Tax & Accountancy
Allowable expenses for landlords: the full list
Every pound you spend running your rental property and cannot claim as a tax deduction is a pound on which you pay income tax unnecessarily. Yet many landlords either over-claim, which creates risk with HMRC, or under-claim, which costs them money. This article sets out the complete list of allowable expenses for UK landlords, explains the rules that govern each category, and covers the common mistakes that lead to either errors on self-assessment returns or missed deductions.
The golden rule: wholly and exclusively
HMRC allows landlords to deduct costs that are incurred ‘wholly and exclusively’ for the purposes of their rental business. This phrase is the foundation of everything that follows. If a cost has a dual purpose, partly personal, partly business, you can only deduct the business portion, and only if that portion can be clearly identified and quantified. If you cannot separate them, the cost is not allowable.
For a broader overview of how rental profits are taxed, see our guide to how rental income is taxed in the UK.
The full list of allowable landlord expenses
1. Repairs and maintenance
The cost of repairing and maintaining your rental property is fully deductible, provided the work restores the property to its original condition rather than improving it. This distinction between repair, allowable expenses, and improvement, capital expenditure, not allowable against rental income is one of the most important in landlord tax.
Allowable repair and maintenance costs include:
Fixing a broken boiler or replacing a boiler like-for-like.
Repairing a leaking roof or replacing damaged tiles.
Repointing brickwork or repairing render.
Fixing broken windows, doors, guttering, or pipework.
Redecorating between tenancies.
Replacing worn carpets or flooring on a like-for-like basis.
Pest control and damp treatment.
Work that upgrades the property, for example, replacing a standard kitchen with a high-specification one, installing an extension, or converting a loft, is capital expenditure and cannot be deducted from rental income. It may however be taken into account when calculating Capital Gains Tax on a future sale.
2. Letting agent and property management fees
If you use a letting agent to find tenants, manage the tenancy, or both, their fees are fully deductible. This includes tenant-find fees (typically a percentage of the first month’s rent), ongoing management fees (typically 8 to 15% of monthly rent), renewal fees, and any charges for arranging repairs on your behalf.
August’s expense tracking tools make it straightforward to log agent fees as they are charged and categorise them correctly for your self-assessment return.
3. Landlord insurance premiums
Premiums for landlord insurance taken out specifically for your rental property are allowable. This includes:
Buildings insurance.
Contents insurance (for furnished lettings).
Landlord liability insurance.
Rent guarantee insurance.
Legal expenses insurance.
A standard home insurance policy taken out on a property you live in is not deductible against rental income. The policy must relate to the rental activity.
Like buildings insurance and public liability cover, rent guarantee insurance premiums are fully deductible against rental income, making it one of the more cost-effective risk management tools available to buy-to-let landlords.
4. Mortgage interest and finance costs
This is where many landlords trip up. Since Section 24 was fully phased in from April 2020, individual landlords can no longer deduct mortgage interest directly from rental income. Instead, they receive a mortgage interest relief tax credit equal to 20% of their finance costs. The finance costs themselves are not an allowable expense in the traditional sense, they are handled separately in the self-assessment calculation.
For a full explanation of how this works and how to minimise the impact, see our guide to Section 24 tax.
5. Utility bills and council tax
If you pay utility bills or council tax on behalf of your tenants, for example, during void periods or because the tenancy agreement includes bills, those costs are deductible. You can only deduct the portion that relates to the rental period, not personal use. If you pay bills on a property you also occupy, you need to apportion the costs carefully.
6. Service charges and ground rent
For leasehold properties, service charges and ground rent paid to the freeholder are allowable expenses. If service charges include a sinking fund contribution, the position is more complex. The contribution is only deductible when it is actually spent on repairs, not when it is set aside.
7. Professional fees
A range of professional fees incurred in connection with the rental business are deductible:
Accountancy fees for preparing rental accounts and self-assessment returns.
Legal fees for drawing up tenancy agreements.
Legal fees for eviction proceedings (where not of a capital nature).
Surveyor fees for assessing repair work.
Selective licensing application fees are a deductible allowable expense.
Legal fees incurred in purchasing a property or taking out a new mortgage are capital costs and are not deductible against rental income.
8. Travel expenses
Travel costs incurred wholly and exclusively for your rental business are allowable. This includes travelling to the property to carry out inspections, meet contractors, or collect keys from outgoing tenants. HMRC accepts either actual vehicle costs or the approved mileage rate (45p per mile for the first 10,000 miles in a tax year, 25p thereafter).
Travel from your home to the property is allowable if the property is a place of business. However, if you have an office elsewhere and visit the property occasionally, the position may be less clear. Keep mileage logs with dates, destinations, and business purposes.
9. Advertising and tenant-finding costs
The cost of advertising a property to find new tenants is deductible. This includes online listing fees, newspaper advertisements, and the cost of producing a property particulars brochure. If you use a letting agent who charges a separate tenant-finding fee, that is covered under agent fees above.
10. Stationery, postage, and administration
The cost of stationery, postage, and telephone calls made exclusively for the rental business are allowable. If you use a dedicated phone line or a portion of your broadband for rental management, you may be able to claim the business proportion. If the cost is mixed (personal and business), you must apportion it.
11. Replacement of domestic items (furnished lettings)
For furnished or part-furnished rental properties, the Replacement of Domestic Items relief allows you to deduct the cost of replacing moveable household items on a like-for-like basis. Qualifying items include:
Beds, sofas, and other furniture.
White goods (washing machines, fridges, dishwashers).
Carpets, curtains, and blinds.
Crockery, cutlery, and kitchenware.
Televisions.
The relief covers the cost of a modern equivalent replacement, not an upgrade. If you replace a standard fridge with a premium American-style model, only the cost of a standard replacement is deductible, the excess is not. You cannot claim the original purchase cost of these items, only replacements.
Note: this relief replaced the old ‘wear and tear allowance’ which allowed a flat 10% of net rents regardless of actual spending.
12. Costs incurred before the tenancy begins
Pre-letting expenses incurred to get a property ready for its first letting can sometimes be deductible. HMRC applies the ‘wholly and exclusively’ test and requires that the property was genuinely available for letting during the period in question. Costs incurred during a prolonged period of personal use before a first letting are less likely to be allowable.
What landlords cannot claim
The following are not deductible against rental income:
Capital improvements - extensions, loft conversions, new kitchens that represent an upgrade. These may reduce CGT on sale.
Initial purchase costs - solicitor fees, survey costs, and SDLT paid when buying the property are capital costs.
Personal expenses - any costs that are partly or wholly personal cannot be claimed unless the business portion can be clearly identified.
Mortgage capital repayments - only the interest element (subject to Section 24 rules) is relevant to the tax calculation; capital repayments are not.
The original purchase of furniture or appliances - only replacements qualify under the Replacement of Domestic Items relief.
Penalties and fines - HMRC disallows costs that arise from breaking the law.
Capital expenditure vs revenue expenditure
The distinction between capital expenditure and revenue expenditure is fundamental to landlord tax. Revenue expenditure, the day-to-day costs of running and maintaining the property, is deductible against rental income in the year it is incurred. Capital expenditure – costs that improve, enhance, or extend the useful life of the asset, is not deductible against rental income.
Some capital expenditure may qualify for capital allowances, which are a separate mechanism for obtaining tax relief on certain types of capital spending, typically plant and machinery. Capital allowances are rarely available for the fabric of a residential property but may be relevant for commercial property or for items such as integrated appliances in some circumstances.
When you sell the property, capital expenditure that has not been relieved elsewhere may be deductible in calculating your Capital Gains Tax liability. Keep records of all capital spending even if it cannot be offset against rental income now.
The £1,000 property allowance
If your total property income (gross rent before expenses) is £1,000 or less in a tax year, you do not need to declare it to HMRC at all. This is the property income allowance.
If your gross property income exceeds £1,000, you have a choice. You can either claim the £1,000 allowance as a flat deduction, instead of actual expenses, or deduct your actual allowable expenses. You cannot do both. For landlords with very low expenses, the flat allowance may produce a better result. For most landlords with a mortgage, agent fees, or repair costs, actual expenses will be significantly more valuable.
How to claim allowable expenses on your tax return
Landlord expenses are claimed through the UK Property pages of your self-assessment tax return. HMRC provides separate boxes for the main expense categories: property repairs and maintenance, legal and professional fees, cost of services, and other allowable property expenses. Finance costs (e.g. mortgage interest) are entered separately and generate a 20% tax credit rather than being deducted from profit.
The tax year runs from 6 April to 5 April. Returns for a given tax year must be filed by 31 January the following year (online). The deadline for paying any tax owed is also 31 January.
If your rental business is complex, multiple properties, a mix of furnished and unfurnished, overseas properties, or property held in partnership, consider using an accountant who specialises in property. The cost is itself an allowable expense.
Record keeping for landlord expenses
HMRC can enquire into a self-assessment return for up to four years after filing, longer in cases of serious non-compliance. You should retain records of all income and expenses for at least five years after the filing deadline for the relevant tax year. Good records include:
Receipts and invoices for every expense claimed.
Bank statements showing payments.
Mileage logs for travel claims.
Tenancy agreements and rent schedules.
Correspondence with agents, contractors, and tenants.
Digital record-keeping is acceptable and increasingly preferred. Using property management software that categorises expenses automatically significantly reduces the administrative burden at tax time and makes HMRC enquiries far less stressful.
Allowable expenses for HMOs and multi-let properties
The same allowable expenses rules apply to Houses in Multiple Occupation (HMOs) and multi-let properties, but the management overhead tends to be higher – and therefore the range of deductible costs is broader. Common additional costs for HMO landlords include:
HMO licence fees (deductible as a property management cost).
Communal area cleaning and gardening.
Internet and utility bills provided to tenants as part of the letting.
Fire safety equipment maintenance, alarm testing, and emergency lighting.
Higher levels of wear-and-tear-related replacement costs.
Some HMO landlords also have employees or regularly engage contractors for whom they act as a hirers; in those cases payroll costs, employer’s NI, and pension contributions for qualifying workers may also be deductible.
Frequently asked questions
Can I claim a home office deduction if I manage my properties from home?
HMRC does allow a deduction for using part of your home as an office for your rental business, but the rules are strict. The space must be used exclusively for business during the periods you claim for. Using a room that is also a bedroom or living room does not qualify. Most landlords use HMRC’s simplified flat-rate method or apportion actual costs by floor area and time. The amounts involved are usually small.
Can I claim for time spent managing my properties?
No. Your own time is not an allowable expense for income tax purposes. You cannot charge your rental business for the hours you spend managing it. If you want to create a deductible cost, you could employ a family member at a genuine market rate for actual management work they perform, but this must be a real arrangement with proper documentation and PAYE compliance where required.
Can I deduct the cost of a new boiler?
It depends. If the old boiler was beyond economic repair and you are replacing it with a broadly equivalent model, HMRC generally treats it as a repair (allowable). If the property had no boiler before and you are installing one for the first time, or if you are significantly upgrading the heating system, it is more likely to be capital expenditure. The line between repair and improvement is fact-specific and worth checking with an accountant for significant costs.
Are void period costs deductible?
Costs incurred during void periods – when the property is between tenants but is actively being marketed – are generally deductible. This includes insurance, utility bills you are paying, and mortgage interest (subject to Section 24). Costs incurred during a period when the property is not genuinely available for letting (for example, while you are renovating it or using it personally) may not be allowable.
Making the most of your landlord tax deductions
Allowable expenses are one of the most effective tools available to reduce your rental tax bill, yet they are consistently under-used by landlords who either lack awareness of what qualifies or do not keep the records needed to support their claims. The key principles are straightforward: the cost must be wholly and exclusively for the rental business, it must be revenue rather than capital in nature, and you must be able to evidence it. Apply those tests consistently, keep good records, and you will be claiming every legitimate deduction available to you.
For related reading, see our guides to how rental income is taxed in the UK, Section 24 tax, and tax tips for landlords: what you can and can’t claim.
This article is intended for general informational purposes only and does not constitute legal, financial, or professional advice. Landlord and tenant law is subject to change, and the information in this article reflects the position at the time of writing. You should always seek independent legal or professional advice before taking any action in relation to your property or tenancy.
Author
August Team
The August editorial team lives and breathes rental property. They work closely with a panel of experienced landlords and industry partners across the UK, turning real-world portfolio and tenancy experience into clear, practical guidance for small landlords.
