Your £900 less the interest part of the £1000 monthly mortgage payment will be taxed as income. There are other costs that you can claim against the income but I suspect that the mortgage interest will more or less mean that you'll not be paying extra tax because of the move. Some of the other allowable expenses are listed here but as far as I know you can't claim the rent on where you will be living.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10014027

Your mortgage lender will expect you to contact them to ask permission to let the property. They may charge a fee and/or suggest that you use a buy-to-let mortgage at some point. It's worth discussing the plan with them before making any final decision.

Hi,

I have bought a property last year and got monthly mortgage of £1000. Due to work reasons, I am moving to another location and planning to rent the purchased property. I am likely to get around £900 PCM rent (before all the fees, and expenses). Near to my new work place, I am planning to rent where I will have to pay around £950 PCM as rent.

Now, the net rental income is zero or negative to me. On top, I will be paying interest on the mortgage. Does this mean I dont have to pay tax on the rental income (of £900 PCM)? Or I have to show £900 as income, and show £950 as my rental expense when I file tax? How this works?

thanks.

SH