Allowable Expenses

Allowable expenses are costs a landlord can legitimately deduct from rental income when working out their taxable profit for UK income or corporation tax. They do not usually affect how much rent a tenant pays month to month, but they can influence a landlord’s finances and decisions.

Typical allowable expenses include letting and management fees, landlord insurance, routine repairs and maintenance, replacement of domestic items (such as white goods and furniture on a like-for-like basis), safety checks, some travel related to managing the property, and a proportion of accountancy and professional fees. Capital improvements, for example, an extension or a new loft conversion, are not normally allowable as day-to-day expenses, although they may be relevant for capital gains tax.

For renters, allowable expenses mainly matter indirectly. They can affect a landlord’s tax bill and, over time, the viability of a tenancy business, but landlords cannot simply pass every cost through as a “fee” to the tenant.