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Do you need to register for VAT as a landlord?

A general guide, not advice, based on HMRC VAT Notices 742, 742A and 709/3.

How VAT applies to rental income

Type of lettingVAT treatmentCounts towards £90,000?
Residential homes and flats let as homesExemptNo
Holiday accommodationStandard-rated, 20%Yes
Commercial property, no option to taxExemptNo
Commercial property you have opted to taxStandard-rated, 20%Yes

Other things you charge for, such as separate parking or services, can have their own VAT treatment. HMRC's land and property guidance (VAT Notice 742) covers the detail.

When a landlord must register for VAT

  • Over the threshold: you must register if your taxable turnover goes over £90,000 in any rolling 12 months, or you expect it to go over in the next 30 days alone. Taxable turnover includes holiday lets, opted commercial rent and any other VAT-able sales from the same business.
  • Residential only: if all your income is exempt residential rent, you do not need to register, and you cannot register voluntarily, because you make no taxable supplies.
  • Below the threshold with some taxable income: you can register voluntarily, which lets you reclaim VAT on costs linked to that taxable income. You would then charge VAT on those supplies and file returns. See when to register for VAT.

Opting to tax commercial property

  • Opting to tax makes your rent on that property standard-rated, so you can reclaim VAT on the purchase, building work and running costs.
  • Your tenants pay VAT on the rent. Businesses that can reclaim VAT are usually unaffected. Tenants that cannot, such as some charities or insurers, pay more.
  • An option to tax usually lasts at least 20 years and can only be revoked in limited circumstances, so take advice before you opt.
  • You normally need to notify HMRC within 30 days of the decision.

What landlords can and cannot reclaim

  • Exempt rent: you cannot reclaim the VAT on costs linked to residential lets or unopted commercial property.
  • Taxable rent: you can reclaim VAT on costs linked to holiday lets and opted commercial property, with valid VAT invoices.
  • Mixed portfolios: VAT on shared costs, such as accountancy fees, may need to be split between taxable and exempt lettings under the partial exemption rules. Small amounts of exempt input tax can sometimes be reclaimed in full. HMRC's VAT Notice 706 explains the tests.

VAT returns and MTD for Income Tax

  • VAT-registered landlords keep digital records and file VAT returns through Making Tax Digital software, usually every quarter.
  • Making Tax Digital for Income Tax is separate. It applies to landlords and sole traders whose gross income from property and self-employment is over £50,000 (from April 2026), over £30,000 (from April 2027) or over £20,000 (from April 2028). It applies whether or not you are VAT registered.
  • The two need separate submissions, and you can use different software for each. See VAT returns during MTD for Income Tax.

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  1. Connect to HMRC on HMRC's own page with your Government Gateway sign-in. We never see that password.
  2. See your VAT periods, due dates, amounts owed and payments, read from HMRC.
  3. Upload your nine box totals as a CSV. Box 3 and Box 5 are worked out and every box is checked.
  4. Submit and keep HMRC's receipt. Reminder emails arrive before each due date.
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Final thoughts

For most landlords, VAT is not an issue: residential rent is exempt. If you have holiday lets or opted commercial property, keep track of that taxable income against the £90,000 threshold, and once registered, file your VAT returns through Making Tax Digital software.

Disclaimer: This guide gives general information, not advice for your business. Property VAT can be complex, especially for mixed portfolios and the option to tax. Speak to an accountant or contact HMRC before you make decisions.

Frequently asked questions

Checked against HMRC VAT Notices 742 (land and property), 742A (option to tax), 709/3 (holiday accommodation) and 706 (partial exemption), and GOV.UK VAT registration guidance. November 2026.

Do landlords charge VAT on rent?
Not on residential rent, which is exempt. Holiday accommodation is standard-rated, and commercial rent is exempt unless the landlord has opted to tax the property, in which case VAT is charged at 20%.

Does rental income count towards the VAT threshold?
Exempt residential rent does not count towards the £90,000 threshold. Holiday let income and rent from commercial property you have opted to tax do count, along with any other taxable sales.

Can a residential landlord register for VAT?
Not if all the income is exempt residential rent, because you need to make taxable supplies to register. A landlord with some taxable income, such as holiday lets, can register voluntarily below the threshold.

What is the option to tax?
A choice to charge VAT on rent or a sale of commercial property, so you can reclaim VAT on related costs. It usually lasts at least 20 years, can only be revoked in limited circumstances, and you normally notify HMRC within 30 days.

Is MTD for Income Tax the same as MTD for VAT?
No. MTD for Income Tax covers quarterly updates of property and self-employment income for those over the qualifying income threshold. MTD for VAT covers VAT returns for VAT-registered businesses. They are separate submissions.

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