Landlord allowable expenses: what you can claim

Checked against GOV.UK · Updated 27 October 2026

As a UK landlord you can take costs that are wholly and exclusively for your letting business, such as repairs, letting agent fees, insurance and bills you pay, off your rental income before tax. You cannot deduct improvements or the capital part of a mortgage, and interest on a residential mortgage gets a basic rate tax reduction instead of being deducted. This guide works through each rule with examples, based on HMRC's guidance on GOV.UK.

The basic rule

HMRC lets you deduct a cost from your rental income if it is wholly and exclusively for renting out the property. If something is only partly for the letting business, you claim just that part, for example only the phone calls about your lettings.

Your rental income is the rent tenants pay you, plus anything they pay for extras such as the use of furniture, heating or hot water. Your taxable profit is that income minus your allowable expenses.

Expenses you can claim

GOV.UK lists these as allowable, as long as they meet the basic rule:

• General maintenance and repairs to the property.
• Water rates, council tax, gas and electricity, when you are the one paying them.
• Insurance, such as landlord buildings, contents and public liability policies.
• Costs of services, including the wages of gardeners and cleaners.
• Letting agent fees and management fees.
• Legal fees for lets of a year or less, or for renewing a lease of less than 50 years.
• Accountant's fees.
• Ground rent and service charges, and rent you pay if you sub-let.
• Direct costs such as phone calls, stationery and advertising for new tenants.
• Vehicle running costs for the share used for your lettings, which can include mileage rate deductions. Log only journeys made solely for the property business.

If you use Making Tax Digital (MTD) for Income Tax, these go into set categories such as property repairs and maintenance, or legal, management and other professional fees. See HMRC expense categories.

Repairs or improvements?

A repair puts the property back to its original condition, sometimes by replacing parts. HMRC's examples include replacing roof tiles blown off in a storm, replacing a boiler that has broken down, and redecorating between tenants.

Replacing a part with the nearest modern equivalent still counts as a repair if the improvement is only incidental to the repair, such as swapping a single-glazed window for a double-glazed one. An improvement, such as an extension or a kitchen of a higher specification than the old one, is capital spending and cannot be deducted.

If insurance or a kept tenancy deposit pays for part of a repair, you can only claim the part you paid yourself. Example: a storm repair costs £1,800 and your insurer pays £1,200, so you claim £600.

Replacing furniture and appliances

Replacement of domestic items relief covers replacing things like beds, free-standing wardrobes, curtains, carpets, televisions, fridges, crockery and cutlery. It applies to unfurnished, part-furnished and fully furnished lets.

It does not cover buying items for the first time, or letting a room in your own home. Your claim is the cost of the new item plus incidental costs of buying it or getting rid of the old one, minus anything you got for the old item.

Example: a fridge costs £450, delivery and removal of the old one cost £40, and you sell the old fridge for £30. You can claim £460.

If the new item is an upgrade, you claim only what a like-for-like replacement would cost. HMRC's example is a sofa replaced by a dearer sofa bed. A more energy-efficient modern fridge is not treated as an improvement.

Mortgage interest and other finance costs

Only the interest part of a mortgage payment counts. Repaying the capital is never an allowable expense.

For residential property, relief for finance costs has been restricted to the basic rate of Income Tax since 6 April 2020. Instead of deducting them, you get a tax reduction worth 20% of the lowest of: your finance costs (including any brought forward), your property profits (after any losses brought forward), and your adjusted total income above your Personal Allowance, leaving out savings and dividend income. Any unused amount is carried forward, and the reduction cannot create a refund.

This covers mortgage interest, overdraft interest, loans including loans to buy furnishings, and fees for arranging finance. It applies to individual landlords with residential lets in the UK or abroad, but not to companies. Interest on a mortgage for a non-residential let is still deducted in the normal way.

Simplified example: rent of £20,000, other expenses of £4,000 and mortgage interest of £6,000. Your property profit is £16,000, and you get a £1,200 reduction (20% of £6,000, assuming that is the lowest figure). A higher rate taxpayer pays 40% of £16,000, which is £6,400, minus £1,200, so £5,200. If your income, without deducting the interest, stays within the basic rate band, you usually pay the same tax as if the interest had been deducted. If not deducting it takes you into the higher rate band, you pay more. HMRC's case studies show both outcomes.

What you cannot claim

• Improvements and other capital spending, unless replacement of domestic items relief applies.
• The capital part of mortgage repayments.
• Personal costs, private phone calls and clothing.

If your expenses are more than your rent, the loss is normally carried forward against future profits from the same rental business.

The £1,000 property allowance instead

You can choose a property allowance of up to £1,000 a year instead of claiming actual expenses, but not both. If your gross property income is £1,000 or less, you usually do not need to tell HMRC, though you should still keep records.

Joint owners each get their own £1,000 against their share of the gross rent. You cannot use it on Rent-a-Room income. You also cannot use it if you deduct expenses from room-letting income instead of using the Rent a Room Scheme, or if you claim the tax reduction for residential finance costs such as mortgage interest.

Example: you let a garage for £2,400 a year with £300 of costs. With the allowance, £1,400 is taxable. Claiming actual costs would leave £2,100 taxable, so the allowance wins. With £1,500 of costs, claiming the costs would be better.

Records to keep

Keep rent books, receipts, invoices, bank statements and mileage logs for at least 5 years after the 31 January filing deadline for each tax year. HMRC can charge penalties if records are inaccurate or incomplete.

If you are in MTD, each expense must also be kept as a digital record showing the amount, date and category. Our guide to Making Tax Digital for landlords covers the wider rules, and records for sole traders and landlords covers what to keep.

Keeping the records with Snapfile

Snapfile lets you send photos of receipts, invoices and bills to a WhatsApp number. It records each one, sorts it into the Self Assessment expense categories, tracks the tax year and quarter, logs mileage and exports a CSV. It does not submit anything to HMRC. It is free during early access.

Common questions

Sources: GOV.UK: Work out your rental income when you let property; GOV.UK: Changes to tax relief for residential landlords: how it's worked out, including case studies; GOV.UK: Tax-free allowances on property and trading income; GOV.UK: Use Making Tax Digital for Income Tax: Create digital records; GOV.UK: Making Tax Digital for Income Tax: Quarterly update direction. This is general information, not tax advice; check GOV.UK or an accountant for your situation.

Related guides

• What records sole traders and landlords need to keep
• Business mileage for sole traders: the simplified rates
• Allowable expenses for sole traders: the full list
• HMRC expense categories for Making Tax Digital
• All guides