One of the most common questions buy-to-let landlords ask is which costs they can deduct from their rental income. Get it right and you will pay significantly less tax. Get it wrong and you could either overpay HMRC or, worse, face a penalty for claiming something you were not entitled to.
This guide covers the main allowable expenses for residential landlords in the UK, the key changes brought in by Section 24, and the most common mistakes to avoid.
Quick Answer
Landlords can deduct most day-to-day running costs from their rental income before tax is calculated. These include letting agent fees, landlord insurance, repairs and maintenance, utility bills (where you pay them), accountancy fees, and ground rent or service charges. Mortgage interest is no longer fully deductible but is replaced by a 20% tax credit.
Allowable Expenses: What You Can Claim
Letting and Management Costs
- Letting agent fees and management charges
- Advertising costs to find tenants
- Legal fees for tenancy agreements (but not for first granting a lease over a year)
- Accountancy fees for preparing your rental accounts and tax return
Property Running Costs
- Buildings and contents insurance (landlord-specific policies)
- Ground rent and service charges (leasehold properties)
- Council tax and utility bills where you, not the tenant, are liable
- Cleaning costs between tenancies
- Gardening and communal area maintenance
Repairs and Maintenance
You can claim for repairs that restore the property to its original condition. This includes:
- Fixing broken windows, doors, or boilers
- Repainting walls or repairing plaster
- Replacing a like-for-like item that has worn out
Important: you cannot claim capital improvements as repairs. If you upgrade a kitchen rather than simply fix it, that is a capital cost, not a revenue expense. Capital costs may be deductible against Capital Gains Tax when you sell, but not against rental income.
The Replacement of Domestic Items Relief
Since April 2016, landlords who rent out residential properties can claim relief for replacing domestic items such as:
- Sofas, beds and other furniture
- White goods (washing machines, dishwashers, fridges)
- Carpets and curtains
- Crockery and cutlery
You can only claim for the replacement cost of a like-for-like item, not an upgrade. If you replace a basic washing machine with a higher-end model, only the equivalent cost of a basic replacement is deductible.
Professional and Legal Fees
- Accountancy and tax return preparation
- Legal fees for rent arrears recovery
- Professional fees for eviction proceedings (the ongoing costs, not the initial tenancy setup)
What Has Changed: Section 24 and Mortgage Interest
Before April 2017, landlords could deduct their full mortgage interest cost from rental income, which often wiped out taxable profit entirely. Section 24 of the Finance (No.2) Act 2015 phased out this relief over four years.
Since April 2020, mortgage interest is no longer deductible as an expense at all. Instead, landlords receive a 20% tax credit based on their finance costs.
What this means in practice:
- Your rental profit is now calculated without deducting mortgage interest
- You pay tax on the higher profit figure
- You then receive a 20% credit to reduce the tax bill
For basic rate taxpayers (20%), the net effect is broadly neutral. For higher rate taxpayers (40% or 45%), the change has significantly increased the tax cost of buy-to-let. Many landlords who were profitable before Section 24 are now technically making a tax loss on paper while still paying tax.
This makes accurate record-keeping and good tax planning far more important than it used to be.
Expenses You Cannot Claim
- Capital improvements (extending the property, converting a loft, adding a new bathroom)
- Personal expenses not related to the rental business
- The initial cost of furnishing a property that was previously unfurnished (this is a capital cost)
- Fines or penalties
Keeping Good Records
HMRC expects you to keep records for at least 5 years after the 31 January filing deadline for the relevant tax year. For landlords this means:
- Receipts and invoices for all expenses claimed
- Bank statements showing rental income received
- Mortgage statements showing interest charged
- Details of any improvements made (useful for CGT purposes later)
Good records do not just help if HMRC enquires into your return. They also mean your accountant can prepare an accurate return and find every legitimate deduction.
Common Mistakes Landlords Make
Confusing repairs with improvements. Replacing a broken boiler is a repair. Installing underfloor heating for the first time is an improvement. Only the repair is deductible against rental income.
Forgetting the replacement of domestic items relief. Many landlords still try to claim under the old wear and tear allowance, which was abolished in 2016. The current relief is more targeted but equally valuable if claimed correctly.
Missing the personal use adjustment. If you use a holiday let or second home personally for part of the year, you can only claim expenses in proportion to the time it is genuinely let.
Not claiming accountancy fees. Your accountant’s fee for preparing your rental income tax return is itself an allowable expense. Many landlords overlook this.
FAQs
Can I claim travel expenses to visit my rental property? Yes, in certain circumstances. Travel directly related to managing or maintaining the property (visiting for an inspection, meeting a contractor, attending to a repair) is allowable. However, travel to purchase a property or oversee major capital works is generally not.
I paid for repairs before the property was first let. Can I claim these? No. Pre-letting expenditure incurred before the first tenancy began is generally not deductible against rental income. It may, however, be treated as a capital cost deductible against CGT when you sell.
My property is empty and not generating income. Can I still claim expenses? Yes, if the property is genuinely available to let and you are actively seeking tenants. Insurance, mortgage interest, council tax and other ongoing costs incurred during a void period are allowable.
Can I claim for my own time managing the property? No. You cannot claim a salary or notional management charge for your own time as a private landlord. If you use a letting agent, their fee is deductible. Your own time is not.
How does Making Tax Digital affect landlords? From April 2026, landlords with rental income over £50,000 must keep digital records and submit quarterly updates to HMRC under Making Tax Digital for Income Tax. From April 2027, the threshold drops to £30,000. Good record-keeping habits started now will make the transition much easier.
Get the Right Advice for Your Rental Portfolio
Our principal tax adviser is an ACCA and ATT qualified tax specialist and HMRC Registered Agent with over 25 years of personal tax experience working with landlords across Kent. Kent Tax Specialists handles landlord tax returns, Section 24 planning, and rental income advice across Gravesend, Dartford, Maidstone, Medway, Tonbridge, Sevenoaks and the wider Kent area. Contact us today for a fixed-fee quote.
Also see: Landlord Tax in Gravesend | Landlord Tax in Maidstone | Landlord Tax in Dartford
