One of the most common questions landlords ask is what they can actually claim against their rental income. Get this right and you only pay tax on your true profit. Get it wrong and you either overpay tax by missing legitimate claims, or you underpay and face an HMRC enquiry. This blog covers every category of allowable expense, what qualifies, what does not, and the mistakes that lead to HMRC investigations.
What Is the Rule for Claiming Expenses as a Landlord?
Every expense you claim must pass the wholly and exclusively test. This means the cost must have been incurred wholly and exclusively for the purpose of your property rental business. If a cost has a personal element alongside a business element, only the business proportion can be claimed. There are no exceptions to this rule.
Can I Claim Letting Agent Fees?
Yes, in full. Any fees paid to a letting agent for finding tenants, collecting rent, or managing your property are fully allowable. This includes tenant-find fees, management fees, inventory fees, and renewal fees. These must relate to the letting of the property and not to the initial purchase or any capital improvements.
What Is the Difference Between a Repair and an Improvement?
Repair costs are allowable. Improvement costs are not. This is one of the most important distinctions in property tax and one of the most commonly misunderstood. A repair restores something to its original condition. An improvement makes something better than it was before.
| Allowable Repair | Not Allowable (Improvement) |
|---|---|
| Fixing a leaking roof | Adding a new roof extension |
| Replacing broken kitchen tiles | Installing a brand new kitchen that was not there before |
| Repainting the interior | Converting a loft into a habitable room |
| Repairing a broken boiler | Replacing an old boiler with a significantly more advanced system |
| Fixing a broken window | Replacing all single glazed windows with double glazing throughout |
Can I Claim My Buildings and Contents Insurance?
Yes. Premiums for landlord buildings insurance and landlord contents insurance are fully allowable. If you have a combined policy covering more than one property, apportion the cost between each property in a reasonable way.
Can I Still Claim Mortgage Interest on My Rental Property?
Not as a direct expense, no. Under Section 24, individual residential landlords can no longer deduct mortgage interest from their rental income as a standard expense. Instead, you receive a basic rate tax credit of 20% of your total finance costs.
Finance costs that qualify for the 20% tax credit include mortgage interest on buy-to-let residential properties, interest on loans taken out to buy furnishings, mortgage arrangement fees, and bank charges directly related to the letting.
What Legal and Professional Fees Can I Claim?
The following are allowable: accountancy fees for preparing your rental accounts and tax return, legal fees for drawing up or renewing a tenancy agreement, and legal costs for pursuing unpaid rent or eviction proceedings.
The following are not allowable: legal fees for buying or selling the property, and legal fees for an initial lease that lasts more than one year.
Can I Claim Council Tax and Bills When the Property Is Empty?
Yes. If the property is empty between tenancies and you as the landlord are paying council tax, gas, electricity, or water during that period, those costs are allowable against your rental income. Once a tenant is in occupation and paying those bills themselves, those costs are no longer yours to claim.
Can I Claim for Furniture and Appliances in My Rental Property?
If you let a furnished residential property, you can claim for the cost of replacing domestic items such as furniture, furnishings, appliances, and kitchenware under replacement of domestic items relief. The key rules are:
- You can only claim for replacing an existing item, not for the initial cost of furnishing the property for the first time
- The relief is limited to the cost of an equivalent replacement. If you upgrade to a significantly better item, only the cost of a like-for-like replacement is allowable, minus any proceeds from disposing of the old item
- This relief applies to residential lettings only
What Can I Not Claim Against My Rental Income?
- Capital expenditure such as extensions, conversions, or significant improvements that add value to the property
- The cost of buying the property including stamp duty and conveyancing fees
- Your own time spent managing or working on the property
- Mortgage capital repayments, only the interest element qualifies for the 20% tax credit
- Personal expenses with a dual personal and business purpose that cannot be clearly apportioned
- The initial cost of furnishing a property for the first time, only replacement costs qualify
What Are the Most Common Mistakes That Lead to an HMRC Investigation?
- Claiming improvement costs as repairs
- Deducting mortgage interest as a full expense rather than applying the 20% tax credit under Section 24
- Claiming the initial cost of furnishing a property rather than only replacement costs
- Not keeping receipts and invoices to support expense claims
- Claiming pre-letting renovation costs as revenue expenses
- Failing to declare all rental income including income from short-term lets or rooms
How Long Do I Need to Keep Receipts and Records?
You must keep all records for at least five years after the 31st January filing deadline for the relevant tax year. Records for 2025 to 2026 must be kept until 31st January 2032. From April 2026, landlords in scope of Making Tax Digital must keep those records digitally throughout the year, not just at tax return time.
