Do landlords pay tax on a deposit they keep?

Do landlords pay tax on a deposit they keep? Yes, on the part you keep, in the tax year you become entitled to keep it, such as 2026-27. While the deposit is protected it is not your income, and a repair it pays for nets off against it. No. HMRC's manual says the deposit is still legally the tenant's for the length of the tenancy, whether it sits in a custodial or an insured scheme. Under the cash basis, only the part you become legally entitled to keep at the end counts. Only the part the deposit did not cover. GOV.UK says that if you keep your tenant's deposit to cover damage, you can only claim repair costs above the amount you kept. Yes, in our reading. It is rent you had not received, and under the cash basis HMRC's manual counts rent when it is paid, so it counts when you become entitled to keep that part of the deposit. Read the full answer, with every source, at rightotax.co.uk.