What Are Allowable Expenses?
Allowable expenses are costs incurred exclusively in connection with running and maintaining a rental property. These expenses can be deducted from your rental income, reducing the total amount on which you must pay tax. If an expense is partly for personal use and partly for your rental business, only the portion related to the business can be claimed.
The UK tax system requires landlords to submit these figures on the SA105 supplementary form as part of their annual Self Assessment tax return. Supporting records such as receipts and invoices do not need to be submitted with the return but must be retained in case HMRC requests evidence.
Mixed-Use Costs and Partial Claims
Some expenses might cover both personal and rental use. In such cases, landlords must calculate the proportion of the cost that directly relates to the letting activity. For example, if a mobile phone is used 30 percent of the time for dealing with tenants, agents, or contractors, then 30 percent of the cost is an allowable expense.
Accurate records and usage logs are essential when claiming for mixed-use items. A clear audit trail helps support your claims should HMRC require further detail or conduct an investigation.
Maintenance vs. Improvements
A critical distinction exists between repairs or maintenance and capital improvements. Maintenance includes work that restores the property to its original condition, whereas improvements increase the property’s value or functionality beyond its original state.
Only maintenance expenses are deductible from rental income. Improvements are considered capital expenditures and cannot be deducted against rental income. However, they can be offset against Capital Gains Tax when the property is sold, so it is important to keep detailed records of such costs.
Claiming for Property Repairs and Maintenance
Repairs and ongoing maintenance of a property form a significant part of the costs landlords incur. These are generally fully deductible as long as they are necessary for keeping the property habitable and in good condition.
Window Repairs and Replacements
If windows are broken or damaged due to weather, vandalism, or general wear and tear—and not through tenant negligence—landlords can claim the cost of repair or replacement. For instance, fitting new double-glazing in place of old units of similar quality would be claimable.
It’s important to note that if the new installation is significantly superior, such as replacing single-glazed wooden windows with high-end triple-glazed aluminium units, only a portion of the cost may be allowable, with the excess treated as capital expenditure.
Roof Repairs and Guttering
Damage to the roof, including missing slates, broken tiles, and blocked or detached guttering, often arises due to storms or age-related deterioration. These types of repairs are allowable as they ensure the structural integrity and weather protection of the property.
Landlords must retain evidence such as contractor quotes, photographs of damage, and completed invoices to support their claims.
Boiler Repairs and Replacement
Boilers are a critical part of a property’s infrastructure, particularly in colder months. If a boiler needs repair or replacement with a similar model, the expense is fully allowable.
However, if a superior model is installed with added features or greater efficiency, only the cost equivalent to a like-for-like replacement is considered a deductible expense. The remaining portion may be treated as a capital improvement and used later against Capital Gains Tax.
Plumbing and Electrical Repairs
Problems such as burst pipes, water leaks, faulty wiring, and malfunctioning fuse boxes are not uncommon. These issues require immediate repair to ensure tenant safety and to maintain the property in a lettable condition.
The cost of professional plumbers, electricians, and replacement parts are all allowable expenses. The cost of emergency call-out fees can also be claimed if directly related to urgent repairs.
Repointing and Brickwork
Over time, the mortar in brick walls deteriorates due to exposure to the elements. Repointing and similar masonry work are considered part of the normal upkeep of a property.
Costs associated with professional brickwork or even the rental of tools and equipment to carry out the work yourself are allowable. However, personal labour is not deductible.
Treating Damp and Condensation
Properties in the UK often suffer from various forms of damp, including condensation damp caused by poor ventilation, rising damp from ground moisture, and penetrating damp resulting from leaks.
Expenditure on materials and labour to treat damp, such as installing new damp-proof membranes or improving ventilation systems, is allowable when it restores the property to a usable condition.
Decorating Between Tenancies
Redecorating is often required at the end of a tenancy or periodically during long-term tenancies. Painting walls, replacing wallpaper, or minor cosmetic touch-ups all fall under maintenance and are therefore claimable.
These expenses can be deducted regardless of whether the landlord carries out the work or hires professionals, provided that invoices and receipts are maintained.
Cleaning and Garden Maintenance
Cleaning a property between tenancies is essential to ensure it is ready for new occupants. Similarly, garden maintenance such as lawn mowing, hedge trimming, and leaf clearance helps maintain curb appeal and prevents complaints.
Both one-off cleaning and regular contracted services are deductible. If you pay a cleaner or gardener in cash, ensure you obtain a signed receipt to evidence the transaction.
Ground Rent and Service Charges
Landlords of leasehold properties are often required to pay annual ground rent and regular service charges. These charges cover the maintenance of communal areas, insurance, and sometimes utilities in shared properties.
As long as these costs are not reimbursed by the tenant, they are fully deductible against rental income.
Landlord Insurance Premiums
Landlord insurance policies typically cover buildings, liability, and contents for furnished lets. These are specifically designed for rental properties and are often a condition of mortgage agreements.
The cost of premiums and any professional valuations required for obtaining cover are allowable expenses. However, optional add-ons that relate to personal use or excessive cover might only be partly allowable.
Utilities Paid by the Landlord
During vacant periods or when included in the rent, landlords may be responsible for utility bills such as gas, electricity, and water. These are considered operating costs and are fully deductible during the periods the landlord is liable.
It is essential to clearly separate periods where the tenant is responsible from those where the landlord bears the cost to ensure accurate reporting.
Council Tax During Vacancies
In the event that a rental property is unoccupied and the landlord is liable for Council Tax, the payments made are allowable as they are directly related to the running of the rental business.
However, landlords must not claim Council Tax that is legally the responsibility of the tenant under the tenancy agreement.
Letting Agent and Management Fees
Letting agents offer services ranging from tenant-finding to full property management. Their fees are usually either fixed or a percentage of the rent collected each month.
These fees are a legitimate cost of running a rental business and can be deducted in full. Always keep contracts and fee breakdowns for your records.
Legal Fees Related to Letting
Certain legal fees are allowable, such as those incurred for short leases (under one year), renewals of less than 50 years, and proceedings related to evicting tenants. Legal costs associated with tenancy agreements and court actions for rent recovery can also be claimed.
However, costs related to purchasing the property or creating a long lease are not allowable as income expenses, though they may be capital expenses.
Advertising for New Tenants
Advertising in newspapers, property websites, or local noticeboards is often necessary to secure tenants. All marketing costs involved in attracting renters can be deducted, provided they are clearly linked to the rental activity.
Landlords should retain copies of advertisements, online listing screenshots, and receipts for publication fees as part of their financial records.
Essential Operational and Administrative Expenses
We focused on common property maintenance and structural expenses that landlords can deduct from their taxable rental income. These included repairs, cleaning, council tax during vacancies, and letting agent fees.
We will examine another set of tax-deductible costs: those associated with the ongoing operations of managing a rental property, administrative functions, subscriptions, and property-related travel. A clear understanding of these categories can significantly impact your total tax bill, particularly if you manage multiple properties or are operating as a professional landlord.
Accountancy and Tax Advice Fees
One of the most common administrative expenses claimed by landlords is the cost of professional accountancy services. Fees paid to accountants for the preparation and submission of your rental accounts or tax returns are fully deductible. This includes charges for completing your Self Assessment tax return, offering guidance on allowable expenses, or even providing advice about structuring your portfolio for tax efficiency. The key requirement is that the advice must relate directly to your rental business and not your wider personal finances. If an accountant provides both personal and rental-related services, ensure that the invoice clearly separates these. Only the portion related to the rental business can be deducted.
Phone and Internet Usage
Communication is a central part of running a successful rental operation. Landlords often communicate with tenants, letting agents, tradespeople, or local authorities, making phone and internet usage an integral part of the business.
If you use a mobile phone or landline partly for personal calls and partly for your rental activity, you may claim the proportion of the bill that relates specifically to business use. For example, if approximately 40 percent of your call time or data use is rental-related, then you can claim 40 percent of the total cost.
Accurate record-keeping, such as itemised bills or usage logs, will help support this claim. Subscriptions for broadband services may also be partially deductible if they are used for managing listings, communicating with agents, or submitting tax information online.
Subscriptions to Landlord Associations
Membership in professional landlord organisations can offer access to legal advice, market updates, regulatory changes, and networking opportunities. These fees are generally regarded as allowable business expenses.
Popular national and local landlord associations offer annual subscriptions that qualify for tax relief. These expenses are fully deductible as long as the membership supports your ability to operate your rental business more efficiently or legally.
Do ensure that the organisation is recognised or operates in a professional capacity. Club memberships or networking groups without a professional development component may not qualify.
Travel and Vehicle Costs Related to Property Management
Landlords who travel to and from rental properties to carry out inspections, meet tradespeople, or attend letting appointments may be eligible to claim related travel costs. These journeys must be exclusively for the purpose of managing the property.
If you use your own vehicle, you can claim mileage using HMRC’s approved mileage rates or alternatively, claim a proportion of actual fuel, insurance, servicing, and MOT costs if you keep detailed records. The mileage method is often simpler and avoids the need to break down every vehicle expense.
Public transport fares, parking fees (excluding penalties), and toll charges are also allowable when incurred as part of managing the rental property. Journeys to purchase repair materials, check the condition of the property, or attend meetings with letting agents are all valid purposes.
However, commuting from your home to your place of business does not qualify. The travel must be specifically linked to a landlord’s responsibility.
Advertising to Attract Tenants
Securing tenants in a timely manner is critical to maintaining cash flow. Landlords can claim the full cost of advertising rental properties across print media, property websites, or local classifieds.
This includes paid listings on popular online platforms, newspaper classifieds, and any associated promotional photography or design costs. These expenses are fully deductible as they directly relate to ensuring occupancy and minimising rental voids.
Do not claim the costs of personal website development or advertising for unrelated services, as these fall outside allowable expenses unless strictly and wholly related to the rental business.
Tenant Referencing and Credit Checks
Before accepting a new tenant, landlords often incur costs related to background checks, including credit checks, referencing services, and employment verification. These help reduce risk and ensure the suitability of prospective tenants.
Such costs are fully deductible as they are directly related to managing and protecting your rental income stream. Even if the tenant later pulls out or the application is unsuccessful, the incurred costs can still be claimed as part of the operational expenses of the business.
Fees charged by referencing agencies or software platforms used for this purpose can also be included, provided their use is tied to the rental activity.
Eviction and Legal Proceeding
Legal costs associated with evicting tenants, pursuing unpaid rent, or enforcing tenancy terms are considered necessary business expenses in the eyes of HMRC. These can include court filing fees, legal representation, and costs of bailiffs if required.
Legal costs related to eviction notices, statutory declarations, and tenancy disputes fall within the scope of allowable expenses. However, if legal proceedings relate to purchasing or selling the property, they would be classed as capital and not deductible against rental income. Retain all correspondence, court forms, and legal invoices for accurate reporting and potential evidence during tax reviews.
Disposal of Furniture and Appliances
Removing unwanted furniture, broken white goods, or outdated fittings from your rental property is a cost of maintaining a habitable and appealing space. The cost of hiring disposal services or skip hire for removing these items is an allowable expense.
This also applies when removing items between tenancies or during refurbishments, especially if these activities are required to return the property to a letting-ready condition.
If you dispose of personal items not related to the rental business or perform general household clear-outs, these costs cannot be included. It’s important that all disposal relates specifically to rental operations.
Replacement Domestic Items Relief
Although landlords cannot claim the full cost of furnishing a property under income tax rules, they can benefit from Replacement Domestic Items Relief. This applies only to replacing an existing item in a residential property that is let out fully or partly furnished.
The relief covers items such as:
- Beds, mattresses, and sofas
- Curtains and carpets
- White goods such as fridges, cookers, and washing machines
- Crockery, utensils, and cookware
To qualify, the replacement must be on a like-for-like basis. If the new item is an upgrade (e.g. replacing a standard washing machine with a luxury washer-dryer), only the equivalent cost of a like-for-like item can be claimed. Any cost beyond that is considered capital expenditure and cannot be offset against rental income.
Note that this relief does not apply to properties let unfurnished, nor to the initial purchase of furnishings when a property is first let.
Handling Mixed-Use Furniture and Appliances
In some cases, landlords may use items for both personal and business purposes. For instance, if a landlord occasionally uses the property as a holiday home between tenancies or retains access to a shared space, any furniture or appliance replacement must be claimed on a proportional basis.
Careful tracking of how often and for how long the property is used for non-rental purposes will help calculate the correct percentage of allowable expense. Any personal use reduces the portion that can be claimed.
This also applies if you’re living in part of the property while renting out another section, such as with a live-in landlord arrangement.
Cleaning Costs Related to Wear and Tear
Cleaning costs are fully allowable as long as they are directly connected to the maintenance or readiness of the rental property. This includes professional end-of-tenancy cleaning, one-off deep cleaning after repair work, or regular cleaning services during a tenancy if the landlord is contractually obliged to provide them.
For furnished properties, cleaning of upholstery, carpets, and curtains may also be included. However, costs for cleaning that are more aesthetic than functional (such as pressure-washing driveways solely for appearance) might not always qualify unless clearly linked to tenancy turnover or letting readiness.
If you carry out cleaning yourself, you cannot claim for your own time but can still claim for cleaning materials, equipment rental, or disposal services used during the cleaning process.
Pest Control and Emergency Services
Expenditure on professional pest control, such as dealing with rodent infestations, bed bugs, or insect problems, qualifies as a tax-deductible expense. These services are necessary to maintain a habitable standard and are often required between tenancies or after damage has occurred.
Similarly, emergency locksmith services, temporary security installations after break-ins, and safety-related interventions (like emergency glazing) are all allowable.
As with other claims, ensure the service is not reimbursed by a tenant or insurance policy, as double-claiming is not permitted.
Utility Bills During Rental Voids
Landlords may be responsible for covering utilities such as water, gas, and electricity during periods where the property is vacant, especially between tenants. These are allowable expenses so long as the property remains available for letting and is not withdrawn from the rental market.
Keep meter readings, supplier invoices, and dates of tenancy agreements on file to support the claim. Utilities included in rental agreements for tenant convenience are also deductible if they are part of the landlord’s operational cost.
Maintenance Supplies and Consumables
Expenses for materials and consumables used in general property upkeep are deductible. This includes:
- Paint, brushes, filler, and sanding paper
- Replacement lightbulbs and smoke alarm batteries
- Screws, nails, and basic DIY items
- Gardening tools and lawn treatments for regular upkeep
However, tools with long-term value (such as power drills or ladders) may not be treated as consumables and are instead capital in nature. Consumables must be used up during the year and not kept for long-term use.
Understanding HMRC’s Definition of Allowable Expenses
Allowable expenses are costs that are incurred wholly and exclusively for the purpose of renting out a property. This fundamental rule forms the basis of what can be deducted from gross rental income before tax is calculated.
In general, any cost that is personal, capital in nature, or related to property acquisition or disposal cannot be claimed against rental income. However, those capital costs may be relevant when calculating Capital Gains Tax on a sale.
The key difference between revenue and capital expenditure lies in the nature of the cost. Revenue expenses maintain the property’s existing condition, while capital expenses improve it or increase its market value.
For example, repainting a scuffed wall is a revenue expense. Knocking down a wall to create an open-plan living space is a capital improvement. Only the former is deductible against rental profits in your Income Tax return.
Using the Self Assessment System Correctly
Landlords must use HMRC’s Self Assessment system to declare their rental income and related expenses. This involves submitting the SA100 main form along with the SA105 supplementary pages dedicated to property income.
The SA105 includes sections for:
- Total rental income received
- Allowable expenses grouped into categories
- Adjustments for part-year letting or shared ownership
- Profit or loss calculations
- Balancing charges if furniture or fixtures were sold
Each category in the SA105 should reflect only the relevant portion of expenditure. For example, legal fees for eviction should be listed under legal and professional costs, not property repairs. Accurate categorisation helps reduce the chance of HMRC enquiries or penalties. Landlords must submit these forms annually by 31 January following the end of the tax year (5 April), whether filing digitally or by paper.
Record-Keeping Requirements for Landlords
Good record-keeping is not just advisable — it is a legal requirement. Landlords must retain all documentation supporting their reported income and expenses for at least five years after the 31 January filing deadline.
Essential documents include:
- Rental agreements and tenancy deposit confirmations
- Bank statements showing rent received
- Invoices and receipts for expenses
- Correspondence with tenants, letting agents, or contractors
- Utility and council tax bills
- Mileage logs and travel records
- Insurance certificates
- Copies of submitted tax returns
Digital copies are acceptable if they are legible, organised, and backed up. Cloud storage or external drives can be used as part of your bookkeeping system. Physical records should be stored securely and in order.
Keeping your records organised by tax year, property, and expense type will make year-end filing far simpler and provide peace of mind in case of HMRC inspections.
Apportioning Shared or Mixed-Use Costs
Some costs, such as internet service, telephone bills, or travel, may be partly personal and partly related to the rental property. In such cases, only the business-use portion can be claimed.
Landlords should apply a reasonable and consistent method for calculating apportionment. For phone usage, this might be a percentage based on call logs. For vehicle mileage, it could involve a logbook detailing every journey with dates, purposes, and distances.
HMRC expects these methods to be fair, evidence-based, and replicable. Estimates without backing data are not acceptable in the event of an audit.
If an expense benefits more than one property, landlords should divide it accordingly. For example, a subscription to a landlord helpline used for managing three properties could be split equally across those properties.
Making the Most of Replacement Domestic Items Relief
Furnished or part-furnished rental properties qualify for Replacement Domestic Items Relief, allowing landlords to claim the cost of replacing items such as:
- Beds, sofas, and wardrobes
- Carpets and curtains
- Washing machines, fridges, and microwaves
- Crockery, pans, and kitchen utensils
This relief only applies to like-for-like replacements and not to the initial purchase of furnishings. For instance, if a landlord buys a fridge for a property for the first time, it cannot be deducted. However, replacing an existing fridge with a similar one qualifies.
If the replacement item is an upgrade, such as switching from a standard cooker to a high-end dual-fuel range, only the cost of an equivalent basic model can be claimed. The excess must be excluded from the deductible amount. Keeping receipts and descriptions of both the old and new item helps demonstrate that the expenditure qualifies under this rule.
Timing and Allocation of Expenses
The date when an expense is incurred determines the tax year in which it can be claimed. For cash basis accounting (used by many landlords with property income under the threshold), the date of payment is used, not the invoice date.
For example, if you receive an invoice for repairs in March but pay it in April, the expense belongs in the following tax year under the cash basis. Under the accruals basis, the invoice date or service date would determine when it is claimed.
Landlords may also have pre-letting expenses. These can be claimed if they are incurred within seven years of the start of the rental activity and would have been allowable if incurred during the letting period. Examples include safety certificates, advertising, or repainting.
Expenses after the rental business ends, such as marketing the property for sale or empty property maintenance, are not usually allowable.
Structuring Your Property Portfolio for Tax Efficiency
Landlords with multiple properties may benefit from structuring their portfolio in a tax-efficient way. While individual property performance doesn’t need to be declared, portfolio-level figures are required.
Losses from one property can offset profits from another, provided they are under common ownership and declared on the same return. Losses can also be carried forward to offset against future rental profits, but not against other income such as employment or pension earnings.
Careful planning of maintenance work, void periods, and tenancy changes can help manage income and deductions year to year. Timing a major repair or replacement to align with other deductible costs may result in a more favourable tax outcome.
For landlords with growing portfolios, incorporating the business or setting up a partnership may offer additional tax planning options, though these come with increased legal and administrative responsibilities.
How to Avoid Common Deduction Mistakes
Many landlords miss out on legitimate deductions simply due to poor record-keeping or misunderstanding of what qualifies. Some common errors include:
- Claiming the full cost of capital improvements rather than recording them for Capital Gains Tax offset
- Failing to apportion shared costs like broadband or vehicle use
- Not retaining receipts or failing to track the purpose of travel
- Misclassifying startup costs as personal expenditure
- Overlooking costs during void periods, such as insurance and utilities
- Double-claiming expenses reimbursed by tenants or insurers
- Not using the correct method of accounting (cash vs accruals)
Understanding the rules and applying them consistently can reduce the risk of under-claiming or over-claiming. HMRC penalties can apply for inaccurate returns, even if errors were unintentional.
Transition to Making Tax Digital (MTD)
Making Tax Digital for Income Tax Self Assessment will soon affect landlords with annual rental income above the HMRC threshold. Under this system, digital records must be kept, and updates sent to HMRC every quarter, rather than just once a year.
While not yet mandatory for all landlords, preparation now can ensure a smoother transition. This includes:
- Using compliant digital tools to track income and expenses
- Creating digital invoices and storing receipts electronically
- Maintaining separate bank accounts for rental income
- Familiarising yourself with quarterly reporting requirements
Staying ahead of these changes avoids compliance issues and improves the quality of your financial data for better decision-making.
Leveraging Capital Allowances Where Relevant
Although residential landlords generally cannot claim capital allowances on property fixtures and buildings, there are exceptions in certain cases.
If part of your property is used as a furnished holiday let and meets the conditions for this status, then capital allowances may apply for items like furniture and equipment. These furnished holiday lets are treated more like businesses for tax purposes, offering different reliefs.
Similarly, landlords renting out commercial property (shops, warehouses, or office space) can access capital allowances on qualifying plant and machinery. Residential landlords, however, are restricted in this area and should focus on replacement relief and maintenance deductions. Understanding which regime applies to your rental activity is critical before attempting to claim capital allowances.
Dealing with HMRC Enquiries or Reviews
HMRC may conduct a random or risk-based review of your Self Assessment return. This can involve questions about declared income, claimed expenses, or documentation.
If contacted, landlords should respond promptly and provide all requested evidence, including receipts, contracts, and explanations of unusual claims. Professional advice may be helpful if the enquiry becomes complex. Having detailed records from the start reduces stress and ensures that any investigation is resolved quickly and favourably.
Late filings, unexplained losses, or inconsistent claims across years are common red flags that can trigger an enquiry. Staying accurate and consistent across all returns is key to remaining compliant.
Planning for the Long Term: Beyond Income Tax
We focused on annual Income Tax deductions, long-term landlords must also consider eventual Capital Gains Tax liabilities when they sell a property.
Capital improvements (not deductible from income) should be logged and supported with receipts, as they can reduce the taxable gain upon sale. These include structural changes, extensions, and enhancements that increase the property’s value.
In addition, landlords nearing retirement may wish to plan for succession, sale, or portfolio restructuring. Tax implications vary depending on whether properties are gifted, sold, or passed on through inheritance. Long-term planning requires a clear record of both income and capital expenditures across the life of each property.
Conclusion
Navigating the financial responsibilities of being a residential landlord in the UK can be challenging, especially when it comes to managing tax liabilities. However, understanding and correctly applying tax-deductible expenses can significantly reduce the amount of taxable rental income, allowing landlords to retain more of their earnings and operate more efficiently.
Across this series, we’ve explored the range of expenses landlords can legally claim. From essential repairs like broken boilers and damp treatment to service-related costs such as letting agent fees, insurance, council tax during vacancies, and even travel expenses, each category offers opportunities to offset genuine business costs.
We’ve also highlighted key distinctions between allowable expenses and capital improvements. While capital improvements may not reduce income tax liability in the current year, they can play a valuable role in reducing Capital Gains Tax when the property is eventually sold. Understanding the difference and keeping detailed records for each can make a significant financial difference.
Additionally, we discussed the importance of accurate record-keeping and compliance. Landlords must ensure that every claim is backed by proper documentation. Using professional accountants or trusted software can help ensure accuracy, especially when dealing with complex portfolios or a mixture of furnished and unfurnished properties. Proper classification of expenses and consistent reporting can help avoid errors and potential penalties from HMRC.
Ultimately, successful property rental management goes beyond collecting rent. A proactive approach to expense tracking, tax planning, and legal compliance allows landlords to maximise profitability while staying within regulatory boundaries. Whether you own one property or many, staying informed and organised ensures you make the most of your tax reliefs while remaining fully compliant with HMRC guidelines. By applying the knowledge and strategies laid out in this guide, landlords can not only ease their annual tax burden but also make smarter long-term financial decisions.