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TAX AND PENSIONS
Landlord allowable expenses explained
As a landlord, many costs are involved in preparing and maintaining a property.
But, some of these costs can be claimed as allowable expenses. This means you don’t have to pay tax on them when it’s time for your Self Assessment, saving you money.
This guide will cover what you can claim and how to get tax relief as a landlord.
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What are allowable expenses for landlords?
Allowable expenses for landlords can be tricky. The costs must be exclusively related to renting out the property, such as for repairing breakages or taking out landlord insurance.
If an expense benefits you personally, for example, a personal phone bill, you can’t claim it.
By keeping detailed records of expenses related to your business, you can claim them on your Self Assessment. This helps reduce the amount of tax you have to pay to HMRC.
Capital expenses vs. revenue expenses
Only revenue expenses can be claimed as allowable expenses on your Self Assessment tax return. Revenue expenses maintain the property but don’t increase its long-term value.
Revenue expenses
Help keep the property in a rentable condition, without improving it
Include everyday costs like essential repairs, cleaning, or utility bills
Can be deducted from your rental income during Self Assessment
Capital expenses
Add value to the property or enhance it beyond its original standards
Include long-term improvements, such as adding a house extension
Can’t be deducted, but could be claimable if you ever sell the property
It’s important to know the difference between revenue expenses and capital expenses. When replacing fixtures or furniture, replacements have to be like-for-like to qualify.
What can landlords claim tax relief for?
Here’s a list of allowable expenses that help a landlord run and maintain a property.
Ground rent and council tax
If you’re not the freeholder of the property – for example, you own and rent a flat in a large complex, but don’t own the building or land – you have to pay the freeholder ground rent.
You’ll also have to pay council tax between tenants. Both are allowable expenses.
If the property is a furnished holiday let, you’ll likely be paying the utility bills for the property. Or, you may have an agreement to pay certain bills, instead of your tenant.
Repair, maintenance, and renovation costs
Landlords can claim repair and maintenance costs as allowable expenses, as long as the work maintains the property in its current condition. For example, fixing broken appliances, repainting walls, or repairing leaks. However, home improvements are not deductible.
Replacements, such as a new shower or boiler, must be like-for-like to be allowable.
Also, if you buy a property that is unliveable, you can’t claim the costs of renovating it. But if something like roofing is damaged by wind during the tenancy, repairs can be claimed.
Property service fees
These include costs for services related to maintaining a property and include gardening, cleaning, or pest control. In short, anything that ensures the house is suitable for tenants.
If you need to dispose of old furniture or fixtures, you can claim back the pick-up costs.
Insurance costs
If you’re a landlord, it’s wise to take out building, contents and landlord liability insurance.
These help protect your property and its contents, should anything go wrong, such as theft or damage. If they’re related to your rental property, they’re an allowable expense.
You can also claim costs for joining landlord associations back on your tax return.
Professional services costs
Landlords can claim professional costs, such as for accountants or lawyers, as allowable expenses. However, they must relate purely to their rental business, such as handling legal matters related to tenancy agreements. Fees related to buying the property don’t count.
Letting agent fees
If you rent through a letting agency, there are various costs to pay for their services.
Letting agent fees cover finding tenants, conducting background checks and managing aspects of the property. These fees can be deducted from rental income to reduce tax.
Miscellaneous management and admin costs
These help with a range of small, but still essential, landlord responsibilities. For example, you can claim tax relief on landlord accounting software for managing tenant records.
If you conduct business from a home office, you may be able to include these costs:
Equipment
Utility bills
Mortgage
However, this can be complicated, and costs need to be carefully calculated. For example, knowing what percentage of electricity or square footage is used for your business.
If you work from home, having a simplified flat rate for allowable expenses could help.
New tenant advertising costs
Tenant advertising costs, such as for printed ads or property website fees, are deductible.
These costs are directly related to advertising your rental business, and they’re essential for finding tenants and keeping the property occupied. Claim them on your tax return.
Travel costs
Travel costs can only include travel related to the running of your rental business, for example, trips to visit tenants, oversee maintenance work, or inspect properties.
Using mileage tracking software can help track business-only trips and receipts.
What can’t landlords claim for?
It’s important to not include the below as allowable expenses, and seek advice if you’re unsure. HMRC can be strict on errors, and capital expenses aren’t always easy to spot.
Capital expenses – improvements to the property that increase its value, beyond just maintenance. This could include adding an extension or luxury fixtures.
Mortgage capital repayments – interest on loans for the property and fees for mortgage arrangement can’t be claimed, but you may receive a tax credit instead.
Costs related to buying – expenses related to purchasing the property, even if you intend to rent it, are not deductible. These could include legal or solicitor costs.
Own use of the property – if the property isn’t occupied by a tenant, for example, if you’re staying there in between lettings, costs for this period aren’t claimable.
Personal expenses – costs for personal phone calls, clothing bought for meeting tenants, or unrelated travel, can’t be logged and claimed as allowable expenses.
Property income allowance for landlords
Property income allowance allows landlords to earn up to £1,000 a year in rental income, without having to pay any tax to HMRC. Which is handy if you earn a small amount.
If your annual rental property income is over £1,000, you need to let HMRC know.
HMRC may need you to fill in a landlord Self Assessment tax return, and you’ll need to record and report your income if you earn between the below income thresholds.
£2,500 to £9,999 (after allowable expenses)
£10,000 or more (before allowable expenses)
There are also upcoming Making Tax Digital rules for landlords. From April 2026, landlords will have to record income and submit tax returns digitally, using approved software.
How to claim allowable expenses as a landlord
Keep detailed records of receipts and records of expenses related to running and maintaining your property, including all of the above allowable expenses.
Ensure that you’re categorising expenses and keeping business and personal costs separate. Some costs, like home office or phone bills, can be partially claimed.
If you earn over a certain threshold, you’ll need to fill in a Self Assessment form for HMRC. By registering, you’ll be able to declare your income and expenses.
Subtract your allowable expenses from your rental income to determine your taxable profit. This amount will be what is subject to tax payable to HMRC.
Fill in, submit, and pay your bill for Self Assessment before the deadline of 31st January. Leave plenty of time to avoid paying a late Self Assessment penalty.
Using accounting software like QuickBooks can help you track finances as a landlord.
Snap photos of receipts for expenses related to managing and maintaining your property, track mileage when visiting tenants, or connect your bank to keep track of payments.
Prepare for Self Assessment with QuickBooks
We can save you hours of admin time and help you save money on your Self Assessment bill. With Making Tax Digital on the horizon, it makes sense to switch to digital records too.
Frequently asked questions
Can I claim partial expenses?
Yes, you can claim partial expenses if part of the cost is related to running your rental property. For example, if part of a home office phone or internet bill is used for your rental business, you can claim the percentage as an allowable expense on Self Assessment.
Can I claim for mortgage interest on my properties?
Landlords can no longer claim mortgage interest as an allowable expense. But, landlords now receive a 20% tax credit on mortgage interest payments, which helps lower the overall tax owed. You won’t get a full deduction, but the tax credit still provides some relief.
What are common expenses missed by landlords?
Overlooked expenses can include mileage for property-related visits, legal fees for tenancy disputes, costs for property management software, or some home office expenses. Small repair and maintenance costs may seem insignificant but can add up over time.
The information on this website is provided free of charge and is intended to be helpful to a wide range of businesses. Because of its general nature the information cannot be taken as comprehensive and they do not constitute and should never be used as a substitute for legal, accounting, tax or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. Any reliance you place on information found on this site or linked to on other websites will be at your own risk.
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