We look closer at HMRC's latest property income statistics for 2022/23. There may be a 'blip' but the stats indicate that property income received by partnerships appears to have fallen by £3.47 billion between 2021/22 and 2022/23. Despite that, overall property income received by all unincorporated landlords only fell by £1.96 billion, meaning that perhaps 2021/22 was a rogue year in terms of the statistics.
speculation over the cause of the changes: a mass of incorporations and divorces, or just the knock-on effect of COVID-19 affecting landlords' profits?
The first thing to note about HMRC's property income statistics is that they only show one section of the UK's property sector;. These are details of what has been reported under Self Assessment.
- Incorporated businesses with property income do not file Income Tax Self Assessment (ITSA) returns and as such are not included.
- The data does not cover company landlords or the property income of overseas entities.
The 2022/23 property rental statistics apparently reveal a major drop in the amount of rental income being declared under Self Assessment by partnerships.
A decrease in property income received by unincorporated businesses may be as expected: advisers have noted that the effect of the restriction on higher rate tax relief on the cost of finance for individuals has meant that many landlords have considered leaving the sector or Incorporating their property portfolios.
- Companies are not subject to the same restrictions as last year and there has been a noted increase in property companies showing up on the Companies House register.
- Analysis by estate agent Hamptons last year indicated a rise in new property companies at Companies House.
A decrease in partnership property income might indicate that landlords have been rushing to incorporate via a property partnership. Partnership incorporation has an added advantage: a partnership does not pay Stamp Duty Land Tax (SDLT) on incorporation (qualifying conditions must be met to make such a claim).
- A surge in Partnership Incorporation would produce an overall drop in total rental income for all unincorporated businesses.
- There is a drop but nothing of the magnitude of the change for partnerships.
The actual reasons for the changes could be the effect of the tumultuous years of the COVID-19 lockdowns: it may well be that a lot of rental income was just not collected during the pandemic in 2020/21 but was recovered later in 2021/22.
Of interest to tax policy setters are the numbers relating to Furnished Holiday Letting (FHL) which is being reformed from April 2025. FHLs account for less than 5% of all property rental income.
Supporters of reform of the FHL rules often express the hope that changing the regime may persuade landlords to sell off their second homes in places where locals cannot afford to buy. It's impossible to tell from the data, although it would seem, following the previous changes to the FHL rules that many holiday homes are rented without claiming FHL status.
Key statistics
Property Income (billions)
| Tax entity | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 |
| Individuals | 40.14 | 41.08 | 40.74 | 43.32 | 44.83 |
| Partnerships | 5.95 | 6.43 | 5.78 | 6.08 | 2.61 |
| Total | 46.09 | 47.51 | 46.52 | 49.40 | 47.44 |
Number of unincorporated landlords
| Tax entity | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 |
| Individuals | 2.75 | 2.78 | 2.78 | 2.83 | 2.81 |
| Partnerships | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 |
| Total | 2.78 | 2.81 | 2.81 | 2.86 | 2.84 |
Average property income (£)
| Tax entity | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 |
| Individuals | 14,600 | 14,800 | 14,600 | 15,300 | 15,900 |
| Partnerships | 201,500 | 215,300 | 194,200 | 205,500 | 102,400 |
| Total | 16,600 | 16,900 | 16,600 | 17,300 | 16,700 |
Number of FHLs (millions)
| Tax entity | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 |
| Furnished holiday lets | 0.10 | 0.11 | 0.11 | 0.12 | 0.13 |
Total FHL income declared (billions)
| Tax entity | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 |
| FHL | 1.37 | 1.52 | 1.74 | 2.50 | 2.29 |
Average rental income and expenses indicate that the number of landlords who will be mandated into Making Tax Digital for Income Tax Self Assessment will be low in number until the mandating thresholds are lowered.
| 2022/23 | No entities (millions) |
Income (billions) |
Average rental income (£) |
Total Expenses (billions) |
Average expenses (£) |
| Individuals | 2.81 | 44.83 | 15,900 | 21.56 | 8,700 |
| Partnerships | 0.03 | 2.61 | 102,400 | 1.43 | 73,400 |
| Total | 2.84 | 47.44 | 16,700 | 22.98 | 9,200 |
Number of taxpayers split by property income band
Note comments above on MTD for ITSA
| Property Income band | 2018/19 | 2019/20 | 2020/21 | 2021/22 | 2022/23 |
| £0-£10k | 1.59 | 1.58 | 1.58 | 1.54 | 1.47 |
| £10k-£20k | 0.70 | 0.73 | 0.74 | 0.78 | 0.80 |
| £20k-£30k | 0.24 | 0.25 | 0.25 | 0.27 | 0.28 |
| £30k-£40k | 0.10 | 0.11 | 0.11 | 0.12 | 0.13 |
| £40k-£50k | 0.05 | 0.06 | 0.06 | 0.06 | 0.07 |
| £50k-£60k | 0.03 | 0.03 | 0.03 | 0.04 | 0.04 |
| £60k-£70k | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 |
| £70k-£80k | 0.01 | 0.01 | 0.01 | 0.01 | 0.02 |
| £80k-£90k | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 |
| £90k-£100k | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 |
| over £100k | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 |
Useful guides on this topic
Land & Property: an Adviser's Tax Update 2024-25
Land and Property taxes: a comprehensive review of the sector offering a topical CPD update. Hot topics for Advisers include issues in respect of Incorporation relief, One to Many letters, Incorporation using hybrid models and changes to the Furnished Holiday Letting (FHL) regime.
Incorporation of a partnership: step by step
This guide explains step-by-step how to incorporate a partnership.
S.162 Incorporation Relief
Incorporation Relief is available to individuals. Gains from the disposal of business assets on incorporation can be deferred. What assets are included? How does the relief work?
Furnished Holiday Letting (FHL)
What is Furnished Holiday Letting? How do you qualify for Furnished Holiday Letting? What are the rules for Furnished Holiday Letting?
External links
