Revenue Expenses
Revenue expenses are the day-to-day running costs of your rental business. In other words, the recurring spending needed to keep a property in rentable condition, as opposed to one-off capital improvements. They are usually deductible against rental income for income tax or corporation tax.
From a landlord’s perspective, typical revenue expenses include:
Routine repairs and tenant reported maintenance. For example fixing a boiler, mending a roof leak, repainting.
Agents’ fees, accountancy costs and legal fees for things like chasing arrears.
Insurance (landlord buildings/contents, rent guarantee) and safety checks.
Replacement of domestic items on a like-for-like basis. for example, swapping a worn fridge for a similar one), and small consumables such as smoke-alarm batteries.
In contrast, capital improvements, such as adding an extension, converting a loft, or installing an entirely new heating system where none existed, are not revenue expenses. They are treated as capital costs, affecting capital gains calculations rather than this year’s rental profit.
Under the Renters’ Rights Act, tighter rental standards, Awaab’s Law duties and higher energy efficiency expectations mean landlords are likely to face more ongoing revenue spending on inspections, repairs and compliance. These remain normal business costs and you cannot pass them to tenants as separate “fees” if they fall outside the list of permitted payments, but you can reflect them in how you set and review rent. See our expenses feature in August.
Also see our free landlord blog articles.
