Landlords can claim allowable expenses against rental income to reduce their tax bill. Deductible expenses include letting agent fees, repairs, insurance, ground rent, professional fees, and travel to properties. Since Section 24, mortgage interest is no longer deductible—you receive a 20% tax credit instead.
This guide lists all allowable landlord expenses and explains what you can and cannot claim.
How Landlord Expenses Work
Allowable expenses reduce your taxable rental profit:
Rental Profit = Rental Income − Allowable Expenses
You pay Income Tax on the profit at your marginal rate (20%, 40%, or 45%).
Important: Mortgage interest is handled separately under Section 24. It's not deducted from income—you receive a 20% tax credit instead.
Fully Deductible Expenses
These expenses reduce your rental income pound-for-pound:
Letting Agent Fees
| Expense | Allowable? | |---------|------------| | Management fees (% of rent) | Yes | | Tenant finding fees | Yes | | Rent collection fees | Yes | | Inventory costs | Yes | | Check-in/check-out fees | Yes |
Repairs and Maintenance
| Expense | Allowable? | |---------|------------| | Fixing broken boiler | Yes | | Repairing roof leaks | Yes | | Replacing broken windows (like-for-like) | Yes | | Repainting/redecorating | Yes | | Fixing plumbing issues | Yes | | Garden maintenance | Yes | | Cleaning between tenants | Yes | | Pest control | Yes |
Key rule: Repairs restore something to its original condition. Improvements upgrade beyond original spec.
Insurance
| Expense | Allowable? | |---------|------------| | Buildings insurance | Yes | | Contents insurance (if furnished) | Yes | | Landlord liability insurance | Yes | | Rent guarantee insurance | Yes | | Legal expenses insurance | Yes |
Ground Rent and Service Charges
| Expense | Allowable? | |---------|------------| | Ground rent (leasehold) | Yes | | Service charges | Yes | | Building management fees | Yes | | Sinking fund contributions | Yes (if revenue, not capital) |
Professional Fees
| Expense | Allowable? | |---------|------------| | Accountant fees | Yes | | Tax return preparation | Yes | | Legal fees for tenant disputes | Yes | | Legal fees for lease renewal | Yes | | Property valuation (for remortgage) | No | | Legal fees for property purchase | No (capital) |
Council Tax and Utilities
| Expense | Allowable? | |---------|------------| | Council tax (void periods) | Yes | | Council tax (if landlord pays) | Yes | | Water rates (if landlord pays) | Yes | | Electricity/gas (if landlord pays) | Yes |
Usually: Tenants pay council tax and utilities during their tenancy.
Advertising and Marketing
| Expense | Allowable? | |---------|------------| | Property listing fees | Yes | | Photography for listings | Yes | | Rightmove/Zoopla fees | Yes | | For-let signs | Yes |
Travel to Properties
| Expense | Allowable? | |---------|------------| | Mileage to inspect properties | Yes (45p/mile first 10k, then 25p) | | Mileage to meet tradespeople | Yes | | Mileage to meet tenants | Yes | | Travel to letting agent | Yes | | Travel abroad for overseas property | Yes |
Keep a mileage log recording date, destination, purpose, and miles.
Other Allowable Expenses
| Expense | Allowable? | |---------|------------| | Landlord association membership | Yes | | Property management software | Yes | | Safety certificates (gas, electrical) | Yes | | EPC certificates | Yes | | Bank charges on rental account | Yes | | Stationery and postage | Yes |
Mortgage Interest (Section 24)
Since April 2020, mortgage interest is not deductible from rental income. Instead, you receive a 20% tax credit.
How Section 24 Works
- Calculate rental profit without deducting mortgage interest
- Pay Income Tax on this full amount
- Receive a 20% tax credit on your mortgage interest
Example
| Item | Amount | |------|--------| | Rental income | £15,000 | | Allowable expenses | £3,000 | | Taxable rental profit | £12,000 | | Tax at 40% | £4,800 | | Mortgage interest paid | £6,000 | | Section 24 credit (20% × £6,000) | −£1,200 | | Final tax | £3,600 |
Impact: Higher-rate taxpayers receive only 20% relief on mortgage interest, not their 40% or 45% marginal rate.
Learn more: Section 24 Explained
Repairs vs Improvements
This distinction is crucial—get it wrong and HMRC may disallow claims.
Repairs (Deductible)
Repairs restore something to its original condition or replace like-for-like:
| Repair | Why It's Allowable | |--------|-------------------| | Replacing broken boiler with similar model | Like-for-like replacement | | Fixing roof tiles | Restoring to working condition | | Repainting walls | Maintenance of original finish | | Replacing worn carpets with similar quality | Like-for-like | | Fixing leaking pipes | Restoring function |
Improvements (Capital—Not Deductible)
Improvements enhance the property beyond its original state:
| Improvement | Why It's Not Allowable | |-------------|----------------------| | Adding a new room | Adds to property | | Converting loft to bedroom | Enhancement | | Installing central heating (where none existed) | Enhancement | | Upgrading basic kitchen to premium kitchen | Enhancement | | Adding double glazing | Enhancement | | Building an extension | Adds to property |
Capital expenditure: Not deductible from rental income, but may reduce Capital Gains Tax when you sell.
The Grey Area: Replacements
When replacing an item, the key question is: what was there before?
| Scenario | Treatment | |----------|-----------| | Replace single-glazed with double-glazed | Capital (improvement) | | Replace old double-glazing with new double-glazing | Revenue (repair) | | Replace basic boiler with basic boiler | Revenue (repair) | | Replace basic boiler with smart/premium system | Part revenue, part capital | | Replace like-for-like kitchen | Revenue (repair) | | Upgrade kitchen significantly | Capital (improvement) |
HMRC guidance: If an item is replaced with the nearest modern equivalent, it's typically a repair. Significant upgrades are capital.
Replacement of Domestic Items Relief
For furnished properties, you can claim the cost of replacing furnishings:
| Claimable | Not Claimable | |-----------|---------------| | Replacing old sofa with new sofa | Initial furnishing cost | | Replacing worn curtains | Upgrading curtains significantly | | Replacing broken bed | Additional furniture | | Replacing appliances (like-for-like) | Premium upgrades |
Calculation: Cost of new item, minus any proceeds from disposing of old item, minus any improvement element.
Note: This replaces the old Wear and Tear Allowance (10% of rent). You can only claim actual replacement costs now.
Expenses During Void Periods
When a property is empty between tenants:
| Expense | Allowable? | |---------|------------| | Council tax | Yes | | Utilities (keeping property heated) | Yes | | Insurance | Yes | | Repairs/maintenance | Yes | | Marketing to find new tenants | Yes | | Mortgage interest | Yes (for Section 24 credit) |
Void period expenses are deductible as long as you intend to re-let the property.
Pre-Letting Expenses
Expenses incurred before your first tenant:
| Expense | Allowable? | |---------|------------| | Repairs to make habitable | Possibly (if restoring, not improving) | | Professional fees for letting | Yes | | Advertising | Yes | | Accountant setup fees | Yes | | Property purchase costs | No (capital) | | Stamp duty | No (capital) |
Pre-letting repairs: If a property needs significant work before first letting, HMRC may argue this is capital (bringing to lettable standard, not maintaining). Minor repairs are usually allowed.
Multiple Properties
If you own several rental properties, they're treated as one property business:
- Combine all income
- Combine all expenses
- Loss on one property offsets profit on another
- File a single property income section (SA105)
Record keeping: Track expenses by property for your own analysis, but HMRC sees combined totals.
Expenses Record Keeping
What to Keep
For each expense:
- Receipt or invoice
- Proof of payment
- Date
- What property it relates to (if tracking individually)
- Category (repairs, insurance, etc.)
How Long to Keep
Keep records for 6 years after the tax year. HMRC can enquire within this period.
Organising Receipts
Options:
- Physical folder by property/year
- Digital scans in cloud storage
- Accounting software with receipt capture
Common Mistakes
1. Claiming Improvements as Repairs
Upgrading a kitchen is capital expenditure. Be honest about whether work is maintenance or enhancement.
2. Forgetting Section 24
Don't deduct mortgage interest from income—it's a separate tax credit calculation.
3. Missing Allowable Expenses
Many landlords miss:
- Mileage to properties
- Landlord association memberships
- Software subscriptions
- Bank charges
4. No Receipts
Without evidence, HMRC can disallow claims. Keep everything.
5. Claiming Personal Use
If you occasionally use the property personally (holiday home), apportion expenses. Only claim the rental portion.
Expense Categories for SA105
When completing the property pages of your Self Assessment:
| SA105 Category | What to Include | |----------------|-----------------| | Rent, rates, insurance, ground rents | Buildings insurance, ground rent, service charges | | Property repairs and maintenance | All repairs, decorating, garden maintenance | | Finance costs | For Section 24 tax credit calculation | | Legal, management, and other professional fees | Agent fees, accountant, legal | | Costs of services provided | Cleaning, utilities if landlord pays | | Other allowable property expenses | Travel, advertising, safety certificates |
Maximising Your Expense Claims
1. Review All Categories
Use this guide as a checklist. Are you claiming everything allowable?
2. Keep Detailed Records
The more organised your records, the less likely you'll miss expenses.
3. Separate Property Bank Account
Makes tracking income and expenses much simpler.
4. Use Software
Property accounting software tracks expenses and categorises correctly.
5. Plan Repairs Strategically
If you're a higher-rate taxpayer, repairs give 40% relief. Time larger repair jobs to maximise relief.
Track Landlord Expenses with TaxFolio
TaxFolio simplifies landlord expense tracking:
- Bank connection — import transactions automatically
- Property categorisation — track by property if needed
- Section 24 handling — mortgage interest calculated correctly
- SA105 categories — matches HMRC requirements
- Receipt storage — digital records for 6+ years
- Real-time tax — see how expenses reduce your bill
- From £69.99/year — built for UK landlords
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