Allowable Expenses for UK Landlords 2026

# Allowable Expenses for UK Landlords 2026

UK rental income is taxed on profit, not turnover. The expenses you can legitimately deduct often make the difference between a marginal portfolio and a profitable one. The rules are not always intuitive — especially since the Section 24 finance restriction.

Revenue vs capital — the fundamental test

• Revenue expense — keeps the property in its existing state and condition. Deductible from rental income.
• Capital expense — improves the property or creates a new asset. Not deductible from rental income but added to the property''s cost base for Capital Gains Tax on sale.

Example: replacing a worn-out boiler with a similar modern equivalent = revenue. Replacing a back boiler with a new combi system and adding radiators = improvement = capital.

Always allowable (revenue)

Property running costs

• Council tax / utilities during void periods (between tenancies).
• Landlord-paid utilities in HMOs.
• Ground rent and service charges on leasehold properties.
• Building and contents insurance (landlord policies).
• Rent guarantee insurance.

Letting and management

• Letting agent fees (let-only, full management, renewal fees).
• Inventory clerk fees.
• Tenant referencing and credit checks.
• Right to Rent checks.
• Advertising and listing fees.
• Property management software subscriptions.

Maintenance and repairs

• Repairs to existing structures (roof tiles, gutters, broken windows).
• Boiler servicing and repair.
• Electrical and gas safety certificates (annual gas, 5-yearly EICR, EPC).
• Painting, decorating, minor plastering.
• Plumbing repairs and replacements (like-for-like).
• Gardening during voids.
• Pest control.
• Cleaning between tenancies.

Professional fees

• Accountancy fees for preparing rental accounts.
• Legal fees for tenancy work (granting leases under 1 year, renewals).
• Subscriptions to landlord associations (NRLA, RLA).
• Training (if directly related to existing rental activity, not new business setup).
• Surveyor fees for damp / structural diagnosis (not for purchase).

Travel

• Travel to and from the property for inspections, repairs, viewings (45p/mile first 10,000, 25p after, in a personal car).
• Public transport fares to the property.
• Overnight stays where necessary.

Office costs

• Phone calls and stationery directly related to letting.
• Use of home as office (flat-rate HMRC allowance: £6/week, or detailed apportionment).
• Postage.

Tenant-related

• Bad debt write-offs (only when genuinely irrecoverable).
• Court costs and bailiff fees for possession.
• Statutory notices (Section 21, Section 8) — legal fees deductible.

Restricted: finance costs (Section 24)

For individual landlords (not companies), mortgage interest, mortgage broker fees, and other finance costs are no longer fully deductible. Instead, you get a 20% tax credit against your tax bill — equivalent to basic-rate relief regardless of your marginal rate.

This has pushed many higher-rate landlords into limited-company structures, where mortgage interest is still fully deductible against profits.

Replacement of Domestic Items relief

For furnished, part-furnished, and unfurnished lets (not Furnished Holiday Lets), you can claim the cost of replacing like-for-like domestic items:

• Beds, sofas, wardrobes.
• White goods (fridge, washing machine, oven where it is treated as furniture).
• Carpets, curtains, blinds.
• Crockery, cutlery.

Rules:

• Old item must be removed.
• New item must be substantially the same — any improvement element is disallowed.
• The first time you furnish a property is not allowable (initial expenditure is capital).

Capital (not deductible against rent, but reduce CGT)

• New extensions, loft conversions, conservatories.
• First-time installation of central heating, double glazing.
• Improvement (not replacement) of kitchens and bathrooms beyond like-for-like.
• New driveways, garages.
• Legal and survey fees on purchase.
• Stamp Duty Land Tax on purchase.

Pre-letting expenses

Expenses incurred up to 7 years before first letting can be claimed in the first year of letting — provided they would have been allowable if the property was already let. Common examples: agent finder fees, advertising, initial inventory, professional cleaning.

What is not allowable

• Your own time / labour.
• Personal expenses dressed up as rental (your phone, car insurance for non-rental use).
• Capital expenditure (use CGT instead).
• Mortgage capital repayments (only interest qualifies for the 20% credit).
• Improvements (kitchen upgrade to a higher spec).
• Original purchase costs (capital, for CGT).

Record keeping

HMRC requires records for 5 years after the 31 January submission deadline of the relevant tax year. Keep:

• Bank statements (rental account).
• Invoices and receipts.
• Mortgage statements.
• Tenancy agreements.
• Inventory reports.
• Mileage log if claiming travel.
• Insurance policies and receipts.

Cloud accounting (Xero, FreeAgent, Hammock, Landlord Studio) makes this straightforward and is itself an allowable expense.

Practical playbook

1. Open a dedicated bank account per property (or portfolio).
2. Run everything through it.
3. Photograph every receipt at the point of payment.
4. Categorise monthly, not annually.
5. Reconcile quarterly.
6. Discuss borderline items with your accountant before the year ends.

Bottom line

The line between revenue and capital is the most important test. Repairs reduce your tax bill now; improvements reduce your CGT later. Finance costs are a 20% credit, not a deduction. Track everything, keep evidence, and review the borderline calls with a property-specialist accountant.