What is the difference between allowable expenses and capital expenditure?

Allowable expenses are the day-to-day running costs of your rental property that you can deduct from your rental income before calculating tax. Things like insurance, repairs, letting agent fees, and utility bills. Capital expenditure covers larger improvements that add value to the property, such as extensions, conversions, or major renovations. HMRC treats them differently at tax time, so keeping them separate matters. August lets you tag each expense as day-to-day or capital when you log it, so your records are always ready for your return.