Allowable expenses for landlords: what HMRC lets you claim
HMRC lists allowable expenses including general maintenance and repairs; water rates, council tax, gas and electricity; landlord insurance; services such as cleaners and gardeners; letting agent and management fees; some legal fees; accountant's fees; ground rent and service charges; direct costs such as phone calls, stationery and advertising; and the business share of vehicle costs [1]. You can't claim capital improvements, the capital part of mortgage payments, or personal costs [1]. Residential mortgage interest gets a basic-rate tax credit instead of a deduction [1].
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Allowable expenses for landlords are the costs you can deduct from your rental income to work out your taxable profit. HMRC's test is simple to state: the expense must be wholly and exclusively for the purposes of renting out the property [1]. Applying it is where landlords get stuck, so this guide sets out HMRC's own list, what's excluded, and the special rules for mortgage interest, repairs and replacing furniture.
The allowable expenses for landlords list
According to HMRC, if you pay for them yourself, you can deduct [1]:
| Expense | Notes |
|---|---|
| General maintenance and repairs | Not capital improvements. See landlord repairs tax deductible. |
| Water rates, council tax, gas and electricity | When you, not the tenant, pay them |
| Insurance | Landlord buildings, contents and public liability policies |
| Costs of services | Including wages of gardeners and cleaners |
| Letting agent and management fees | |
| Legal fees | For lets of a year or less, or renewing a lease of less than 50 years |
| Accountant's fees | |
| Rents, ground rents and service charges | Rents if you're sub-letting |
| Direct costs | Phone calls, stationery, advertising for new tenants |
| Vehicle running costs | Only the proportion used for the rental business, including mileage rate deductions |
You can also claim interest on a mortgage for a non-residential let property [1].
What landlords can't claim
HMRC says you can't deduct [1]:
- improvements or enhancements to the property, which are capital expenditure, unless they qualify for replacement of domestic items relief,
- the full mortgage payment: only the interest part can be considered,
- private phone calls,
- clothing, even for a property meeting,
- personal expenses not incurred solely for the rental business.
Capital costs aren't wasted, though. Keep records, because you may be able to set them against Capital Gains Tax when you sell [1].
Mortgage interest on residential lets
For residential property, Income Tax relief on finance costs is restricted to the basic rate [1]. Rather than deducting mortgage interest from rent, you get a tax reduction at the basic rate. This affects interest on mortgages, loans (including for furnishings) and overdrafts, plus fees for getting or repaying them [1]. Companies aren't affected [1].
Replacing furniture and appliances
You can't claim the initial cost of furnishing a let. But replacement of domestic items relief lets you deduct the cost of replacing items such as beds, wardrobes, curtains, carpets, fridges, televisions and kitchenware [1]. The old item must no longer be available to the tenant, and if the new one is an improvement, you can only claim the cost of an equivalent item [1]. HMRC's example: replacing a sofa with a sofa bed costing £550 when a sofa costs £400 means you claim £400 [1].
Small items such as cutlery, crockery, cushions and bed linen can be allowable as repairs if they're low value, short-lived and replaced almost annually [1].
Expenses that are only partly for the rental
If only part of a cost is for your rental business, you can claim that part as long as it's wholly and exclusively for the business [1]. Mileage is the common example: only journeys solely for the property business count.
The £1,000 property allowance
You can claim the property allowance instead of expenses, getting up to £1,000 a year of property income tax-free. If you do, you can't also deduct your expenses [1]. For most landlords with a full-time let, actual expenses are higher, but it's worth checking.
Allowable expenses for landlords and Making Tax Digital
Under MTD for Income Tax, your software sends HMRC totals for each expense category, using the same categories as Self Assessment [2]. HMRC doesn't receive individual receipts [2], but you still need them. Keep records for at least 5 years after the 31 January deadline [1].
Keeping repair expenses organised
Repairs are the expense most likely to be scattered across texts, emails and paper invoices. Gaffy keeps each repair against the property it belongs to, with the tenant's report, photos, outcome and the cost you log, and you can store the invoice in that property's vault. That makes the repairs line easy to total when you do your return or MTD update. Gaffy isn't accounting software and doesn't file to HMRC. It's £12 a month for up to 5 properties, first month free.
Allowable expenses for landlords: worked example
A landlord lets one unfurnished flat for £1,000 a month, so £12,000 of rent in the year. During the year they pay:
| Cost | Amount | Treatment |
|---|---|---|
| Landlord insurance | £300 | Allowable [1] |
| Boiler replaced after breaking down | £2,200 | Repair, allowable [1] |
| Letting agent tenant-find fee | £600 | Allowable [1] |
| Accountant's fee | £250 | Allowable [1] |
| New conservatory | £8,000 | Capital, not allowable against rent; keep for CGT [1] |
| Mortgage interest | £3,600 | Basic-rate tax reduction, not a deduction [1] |
Allowable expenses deducted: £300 + £2,200 + £600 + £250 = £3,350, so profit before the finance cost reduction is £8,650. The mortgage interest then gives a tax reduction at the basic rate [1]. This is an illustration of how HMRC's rules work, not tax advice.
People also ask
What expenses can a landlord claim?
Costs wholly and exclusively for the rental business, such as repairs, insurance, agent fees, accountant's fees, utilities you pay, and advertising [1].
Can landlords claim mortgage interest?
On residential lets, not as a deduction. You get a basic-rate tax reduction instead [1].
Can I claim for a new kitchen?
Like-for-like replacement can be a repair. A higher-specification kitchen is a capital improvement and isn't allowable [1].
Can I claim the cost of furnishing a property?
Not the initial cost. Replacements may qualify for replacement of domestic items relief [1].
Can landlords claim travel expenses?
Yes, the share of vehicle costs used for the rental business, including mileage rate deductions [1].
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FAQ
Does Gaffy calculate my allowable expenses?
No. We log repair costs against each property. Your accountant or accounting software works out the tax.
Is Gaffy's subscription an allowable expense?
Software used wholly for your rental business is generally a business cost, but check with your accountant.
Sources
- HMRC, Work out your rental income when you let property (ww.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income)
- HMRC, Use Making Tax Digital for Income Tax: send quarterly updates (ww.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates)