Deductible Expenses

A deductible expense is a cost of running your rental business that you can offset against rental income when working out your taxable profit for income tax or corporation tax. It reduces the profit you pay tax on, but is not refunded to you by HMRC.

Deductible expenses usually include:

Routine repairs and maintenance, including fixing leaks, servicing boilers, repainting.
Agents’ fees, accountancy and some legal costs related to the letting.
Landlord insurance premiums for landlord policies.
Replacement of domestic items on a like for like basis.
Allowable travel and office costs linked to managing the property.

They do not normally include capital improvements. For example, adding an extension, full refurbishments that significantly upgrade the property, or structural changes. Those are usually treated as capital costs, relevant for future capital gains tax rather than an immediate deduction.

Under the Renters’ Rights Act, increased spending on safety, rental standards, energy efficiency and damp and mould duties will often be deductible expenses, but you still cannot pass them to tenants as separate “fees” unless they fall within the narrow list of permitted payments. See our expenses feature and how we help making tax digital for landlords in August.