Allowable expenses

Allowable expenses are the costs a landlord can deduct from rental income to arrive at the taxable profit for UK income tax. Deducting them reduces the tax bill: a landlord with £18,000 of rent and £5,000 of allowable expenses pays income tax on £13,000.

A cost is allowable when it passes two tests. It must be incurred wholly and exclusively for the letting business, and it must be a revenue cost that maintains the property rather than a capital cost that buys or improves it, as HMRC's guidance on working out your rental income explains. Repairs, letting agent fees and landlord insurance are typical allowable expenses. Mortgage interest is relieved through a separate tax credit rather than as an allowable expense.

For the full list of what landlords can claim in 2026/27, with the rule behind each category, see our guide to allowable expenses for landlords.

Frequently asked questions

What is the difference between allowable and non-allowable expenses?

Allowable expenses reduce taxable rental profit; non-allowable expenses do not. Capital improvements, purchase costs, mortgage capital repayments and personal spending are the main non-allowable costs.

Are allowable expenses the same as deductible expenses?

Yes. HMRC calls them allowable expenses, and accountants often call them deductible or tax-deductible expenses. The terms describe the same costs.