activity targeting undeclared rental income across Scotland, Making Tax Digital for Income Tax is now live for landlords with higher qualifying income, and Scotland’s income tax rates sit above the UK average at most income levels — all at the same time.
This guide covers everything Glasgow landlords need to understand about rental income tax in 2026/27, written in plain English by 1341 Accountancy on West George Street in Glasgow.

How Rental Income Is Taxed for Glasgow Landlords

Rental income in the UK is taxed as property income at your marginal rate of Income Tax. As a Glasgow landlord, that means you are subject to Scottish Income Tax rates, which are different from the rates paid by landlords in England, Wales, and Northern Ireland, and are higher at most income levels above basic rate.

Your taxable rental profit is calculated as your total rental income received in the tax year, minus allowable expenses incurred wholly and exclusively for the rental business. The resulting profit is added to any other income you earn and taxed at your marginal rate.

For 2026/27, the Scottish Income Tax rates relevant to most landlords are: starter rate of 19% on income from £12,571 to £15,397; basic rate of 20% from £15,397 to £27,491; intermediate rate of 21% from £27,491 to £43,662; higher rate of 42% from £43,662 to £75,000; and advanced rate of 45% from £75,000 to £125,140.

Glasgow landlords paying the 42% higher rate face a significantly larger tax bill on the same rental profit than equivalent landlords in England paying 40%. This makes professional tax planning particularly valuable for Scottish property investors.

The Property Income Allowance

Every UK landlord is entitled to a Property Income Allowance of £1,000 per tax year. If your total gross rental income is below £1,000, you do not need to declare it to HMRC and no tax is due. If your rental income is above £1,000, you must declare it — but you can choose to deduct the £1,000 allowance instead of calculating actual expenses, whichever gives you the better result.

For most Glasgow landlords with mortgages, management agents, or ongoing maintenance costs, claiming actual expenses will produce a much lower tax bill than the £1,000 allowance. The allowance is primarily useful for landlords with very low rental income and minimal expenses.

Section 24 — The Mortgage Interest Restriction That Still Affects Glasgow Landlords

Since April 2020, landlords can no longer deduct mortgage interest from their rental income as a full expense. Instead, they receive a basic rate tax credit of 20% on their mortgage interest costs, applied against their final tax bill after it has been calculated at their marginal rate.

For a Glasgow landlord paying the 42% Scottish higher rate, this is the single most financially damaging change in the history of buy-to-let taxation in Scotland. Before Section 24, a landlord earning £15,000 rent with £8,000 mortgage interest paid tax on £7,000 profit at their marginal rate. After Section 24, the same landlord pays tax on the full £15,000 rental income at 42%, then receives only a 20% credit on the £8,000 interest. The effective tax on the same economic situation is dramatically higher, and in some cases landlords with leveraged portfolios are paying tax on losses.

If Section 24 is affecting your rental income tax position, speak to 1341 Accountancy about your specific Glasgow property portfolio — visit our Landlord Services page

What Expenses Can Glasgow Landlords Claim?

The following expenses are allowable against rental income, provided they are incurred wholly and exclusively for the rental business:

• Letting agent and management fees, fully claimable in the year charged
• Maintenance and repairs that restore a property to its original condition (improvements that add value are not claimable)
• Buildings and contents insurance for the rental property
• Ground rent and service charges on leasehold properties
• Accountancy fees directly related to your rental income
• Advertising costs for finding tenants
• Utility bills you pay as the landlord during void periods
• Travel to and from the rental property for genuine business purposes
• Mortgage interest, as a 20% basic rate credit rather than a deduction under Section 24

What you cannot claim:

• Capital improvements that add value to the property
• Personal expenses unrelated to the rental business
• The full mortgage interest as a deduction; only the 20% credit applies

Making Tax Digital for Landlords in Glasgow

From 6 April 2026, Making Tax Digital for Income Tax is live for landlords whose qualifying gross income from property and self-employment combined exceeded £50,000 in the 2024/25 tax year.

If this applies to you, you are now required to keep digital records of all rental income and expenses using HMRC-approved accounting software, submit quarterly digital updates to HMRC through that software four times per year, and submit a Final Declaration at the end of the tax year replacing the traditional Self Assessment return.

The threshold drops to £30,000 from April 2027 and to £20,000 from April 2028. If your gross rental income is approaching these thresholds, getting the right software and systems in place now is significantly easier than doing it in a rush when compliance becomes mandatory.

HMRC has confirmed that paper records and spreadsheets are not MTD-compliant. Landlords in scope must use approved software such as Xero, QuickBooks, or FreeAgent. Submitting quarterly updates through the HMRC website is not an option.

1341 Accountancy helps Glasgow landlords get set up for Making Tax Digital — visit our Making Tax Digital page

HMRC Enforcement — Why Glasgow Landlords Need to Get This Right Now

HMRC’s Let Property Campaign has collected nearly £250 million from landlords who failed to properly declare rental income across the UK over the past decade. Enforcement activity targeting Scottish landlords has intensified in 2026, with Glasgow identified as a high-priority market.

The risk for Glasgow landlords is higher than many realise because HMRC now has access to Registers of Scotland data, Land and Buildings Transaction Tax records, and third-party data from letting agents and property platforms. Undeclared rental income in Glasgow is increasingly easy for HMRC to identify.

If you have rental income that has not been declared in previous years, the Let Property Campaign allows voluntary disclosure with reduced penalties. The earlier you come forward, the lower the penalty. Waiting for HMRC to find you results in significantly larger penalties and, in serious cases, criminal prosecution.

If you have undeclared rental income or you are not sure whether your property income has been reported correctly, contact 1341 Accountancy for a confidential initial consultation 

Reporting Rental Income Through Self Assessment

Landlords who are not in scope for Making Tax Digital must still report their rental income through Self Assessment. Key deadlines for the 2026/27 tax year: 5 October 2027 to register for Self Assessment if not already registered; 31 October 2027 for paper returns; 31 January 2028 for online returns and payment of tax owed; 31 July 2028 for the second payment on account.

Missing the 31 January deadline results in an automatic £100 penalty regardless of whether any tax is owed. Penalties escalate the longer the return remains outstanding.

Do Glasgow Landlords Need an Accountant?

You are not legally required to use an accountant to file rental income through Self Assessment. However, given the complexity of Section 24, the new Scottish income tax bands, Making Tax Digital requirements, and the increased HMRC enforcement activity targeting Glasgow landlords, professional support is more valuable than ever.

A Glasgow accountant specialising in property income will calculate your tax bill correctly, ensure you claim every allowable expense, advise on the most tax-efficient way to hold your portfolio, and manage your MTD obligations if you are in scope. For most Glasgow landlords with leveraged properties, the tax savings from proper expense claims and planning more than cover the accountancy fee.

Book a free 30-minute consultation with Laura and Emma at 1341 Accountancy — specialist landlord accounting support in Glasgow