Allowable Expenses: Complete Landlord Tax Deductions List
Written by Scott Jones, founder of PropertyKiln · Last updated
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You only get tax relief on expenses that are wholly and exclusively for the rental business and are revenue, not capital. Everything else is either disallowed or only helps you for CGT later.
"This guide provides general information about UK landlord tax obligations. It is not financial or legal advice. Tax treatment depends on your individual circumstances and may change. Consider consulting a qualified accountant or solicitor for advice specific to your situation."
1. Property costs and finance costs
Property running costs
| Expense | Individual landlord | Company | Notes |
|---|---|---|---|
| Council tax during voids | Fully deductible | Fully deductible | Only when you are liable between tenants. |
| Water rates (you pay, not tenant) | Fully deductible | Fully deductible | If you recharge tenant, that recharge is income. |
| Buildings / landlord insurance | Fully deductible | Fully deductible | Standard landlord policy. |
| Contents insurance (landlord items) | Fully deductible | Fully deductible | Tenant's own insurance is not your cost. |
| Ground rent | Fully deductible | Fully deductible | As billed. |
| Service charges | Fully deductible | Fully deductible | Repairs/improvements distinction is dealt with by freeholder. |
| Licence fees (HMO/selective etc.) | Fully deductible | Fully deductible | Spread over licence period if you want smoother profits. |
Finance costs
| Expense | Individual | Company | Notes |
|---|---|---|---|
| Mortgage interest and loan interest on BTL | Not deductible from profit; 20% tax credit only (Section 24) | Fully deductible trading expense | Applies to most residential finance costs. |
| Mortgage arrangement fees | Treated as finance cost: 20% credit only | Fully deductible, usually spread over loan term | HMRC treat many "fees" as finance costs. |
| Broker fees added to loan | As above -- finance cost | As above -- deductible | If paid from cash, many accountants still treat as finance cost. |
| Early repayment charges | Finance cost: 20% credit only | Fully deductible | HMRC see ERCs as finance rather than repair. |
| Bank charges on rental account | Fully deductible | Fully deductible | Eg business account monthly fee. |
Most common mistake: still deducting interest from rent in the profit calc as if Section 24 never happened.
2. Letting, professional and "people" costs
Letting and tenancy setup
| Expense | Treatment | Notes |
|---|---|---|
| Letting / management agent fees | Fully deductible | Tenant-find, rent collection, full management. |
| Online listing fees (OpenRent etc.) | Fully deductible | Advertising is an allowable expense. |
| Tenant referencing costs | Fully deductible | You pay since Tenant Fees Act. |
| Inventory and check-in clerk | Fully deductible | Start and end of tenancy. |
| Tenancy agreement drafting / renewals | Fully deductible | Renewals and disputes are revenue; purchase legals are not. |
Professional and admin
| Expense | Treatment | Notes |
|---|---|---|
| Accountancy fees for rental accounts/tax return | Fully deductible | Only the part relating to rental business. |
| Legal fees for arrears, eviction, renewals | Fully deductible | Ongoing business, not acquisition. |
| Legal fees for purchase or sale | Not deductible from rental profit; capital for CGT | Add to CGT base cost instead. |
| Property management software | Fully deductible | Hammock, Landlord Studio, Xero portion, etc. |
| Professional subscriptions (NRLA etc.) | Fully deductible if used for rental business | Mixed use: claim reasonable proportion. |
Most-missed: software, part of accountancy bill, and proportion of broadband / phone genuinely used for the rental business.
3. Repairs vs improvements, and day-to-day property costs
Repairs and maintenance
Core rule from PIM2030 and BIM guidance: restoring to original condition is a repair (deductible); significantly upgrading or altering is capital (not deductible from income).
| Expense | Deductible? | Reason / example |
|---|---|---|
| Fixing a leak, boiler repair service | Fully deductible | Restoring asset. |
| Replacing broken like-for-like boiler | Usually deductible as repair | HMRC accept many modern equivalents. |
| Replacing tired kitchen with similar spec | Deductible repair | "Like-for-like" replacement. |
| Replacing basic kitchen with luxury bespoke | Largely capital, not deductible | Genuine improvement. Capital for CGT. |
| Adding an extension / extra room | Not deductible; capital | Enhances and alters asset. |
| Rewiring whole property to modern standard | Often deductible as repair if simply updating | If combined with major alterations, may need apportionment. |
| Decorating between tenancies | Deductible | Routine maintenance. |
| Initial works to make unlettable wreck habitable | Often treated as capital, not revenue | "Once-and-for-all" improvement from non-functioning state. |
If you do big refurb jobs that mix repair and improvement, HMRC say you can apportion the invoice reasonably; the repair element remains deductible.
Cleaning, gardening, security
| Expense | Treatment | Notes |
|---|---|---|
| Cleaning between tenancies / communal | Fully deductible | Standard allowable. |
| Regular gardening for let property | Fully deductible | If your responsibility. |
| Pest control | Fully deductible | Rats, wasps, etc. |
| Lock changes, key cutting | Fully deductible | After tenant change or lost keys. |
| Safety checks (gas, EICR, PAT) | Fully deductible | Legal compliance. |
4. Travel, home-office, and misc costs
Travel
Two methods: HMRC mileage or actual costs. You must pick one method per vehicle.
Approved mileage rates (2024/25 and carried into 2025-26):
- Cars/vans: 45p per mile for first 10,000 business miles, 25p per mile thereafter.
- Motorcycles: 24p/mile.
- Bicycles: 20p/mile.
Allowable trips:
- To and from the rental property for management, inspections, repairs.
- To letting agent, builder's merchant, accountant for rental meetings.
Not allowable:
- Normal commute to your main job.
- Private journeys.
If you use the mileage method, you cannot additionally claim separate fuel/insurance/repairs for that car.
Home office
HMRC accept a reasonable proportion of home running costs where you genuinely manage from home:
- Part of: heating, electricity, broadband, phone, home insurance.
- Or use a simple flat-rate approach if your accountant prefers.
You must be able to justify your apportionment. Landlords often under-claim modest, well-supported home-office costs.
5. Commonly missed and commonly wrong claims
Most commonly missed
- Mileage to properties, agents, courts -- no log, no claim.
- Portion of home broadband/phone genuinely used for the rental business.
- Software and cloud tools (Hammock, Landlord Studio, e-signature, cloud storage).
- Small things: key cutting, postage, stationery, landlord-specific training.
Most commonly claimed incorrectly
Capital improvements as repairs Turning a basic kitchen into a high-end one, adding en-suites, or doing initial renovation on a wreck and calling it "repairs". HMRC manuals are clear that genuine improvements are capital, not deductible from rent.
Mortgage interest deducted twice Still reducing rental profit by interest and claiming the 20% credit. Section 24 allows credit only for individuals; interest no longer reduces taxable rental profit.
Purchase/sale legal costs as revenue These belong in the CGT base cost, not as annual expenses.
Travel to property for non-business reasons Combining holiday and property visit then trying to claim the whole trip.
What forums and Reddit get wrong
"If it relates to the property, it is deductible." Wrong: only revenue expenses wholly and exclusively for the rental and not capital improvements are deductible from rental income. Capital goes to CGT instead.
"Repairs just after purchase are capital and never deductible." HMRC accept that many post-acquisition repairs are still revenue; only where the property was not fit for letting without major works, or the price was heavily discounted for disrepair, are those costs likely to be capital.
"Section 24 means you get no relief on interest." You still get relief, but only as a 20% credit, not a full deduction. That is a big difference in how you model deals.
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