Your guide to landlord allowable expenses

Plus, unlock your property’s potential

Claiming allowable expenses as a landlord isn’t about avoiding paying tax, it’s about making sure you’re paying what’s fair. Here’s all you need to know…

As a landlord, there are many benefits from having a rental property, such as the regular income you can earn, but you’ll have to pay tax on your profits.

We’re here to help you understand how to claim against your rental income profits and therefore reduce the amount of tax that you owe. As a landlord, you have “allowable expenses” and these can be deducted as long as they are, in the words of the website, 'wholly and exclusively for the purposes of renting out the property'.

Claiming allowable expenses as a landlord is one way of making sure you’re paying what’s fair. Here’s how and what you can claim.

What can I claim for as a buy-to-let investor?

Here’s what you can claim as a landlord in the UK:
  • General maintenance and repairs to the property, but not improvements (such as replacing a laminate kitchen worktop with a granite worktop).
  • Water rates, council tax, gas and electricity, ground rents and service charges, direct costs such as phone calls. Although these are usually covered by the tenant, these bills may need to be paid when no tenant is renting the property.
  • Insurance – such as landlords’ policies for buildings, contents and public liability costs of services, including the wages of gardeners and cleaners.
  • Professional fees, including those from rent collection services, marketing fees and any other letting agent fees. Additionally, you can also claim back accountants, surveyors, and solicitors fees (excluding any that relate to your property purchase) or for renewing a lease for less than 50 years.
  • Stationery and advertising for new tenants, vehicle running costs (only the proportion used for your rental business) including mileage rate deductions for business motoring costs.
  • Subscription costs to a landlord association, e.g. the National Residential Landlords Association.

Find out how much you could let your property for

How does an allowable expense affect your tax bill?

Most landlords will file their tax return under the ‘cash basis’. This means your tax return should only include income that's been received during the tax year, and expenses that have been paid during that time.

Keeping an up-to-date and dated record of all your incomings and outgoings will help ensure that you have a good understanding of what you can claim back when. A reliable and trusted letting agent, like us, may offer a service to complete payments of property related invoices on your behalf (excluding and/or loan repayments), through which you'll have an accurate record of expenses.

What can I not claim as an allowable expense?

Some expenses are not deemed to be allowable. These include:

  • Personal expenses
  • Private phone calls which were not related to the property rental business
  • Clothing which you bought for business purposes
  • Your total mortgage payments

What are the changes to landlords' wear and tear allowance?

Prior to April 2016, if you were letting out a fully furnished property, you used to be able to claim for wear and tear of furnishings, such as cookers, carpets, beds and televisions. The allowance meant that you could claim 10% of the net annual rent each year. This allowance was replaced with ‘Replacement of domestic items relief’, which applies to all rented properties, not just furnished homes. There are certain conditions, but on the whole, it means that, as a landlord, you can claim back anything that you spend on replacing a 'domestic item’, not its initial purchase. Additionally, it’s worth emphasising that you can't claim tax relief on the cost of adding a kitchen for the first time or furnishing the property from scratch.

You may consider a part exchange or complete exchange of a broken item, just keep in mind that the new item needs to be of broadly the same standard and quality of the item it will replace

What are some key allowable expenses all landlords should keep in mind?

Whether you’re new to the investment scene or an expert landlord, the following expenses are some of the key claims that can make a real difference to your tax return. So, don’t forget that you can claim back for expenses such as the cost of petrol for travelling between your rental properties, or for phone calls or texts that were sent in connection with a rental property. It is also possible to claim back the cost of subscriptions to property investment magazines, plus money spent on advertising the property, as well as legal and accountancy fees connected to the buy-to-let.

Get in touch with your local branch if you have any further questions.

Discover the true value of your rental property

We’d like to highlight that this is not tax advice and the tax rules can be complex. We always recommend that you explore your individual circumstances with a professional tax advisor.