Landlord Tax Deductions UK: Complete List of Allowable Expenses

Understanding Landlord Tax Deductions

You’re taxed on your rental profit. Not your total rental income. The calculation is simple:

Rental Income − Allowable Expenses = Taxable Rental Profit

Claim more legitimate expenses and you pay less tax. Most landlords leave money on the table here. They either don’t claim everything they’re entitled to or they misunderstand what qualifies.

This guide lists every deduction available in 2026/27. It covers the capital vs revenue distinction that catches people out and explains the Section 24 mortgage interest restriction that stings higher-rate taxpayers.

Whether you fill out the SA105 property pages yourself or hand it to an accountant, know what you can claim. Don’t pay more tax than you have to.

The Complete List of Allowable Expenses

1. Mortgage Interest and Finance Costs

What you can claim: Interest on buy-to-let mortgages, loans for furnishings, and overdraft interest on your rental property bank account.

How it works post-Section 24: Individual landlords don’t deduct mortgage interest from rental income any more. You get a 20% tax credit on the interest paid instead. See the Section 24 section below for worked examples.

Claimable:

• Mortgage interest (not capital repayments)
• Interest on loans used to fund repairs, improvements, or furnishings
• Arrangement fees and mortgage broker fees (spread over the mortgage term)
• Early repayment charges (if related to the rental business)
• Overdraft interest on a dedicated rental bank account

Not claimable:

• Capital repayments on your mortgage
• Interest on loans used for personal purposes
• Interest on your residential mortgage (even if you used equity release for property investment — the loan must be secured against the rental property or used demonstrably for the rental business)

2. Repairs and Maintenance

What you can claim: The cost of repairing or maintaining the property in its current condition.

This is one of the biggest deduction categories. Also one of the most misunderstood. The question is always: repair or improvement?

Deductible (revenue expense):

• Fixing a broken boiler
• Repairing a leaking roof
• Replacing broken windows with equivalent windows
• Repointing brickwork
• Fixing damp problems
• Repainting and redecorating
• Repairing or replacing guttering
• Fixing plumbing issues
• Replacing floor tiles with equivalent tiles
• Garden maintenance and repairs to fences/walls

Not deductible as revenue (capital expense):

• Installing a new bathroom where there wasn’t one before
• Adding a conservatory or extension
• Converting a loft into a bedroom
• Upgrading single-glazed to double-glazed windows (improvement, not repair)
• Installing central heating for the first time

The grey area: Like-for-like replacement is a repair. Something substantially better is an improvement. Replace a broken single-glazed window with another single-glazed window? Repair. Replace it with double-glazing? Improvement. But if single-glazed windows are no longer available and double-glazing is the modern equivalent, HMRC may accept it as a repair. Document your reasoning.

3. Insurance

What you can claim: All insurance premiums directly related to the rental property.

Deductible:

• Landlord buildings insurance
• Landlord contents insurance (furnished properties)
• Landlord liability insurance
• Rent guarantee insurance
• Legal expenses insurance (property-related)
• Emergency home cover / boiler cover

Not deductible:

• Personal insurance policies
• Life insurance (even if linked to the mortgage — personal expense)
• Insurance on your own home

4. Letting Agent and Management Fees

What you can claim: Fees paid to letting agents or property management companies.

Deductible:

• Full management fees (8-15% of rent)
• Tenant-finding fees
• Inventory and check-in/check-out fees
• Renewal fees
• Maintenance coordination fees

Self-manage your property and you won’t have agent fees to deduct. But you’ll save far more than you lose in tax relief.

5. Accountancy and Professional Fees

What you can claim: Professional fees relating to your rental business.

Deductible:

• Accountant’s fees for preparing your property tax return
• Tax advice relating to rental income
• Solicitor’s fees for renewing a lease (under 50 years)
• Solicitor’s fees for eviction proceedings
• Debt collection fees (chasing rent arrears)
• Valuation fees (if required for tax purposes)
• NRLA or other landlord association membership fees

Not deductible:

• Solicitor’s fees for buying or selling the property (capital — add to your CGT base cost)
• Fees for creating a new lease (as opposed to renewing)
• Legal costs of obtaining planning permission for improvements

6. Advertising and Tenant Finding

What you can claim: Costs of finding and vetting tenants.

Deductible:

• Online listing fees (OpenRent, Rightmove premium, etc.)
• Newspaper or local advertising
• Tenant referencing costs
• Photography for listings
• Signage (“To Let” boards)
• Printing costs for flyers or brochures

7. Council Tax and Utility Bills

What you can claim: Council tax and utilities — but only when you are liable to pay them.

Deductible:

• Council tax during void periods (between tenancies)
• Council tax if you pay it as part of an inclusive rent arrangement (e.g., HMOs)
• Utility bills during void periods
• Utility bills if included in the rent (common in HMOs)
• Water rates during void periods

Not deductible:

• Council tax or utilities the tenant is contractually responsible for

8. Ground Rent and Service Charges

What you can claim: Ongoing charges on leasehold properties.

Deductible:

• Ground rent
• Service charges (revenue portion — cleaning, gardening, communal maintenance)
• Building insurance paid via service charge (if not claimed separately)
• Estate management fees

Partially deductible:

• Service charges that include a sinking fund contribution may be partly capital (major works reserve) and partly revenue (routine maintenance). In practice, the full amount is usually treated as revenue unless a big chunk is clearly earmarked for capital improvements.

9. Travel Costs

What you can claim: Travel to and from your rental property for business purposes.

Deductible:

• Mileage to and from the property for inspections, maintenance, or viewings (45p per mile for the first 10,000 miles, 25p after that)
• Actual vehicle costs apportioned for business use (as an alternative)
• Public transport fares for property visits
• Parking charges when visiting the property
• Mileage to your accountant or solicitor regarding the property
• Hotel costs for overnight stays on property matters (must be reasonable and necessary)

Not deductible:

• Travel costs for viewing potential new investment properties (pre-trading expenditure)
• Commuting costs if being a landlord is your main job and the property is your regular workplace

Record-keeping: Keep a mileage log. Date, destination, purpose, miles driven. No log means HMRC can disallow the entire travel claim.

10. Home Office Costs

What you can claim: A proportion of your home costs if you manage your properties from home.

Deductible (simplified method):

• £6 per week (£312 per year) with no records needed — available to all landlords who work from home
• A proportionate share of home costs (heating, electricity, broadband, insurance, mortgage interest) based on room and time used for property management

The £6/week flat rate is simpler for most landlords with a small portfolio. Saves you calculating proportions.

11. Replacement of Domestic Items

What you can claim: The cost of replacing furnishings, appliances, and domestic items in a furnished or part-furnished property.

The old “wear and tear allowance” (10% of rent) was scrapped in April 2016. Replacement Domestic Items Relief replaced it. You claim actual replacement costs now. No more flat-rate deduction.

Deductible:

• Replacing a washing machine with an equivalent washing machine
• Replacing curtains or blinds
• Replacing a sofa or bed
• Replacing crockery, cutlery, or kitchenware
• Replacing a fridge-freezer
• Replacing carpets (like-for-like)
• Replacing a television

Rules:

• Only applies to replacements. Furnish a property for the first time and the cost is capital expenditure.
• Replace with something substantially better (basic washer → high-end model) and you can only claim the cost of an equivalent replacement. The uplift is capital.
• You can claim disposal costs of the old item (tip fees, removal costs).

12. Pre-Letting Expenses

What you can claim: Expenses incurred before you first let the property. They must be things that would have been allowable during the letting.

Deductible:

• Advertising for tenants before the first let
• Legal fees for drawing up the tenancy agreement
• Gas safety certificate and EPC obtained before first letting
• Repairs and redecoration to make the property lettable (provided the property was already in a lettable condition — see below)

Not deductible:

• The cost of purchasing the property
• Stamp duty
• Solicitor’s fees for the purchase
• Costs of making the property habitable for the first time (capital)

The distinction that matters: Buy a property that needs major work before it can be let? Those renovation costs are capital expenditure. The property must already be in a condition where it could theoretically be let. A derelict property needing a new roof, rewiring, and replumbing involves capital expenditure. Not revenue.

13. Bad Debts (Unpaid Rent)

What you can claim: Rent you’ve included as income but can’t collect.

Tenant leaves owing rent? You’ve chased it properly (formal demands, debt collection attempts) and it’s genuinely irrecoverable? Write it off as an allowable expense. You must show that:

• The debt was formally demanded
• Reasonable collection attempts were made
• The debt is genuinely irrecoverable

Debt gets recovered later (debt collector succeeds years down the line)? Include the recovered amount as income in the year you receive it.

14. Wear and Tear on Tools and Equipment

What you can claim: Tools and equipment used for your rental business.

Deductible:

• A laptop or tablet used for property management (business proportion only)
• Software subscriptions (accounting software, property management apps)
• A mobile phone used for tenant communication (business proportion)
• Tools used for minor repairs (if you do them yourself)
• A camera used for property photography and inventories (business proportion)

Mixed personal and business use? Claim only the business proportion.

Section 24: Mortgage Interest Restriction Explained

Section 24 of the Finance Act 2015 is the single biggest tax change for landlords in a generation. Got a mortgage on your rental property? You need to understand this.

What Changed

Before Section 24 (pre-April 2017), landlords deducted mortgage interest from rental income before calculating tax:

• Basic-rate taxpayers saved 20% on interest payments
• Higher-rate taxpayers saved 40%
• Additional-rate taxpayers saved 45%

After Section 24 (fully phased in from April 2020), mortgage interest is not deducted from income. Every landlord gets a flat 20% tax credit on mortgage interest instead.

The Impact by Tax Band

Tax Rate	Before Section 24	After Section 24	Extra Tax Paid
Basic (20%)	20% relief	20% credit	No change
Higher (40%)	40% relief	20% credit	20% on interest
Additional (45%)	45% relief	20% credit	25% on interest

Worked Example: Higher-Rate Taxpayer

Sarah’s rental property:

• Annual rent: £18,000
• Mortgage interest: £8,000
• Other allowable expenses: £3,000
• Sarah is a 40% taxpayer from her employment

Before Section 24:

• Taxable profit: £18,000 − £8,000 − £3,000 = £7,000
• Tax at 40%: £2,800

After Section 24:

• Taxable profit: £18,000 − £3,000 = £15,000 (mortgage interest NOT deducted)
• Tax at 40%: £6,000
• Less 20% tax credit on mortgage interest: £8,000 × 20% = £1,600
• Net tax: £4,400

Extra tax under Section 24: £1,600 per year

The Phantom Income Problem

Section 24 inflates your taxable income because mortgage interest isn’t deducted. This can:

• Push basic-rate taxpayers into the higher-rate bracket
• Reduce or eliminate your personal allowance (tapers above £100,000)
• Trigger the High Income Child Benefit Charge
• Increase student loan repayments

Some landlords end up with a tax bill that exceeds their actual rental profit. That’s the scenario that pushes people toward incorporating.

Section 24 and Limited Companies

Section 24 does not apply to limited companies. Hold the property in a company and mortgage interest is deducted in full from rental income before corporation tax.

That’s the main reason landlords consider transferring properties to a company structure. But the transfer triggers Stamp Duty Land Tax and potentially Capital Gains Tax. Run the numbers carefully. Our buy-to-let limited company guide breaks down the full analysis.

Capital vs Revenue Expenses: The Critical Distinction

Get this wrong and you’ll either overpay tax or trigger an HMRC enquiry. Revenue expenses cut your tax bill now. Capital expenses don’t reduce Income Tax but can reduce Capital Gains Tax when you sell.

Revenue Expenses (Deductible from Rental Income)

Revenue expenses cover maintaining the property and running your rental business. Deduct them from rental income in the tax year they’re incurred.

The test: Does the spending repair, maintain, or restore? Yes? Revenue.

Examples:

• Repainting rooms between tenancies
• Replacing a broken boiler with an equivalent model
• Fixing a leaking pipe
• Replacing worn carpet with equivalent carpet
• Regular garden maintenance
• Servicing the central heating system

Capital Expenses (Not Deductible, but Added to Base Cost)

Capital expenses improve the property beyond its original condition or add something new. Can’t deduct them from rental income. But they increase the property’s base cost and reduce your Capital Gains Tax on sale.

The test: Does the spending improve, extend, or add something new? Yes? Capital.

Examples:

• Adding a new bathroom
• Building an extension or conservatory
• Converting a garage into a room
• Installing double glazing for the first time
• Upgrading the kitchen beyond its original quality
• Adding central heating where none existed

The Repair vs Improvement Grey Area

Many expenses sit in a grey zone. HMRC uses three principles:

The “entirety” principle: Look at the property as a whole. Replacing a roof is a repair to the building (revenue), even though the roof itself is new. Adding a new floor to a building is an improvement (capital).

The “modern equivalent” principle: Original material no longer available? The modern equivalent counts as a repair. Lead pipes to copper pipes? Repair. Coal fire to gas fire? Repair.

The betterment test: New item substantially better than the old one? The betterment element is capital. But incidental improvement during a repair is fine. Use slightly better plaster because the old type doesn’t exist any more? The whole cost stays revenue.

Practical Examples

Expenditure	Classification	Reasoning
Replacing a broken boiler with the same model	Revenue	Like-for-like replacement
Replacing a standard boiler with a combi boiler	Partly capital	Improvement element (efficiency, hot water on demand) may be capital
Repainting throughout	Revenue	Maintenance
Knocking two rooms into one	Capital	Alters the property’s structure
Replacing kitchen units (same quality)	Revenue	Like-for-like replacement
Replacing a basic kitchen with a high-end one	Partly capital	Claim cost of equivalent basic kitchen as revenue; the uplift is capital
Rewiring the property	Revenue	Maintaining existing electrical system
Installing first-time electrics (e.g., outbuilding conversion)	Capital	New installation
Damp-proofing	Revenue	Repair/maintenance
Underpinning foundations	Revenue	Repair to existing structure
Landscaping the garden	Capital (if initial) / Revenue (if maintenance)	Creation vs upkeep

How to Claim Your Deductions

Self Assessment: SA105

Report rental income and expenses on the SA105 property pages of your Self Assessment tax return. You need this if gross rental income exceeds £1,000 (the property income allowance).

Our SA105 guide gives you step-by-step instructions.

Record-Keeping Requirements

HMRC wants records kept for at least 5 years after the 31 January filing deadline for that tax year. Records for 2026/27 must be kept until at least 31 January 2033.

Keep:

• Bank statements for your rental property account
• Receipts and invoices for all expenses claimed
• Tenancy agreements
• Mortgage statements showing interest paid
• Insurance policy documents and payment records
• Mileage logs for travel claims
• Records of all rental income received, with dates

Making Tax Digital

MTD-compatible software becomes mandatory from April 2026 (income over £50,000) and April 2027 (income over £30,000). You’ll submit quarterly updates to HMRC. Start digitising your records now, even if you’re not yet required to.

Tax Planning Strategies

1. Transfer Income Between Spouses

Jointly own a property with your spouse or civil partner? One of you pays a lower tax rate? Shift the income split with a Form 17 declaration to HMRC (plus a deed of trust changing beneficial ownership).

HMRC assumes a 50/50 split for married couples by default. One spouse on basic rate and the other on higher rate? Moving more income to the lower-rate spouse saves real money.

2. Consider Incorporation

Heavily mortgaged portfolio where Section 24 hits hard? Transferring properties to a limited company removes the mortgage interest restriction. Corporation tax at 25% (or 19% for small profits) can also beat personal rates.

The catch: incorporation triggers Stamp Duty and potential CGT. The break-even depends on your numbers. See the limited company guide.

3. Timing of Expenses

Approaching the end of the tax year with maintenance work to do? Think about whether to complete it before 5 April (deduct this year) or after (deduct next year). Useful if you expect to change tax bands.

4. Claim Everything You’re Entitled To

Obvious? Yes. But the most common tax failure is not claiming legitimate expenses. Review this guide against your actual costs every year. Commonly missed deductions:

• Travel to the property (mileage)
• Home office costs (£6/week flat rate)
• Landlord association memberships
• Software and app subscriptions
• Bank charges on your rental account
• Energy performance certificate costs

5. Use the Property Income Allowance Where Beneficial

Expenses less than £1,000? You might be better off claiming the £1,000 property income allowance instead of itemising. This is a flat deduction available to all property landlords. You can’t claim both — pick whichever gives the better result.

This typically helps landlords who rent out a single room or have a small amount of property income with minimal expenses.

Common Mistakes That Trigger HMRC Enquiries

1. Claiming Improvements as Repairs

HMRC’s number one challenge area. Replace a basic bathroom with a luxury one and claim the full cost as a repair? Expect questions. Be honest about the capital element of mixed spending.

2. Not Declaring All Income

HMRC cross-references your returns with deposit protection schemes, letting agent records, and other data sources. Don’t declare all your rental income? You will be caught. The penalties for deliberate non-declaration go up to 100% of the tax owed.

3. Claiming Personal Expenses

That holiday to Spain where you “happened to visit your Spanish rental property” is not a deductible business trip. Unless the primary purpose was genuinely business. Mixed trips should be apportioned honestly.

4. Incorrect Mortgage Interest Claims

Post-Section 24, claiming mortgage interest as a deduction (rather than a tax credit) is wrong. HMRC will enquire if your return shows mortgage interest deducted from rental income. Make sure you or your accountant apply Section 24 correctly.

5. No Supporting Records

HMRC opens an enquiry. You can’t produce receipts, invoices, or bank statements. Those deductions get disallowed. Keep everything for at least 5 years.

Expenses Checklist by Category

Run through this when preparing your tax return. Don’t leave money behind.

Property costs:

• Mortgage interest (as 20% tax credit)
• Ground rent
• Service charges
• Council tax (void periods / HMO)

Insurance:

• Buildings insurance
• Contents insurance
• Landlord liability insurance
• Rent guarantee insurance
• Legal expenses insurance

Maintenance:

• Repairs and maintenance
• Redecoration
• Garden maintenance
• Cleaning (between tenancies)

Professional fees:

• Accountant
• Solicitor (non-capital matters)
• Letting agent fees
• Landlord association membership

Administration:

• Advertising / tenant finding
• Referencing costs
• Stationery and postage
• Software subscriptions
• Phone (business proportion)
• Home office (£6/week or actual)

Travel:

• Mileage to property
• Public transport
• Parking
• Overnight stays (if necessary)

Replacements:

• Domestic items (like-for-like replacements only)
• Disposal costs of replaced items

Other:

• Utility bills (void periods / inclusive rents)
• Bad debts written off
• Bank charges on rental account
• EPC and gas safety certificate costs
• EICR costs

Use our rental yield calculator to see how expenses affect your net yield. Make sure you’re keeping digital records for Making Tax Digital compliance.

---

This guide was last updated in March 2026 for the 2026/27 tax year. Tax rules change regularly — always verify current rates, thresholds, and reliefs with HMRC or a qualified accountant before filing your return.