Allowable expenses for landlords: what you can claim | August

Allowable expenses for landlords: what you can claim

Allowable expenses are the costs a landlord can deduct from rental income before calculating the profit on which income tax is due. HMRC permits a deduction only for costs incurred wholly and exclusively for the rental business, and only where the cost is revenue rather than capital in nature. Get the categories right and you pay tax on your true profit; get them wrong and you either over-claim, which creates risk in an HMRC enquiry, or under-claim, which means paying tax you do not owe.

This guide sets out the complete list of allowable expenses for UK landlords, explains the rule that governs each category, and covers the common mistakes that lead to errors on self-assessment returns or to missed deductions. For a broader view of how rental profits are taxed, see our guide to how rental income is taxed in the UK.

The golden rule: wholly and exclusively

HMRC allows landlords to deduct costs incurred wholly and exclusively for the purposes of their rental business, a principle set out in HMRC's guidance on working out your rental income. This phrase is the foundation of everything that follows. If a cost has a dual purpose, partly personal and partly business, you can deduct only the business portion, and only if that portion can be clearly identified and quantified. If you cannot separate the two, the cost is not allowable.

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. The distinction between a repair and an improvement is one of the most important in landlord tax. Allowable repair and maintenance costs include:

• Fixing or replacing a boiler on a like-for-like basis.

• 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, such as 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, ongoing management fees of typically 8% to 15% of monthly rent, renewal fees, and charges for arranging repairs on your behalf.

3. Landlord insurance premiums

Premiums for landlord insurance taken out specifically for your rental property are allowable, including buildings insurance, contents insurance for furnished lettings, landlord liability insurance, rent guarantee insurance and legal expenses insurance. A standard home insurance policy on a property you live in is not deductible against rental income; the policy must relate to the rental activity.

4. Mortgage interest and finance costs

This is where many landlords trip up. Since the restriction under section 24 of the Finance (No. 2) Act 2015 was fully phased in from April 2020, individual landlords can no longer deduct mortgage interest directly from rental income. Instead they receive a tax credit equal to 20% of their finance costs, applied at the calculation stage rather than deducted from profit. The finance costs themselves are not an allowable expense in the traditional sense; they are handled separately in the self-assessment calculation.

Our rental income tax calculator applies this credit correctly: enter your rental income, finance costs and other income to see an estimated liability that reflects how HMRC actually treats mortgage interest. For a full explanation, 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 includes bills, those costs are deductible. You can deduct only the portion that relates to the rental period, not personal use, so apportion carefully where a property is also occupied by you.

6. Service charges and ground rent

For leasehold properties, service charges and ground rent paid to the freeholder are allowable. Where service charges include a sinking fund contribution, the position is more complex: the contribution is deductible only 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, including accountancy fees for preparing rental accounts and self-assessment returns, legal fees for drawing up tenancy agreements, legal fees for eviction proceedings where not capital in nature, and surveyor fees for assessing repair work. 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, including journeys to carry out inspections, meet contractors or collect keys. HMRC accepts either actual vehicle costs or the approved mileage rate of 45p per mile for the first 10,000 miles in a tax year and 25p thereafter. Our mileage expense calculator applies the correct rates automatically: enter the two postcodes and it maps the route, calculates the allowable claim and handles the rate change at 10,000 miles. 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, including online listing fees, newspaper advertisements and the cost of producing property particulars. Where a letting agent 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, apportioning any mixed personal and business cost.

11. Replacement of domestic items (furnished lettings)

For furnished or part-furnished properties, 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, carpets, curtains and blinds, crockery and kitchenware, and televisions.

The relief covers the cost of a modern equivalent, not an upgrade. As HMRC's worked examples show, if you replace a basic item with a premium model, only the cost of an equivalent standard replacement is deductible, adjusted for any disposal costs and any proceeds from selling the old item. You cannot claim the original purchase cost of these items, only replacements. This relief replaced the old wear and tear allowance, which gave 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, such as extensions, loft conversions and upgraded kitchens. These may reduce Capital Gains Tax on sale.

• Initial purchase costs, including solicitor fees, survey costs and Stamp Duty Land Tax paid when buying the property, which are capital costs.

• Personal expenses, unless the business portion can be clearly identified and quantified.

• Mortgage capital repayments, since only the interest element, subject to Section 24 rules, is relevant to the tax calculation.

• The original purchase of furniture or appliances, since only replacements qualify under Replacement of Domestic Items relief.

• Penalties and fines, which HMRC disallows because they arise from breaking the law.

Capital expenditure versus revenue expenditure

The distinction between capital and revenue expenditure is fundamental to landlord tax. Revenue expenditure, the day-to-day cost of running and maintaining the property, is deductible against rental income in the year it is incurred. Capital expenditure, which improves, enhances or extends the useful life of the asset, is not.

Some capital expenditure may qualify for capital allowances, a separate mechanism for relief on certain plant and machinery. Capital allowances are rarely available for the fabric of a residential property but may be relevant for commercial property or for some integrated appliances. When you sell, capital expenditure that has not been relieved elsewhere may be deductible in calculating your Capital Gains Tax liability, so keep records of all capital spending even where it cannot be offset against rental income now.

The £1,000 property allowance

If your total property income, meaning gross rent before expenses, is £1,000 or less in a tax year, you do not need to declare it to HMRC. This is the property income allowance. If your gross property income exceeds £1,000, you can either claim the £1,000 allowance as a flat deduction instead of actual expenses, or deduct your actual allowable expenses, but not both. For landlords with very low costs the flat allowance may produce a better result; for most landlords with a mortgage, agent fees or repair costs, actual expenses are significantly more valuable.

How to claim allowable expenses on your tax return

Landlord expenses are claimed through the UK Property (SA105) pages of your self-assessment return. HMRC provides separate boxes for the main categories, including property repairs and maintenance, legal and professional fees, cost of services, and other allowable property expenses. Finance costs such as 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, and an online return for a given tax year must be filed by 31 January the following year, which is also the deadline for paying any tax owed. If your rental business is complex, with multiple properties, a mix of furnished and unfurnished lettings, overseas property or property held in partnership, consider 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 a period after filing, and longer in cases of serious non-compliance, so 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, tenancy agreements and rent schedules, and correspondence with agents, contractors and tenants. A dedicated landlord bank account makes these records far easier to evidence; our guide to the best bank accounts for UK landlords covers the options.

From building August alongside thousands of self-managing landlords, we see the same pattern repeatedly: the landlords who claim every legitimate deduction are the ones who categorise costs as they go rather than reconstructing a year of receipts each January. Digital records are acceptable to HMRC and increasingly expected. From April 2026, landlords above the Making Tax Digital thresholds must keep digital records and submit quarterly updates using compatible software, and August's expense tracking stores every cost in HMRC-aligned categories ready for those submissions. For how the quarterly process works in full, see our complete guide to Making Tax Digital for landlords.

Allowable expenses for HMOs and multi-let properties

The same rules apply to Houses in Multiple Occupation and multi-let properties, but the management overhead is higher, so the range of deductible costs is broader. Common additional costs include HMO licence fees, communal area cleaning and gardening, internet and utility bills provided to tenants as part of the letting, and fire safety equipment maintenance, alarm testing and emergency lighting. In our experience, HMO landlords are also the group most likely to under-claim on communal running costs, because those bills arrive in the landlord's name and are easy to treat as personal rather than business expenses. Some HMO landlords engage contractors regularly or employ staff, in which case payroll costs, employer's National Insurance and pension contributions for qualifying workers may also be deductible.

Frequently asked questions

Can I claim mortgage interest as an allowable expense?

Not directly. Since April 2020, individual landlords cannot deduct mortgage interest from rental income. Instead you receive a tax credit worth 20% of your finance costs, applied against your income tax bill under Section 24. This means higher-rate and additional-rate taxpayers receive less relief than they did under the old deduction. Limited companies are not affected and can still deduct mortgage interest in full.

Can I claim a home office deduction if I manage my properties from home?

Yes, but the rules are strict. The space must be used exclusively for business during the periods you claim for, so a room that doubles as 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, and 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 could employ a family member at a genuine market rate for actual 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, which is allowable. If the property had no boiler before, or 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 a void period, when the property is between tenants but actively marketed, are generally deductible, including insurance, utility bills you are paying and mortgage interest subject to Section 24. Costs incurred while the property is not genuinely available for letting, for example during a renovation or personal use, may not be allowable.

Making the most of your landlord tax deductions

Allowable expenses are one of the most effective tools available to reduce a 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 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 and keep good records, and you will claim every legitimate deduction available to you. You can start tracking expenses with August for free for up to two properties.

For related reading, see our guides to how rental income is taxed in the UK and tax tips for landlords on what you can and cannot claim.

This article is intended for general informational purposes only and does not constitute legal, financial or tax advice. Tax rules change and individual circumstances vary, and the information reflects the position at the time of writing. Always seek independent professional advice before acting in relation to your tax affairs.