Understanding which expenses can be claimed against rental income is essential for every landlord. Keeping accurate records and claiming allowable expenses correctly can help reduce your tax bill and ensure compliance with HMRC requirements.
What are allowable expenses?
Allowable expenses are costs that are wholly and exclusively incurred for the purpose of renting out your property. These expenses can generally be deducted from your rental income before calculating taxable profit.
Repairs and maintenance
Landlords can usually claim the cost of repairs and maintenance that keep the property in good condition.
- Boiler repairs
- Roof repairs
- Plumbing repairs
- Replacing broken fixtures and fittings
- Painting and decorating
- General maintenance work
Improvements that significantly enhance the property may be treated differently for tax purposes and could be considered capital expenditure.
Insurance
Landlord insurance policies are generally allowable expenses and can usually be claimed against rental income.
- Buildings insurance
- Contents insurance
- Landlord liability insurance
- Rent guarantee insurance
Letting agent and management fees
Fees paid to letting agents and property management companies are normally deductible.
- Tenant find fees
- Property management fees
- Inventory costs
- Tenant referencing fees
- Check-in and check-out fees
Professional fees
Certain professional costs may also qualify as allowable expenses.
- Accountancy fees
- Bookkeeping services
- Legal fees relating to tenancy matters
- Eviction-related legal costs
Safety certificates and compliance
Costs relating to legal compliance are generally allowable expenses and form an important part of managing rental property.
- Gas Safety Certificates (GSC)
- Electrical Installation Condition Reports (EICR)
- Smoke alarm compliance
- Carbon monoxide alarms
- Legionella risk assessments
Mortgage interest relief
Residential landlords can no longer deduct mortgage interest directly from rental profits. Instead, eligible landlords may receive a basic rate tax reduction based on finance costs.
The rules can be complex, so it is important to understand how they apply to your circumstances.
Utility bills and council tax
If you pay utility bills or council tax on behalf of tenants, these costs may be allowable depending on the tenancy arrangement.
Keeping accurate records
HMRC expects landlords to keep clear and accurate records of rental income and expenses. Maintaining organised records throughout the year makes completing Self Assessment tax returns much easier and helps support expense claims if HMRC requests evidence.
How Precision Books can help
Precision Books supports landlords with bookkeeping, rental income reporting and Self Assessment tax returns.
We can help you identify allowable expenses, maintain accurate records and ensure your rental income is reported correctly.
This article is for general information only and should not be treated as personal tax advice. Tax rules can change and individual circumstances vary.