Property licences for landlords: costs, records and tax

acrenvo.com/guides/property-licence-costs-and-records, last reviewed 20 October 2026

Owen is fictional, but his position is common among landlords who let by the room. He owns a five-bedroom house let to five sharers who are not related, and his council licence for it runs out next spring. He knows he must renew it, but he wants to be clear about how long a licence lasts, what the council expects in the meantime, and how the fee should go into his records for Making Tax Digital (MTD) for Income Tax. This guide covers those points for landlords in England.

When a property needs a licence

Licensing is mostly about houses in multiple occupation (HMOs), and the starting point is the council. GOV.UK’s HMO licence page, last updated on 19 July 2023 and read again on 20 October 2026, says: “If you want to rent out your property as a house in multiple occupation in England or Wales you must contact your council to check if you need a licence.” It goes on: “You must have a licence if you’re renting out a large HMO in England or Wales.” and “Your property is defined as a large HMO if all of the following apply:”

• it is rented to 5 or more people who form more than 1 household
• some or all tenants share toilet, bathroom or kitchen facilities
• at least 1 tenant pays rent (or their employer pays it for them)

A property outside that definition may still need one. GOV.UK says: “Even if your property is smaller and rented to fewer people, you may still need a licence depending on the area. Check with your council.” The law behind both kinds of scheme is the Housing Act 2004, Parts 2 and 3.

How long a licence lasts

A licence runs for a set period and then has to be renewed. GOV.UK says: “A licence is valid for a maximum of 5 years.” It adds: “You must renew your licence before it runs out.” and “You need a separate licence for each HMO you run.”

Use the expiry date printed on the licence. Mandatory HMO licensing and local additional or selective schemes have different coverage, so confirm the requirement with the council. For Owen, the expiry date on his licence is also the date the compliance tracker asks for, so his reminder comes round before the licence lapses.

What a licence asks of you in the meantime

A licence comes with conditions, and some of them overlap with the other checks in this series. GOV.UK lists these among them:

• send the council an updated gas safety certificate every year
• install and maintain smoke alarms
• provide safety certificates for all electrical appliances when requested

So Owen sends the council his gas safety record each year as well as giving his tenants their copies, and he keeps a note of when he did it. The guide to gas safety checks explains how long to keep that record.

What a licence costs

There is no national price for a licence. GOV.UK says: “You’ll be charged a fee which is set by the council.” Because each council sets its own, your council’s website is the place to find what it charges, and we do not state a figure here.

How the fee is treated for tax

GOV.UK’s guidance on working out rental income does not mention licence fees by name. What it gives is a general rule: “You can deduct expenses from your rental income when you work out your taxable rental profit as long as they are wholly and exclusively for the purposes of renting out the property.”

Work the council asks for as a licence condition is judged in the same way as any other work on the property: “Allowable expenses include the costs of maintenance and repairs to the property (but not ‘capital’ improvements).” and “Capital expenses are not allowable and cannot be claimed against your rental income but you should keep records of them as you might be able to set them against Capital Gains Tax if you sell the property in the future.” Fines follow a rule of their own, and HMRC’s manual says: “A customer can’t deduct the cost of a fine incurred as a result of their breach of the law.” If you are unsure how these rules apply to your licence fee, or whether a council penalty is treated the same way, HMRC or a tax adviser can tell you.

One email a month lists the MTD software price changes we have checked and any changes to HMRC’s list of software. If that would be useful, you can sign up for the monthly price-changes email at the end of this page.

Recording the fee under Making Tax Digital

The council’s receipt becomes a digital record in your software. GOV.UK says: “When you create records of your income or expenses, you will need to record the:”

• amount
• date when the income was received or expenses incurred
• category (the type of category you use depends on the type of business you have)

It adds: “Making Tax Digital for Income Tax uses the same categories of income and expenses as Self Assessment.” GOV.UK does not say which category a licence fee belongs in, so use the one you would use on your Self Assessment return. Keep the licence, the council’s receipt and any letters about conditions together. For tax purposes, GOV.UK says: “You will need to keep your digital records for at least 5 years after the 31 January submission deadline for a tax year. This is the same amount of time you need to keep records for Self Assessment.” The guide to MTD digital records explains what each record needs.

If your property is outside England

This guide covers England. GOV.UK’s HMO licence page applies to England and Wales, and its guide to renting out a property says there are different rules for landlords in Scotland and for landlords in Northern Ireland.

The other recurring checks

• Gas safety checks for landlords: costs, records and tax
• Electrical safety reports (EICR) for landlords: costs, records and tax
• Energy Performance Certificates for landlords: costs, records and tax
• Tenancy deposit protection for landlords: costs, records and tax
• Smoke and carbon monoxide alarms for landlords: records and tax

The compliance tracker keeps the dates for all of these checks together, property by property.

Questions about property licences