If you’re a landlord in the UK, there’s one question that comes up every single year when it’s time to file your Self Assessment tax return: “What expenses can I actually claim?”
It’s not a simple question — because HMRC has rules about what counts as an allowable expense, and if you get it wrong, you could either pay too much tax (by missing deductions you’re entitled to) or face penalties (by claiming things you shouldn’t).
The good news? Most landlords can legitimately reduce their taxable rental profit by 25–40% just by claiming all the expenses they’re entitled to. That could save you thousands of pounds in tax every year.
This guide will walk you through exactly what you can claim, what you can’t, and the rules you need to follow to stay on the right side of HMRC.
What Are Allowable Expenses?
Allowable expenses are business costs that you can deduct from your rental income before you calculate how much tax you owe.
Here’s how it works:
- You earn £15,000 in rent over the year (your gross rental income)
- You spend £4,000 on allowable expenses (repairs, insurance, letting fees, etc.)
- Your taxable rental profit is £11,000 (£15,000 minus £4,000)
- You only pay tax on the £11,000 — not the full £15,000
The more allowable expenses you claim, the less tax you pay.
But here’s the key rule: an expense is only allowable if it’s spent wholly and exclusively for the purpose of renting out the property.
That means:
- If you bought something only for your rental business, you can claim it
- If you bought something for both business and personal use, you can only claim the business portion
- If you bought something primarily for personal use, you can’t claim it at all
The “Wholly and Exclusively” Rule Explained
This is HMRC’s golden rule, and it’s where most landlords get confused.
An expense is wholly and exclusively for your rental business if you would not have spent that money unless you were renting out the property.
Let’s look at some examples:
Example 1: Landlord insurance
You wouldn’t have landlord insurance if you weren’t renting out the property, so this is 100% allowable.
Example 2: Repairing a broken boiler
The boiler broke because tenants are using the property. You wouldn’t be fixing it if the property wasn’t rented, so this is 100% allowable.
Example 3: Broadband in the rental property
If you pay for broadband at the rental property and the tenants use it, this is 100% allowable.
But if you also use that same property as a holiday home for yourself, then the broadband isn’t “wholly and exclusively” for rental purposes — so you can only claim a proportion based on how much of the year it was rented out.
Example 4: A laptop you use for rental accounts and personal stuff
If you buy a laptop and use it 70% for managing your rental properties and 30% for personal use, you can claim 70% of the cost — not the full amount.
The key is being honest and realistic. If HMRC asks, you need to be able to explain how you worked out the split.
What Expenses Can Landlords Claim? The Full List
Let’s go through every major category of allowable expenses for landlords in the UK.
1. Repairs and Maintenance
This is one of the biggest categories — and also one of the most misunderstood.
You can claim the cost of repairing or maintaining the property to keep it in its current condition.
What you CAN claim:
- Fixing a broken boiler
- Repairing a leaking roof
- Replacing broken windows or doors
- Fixing plumbing issues (burst pipes, blocked drains)
- Repainting walls (to restore them to their original condition)
- Replacing broken tiles, carpets, or flooring (like-for-like)
- Servicing the boiler or heating system
What you CANNOT claim:
- Adding an extension
- Installing a new bathroom where there wasn’t one before
- Converting a loft into a bedroom
- Upgrading the kitchen (new cabinets, layout changes)
- Adding double glazing where there was single glazing
The difference is simple: repairs restore the property to its original condition. Improvements add value or change the property.
The “like-for-like replacement” rule
If you replace something, you can only claim the cost of a modern equivalent of what was there before.
Example:
Your rental property has an old electric shower worth £80. It breaks, so you replace it with a new one that costs £250.
You can only claim £80 (the cost of a like-for-like replacement), not the full £250. The extra £170 is an improvement.
However, if the new shower costs £250 simply because that’s what showers cost now (not because you’ve upgraded to a fancier model), HMRC will usually accept the full amount as a repair.
2. Letting Agent Fees and Management Costs
If you use a letting agent to manage your property, all their fees are fully deductible.
This includes:
- Tenant-finding fees
- Monthly management fees (usually 10–15% of rent)
- Inventory check fees
- Rent collection charges
- Renewal fees
If you manage the property yourself, you can’t claim for your own time — only for costs you actually pay out (like advertising fees or credit check costs).
3. Insurance
You can claim the cost of any insurance policy that’s directly related to the rental property.
Allowable:
- Landlord insurance (covers building, contents, liability)
- Buildings insurance
- Contents insurance (if you provide furniture)
- Rent guarantee insurance (covers unpaid rent)
- Landlord liability insurance
Not allowable:
- Life insurance
- Personal health insurance
- Car insurance (unless the car is used exclusively for rental business — very rare)
4. Utility Bills, Council Tax, and Service Charges
If you pay the utility bills or council tax (rather than the tenant), these are allowable expenses.
Allowable:
- Gas and electricity
- Water
- Council tax (if the property is empty between tenancies)
- Ground rent
- Service charges (for leasehold properties)
Important: If the tenant pays you for utilities (as part of the rent or separately), you need to:
- Declare that money as rental income
- Then claim the actual cost of the utilities as an expense
It balances out, but both need to be recorded.
5. Professional Fees
You can claim fees paid to professionals for services related to your rental business.
Allowable:
- Accountant fees for preparing your rental tax return
- Legal fees for evicting a tenant, chasing unpaid rent, or renewing a lease (if it’s for less than a year)
- Surveyor fees for rental valuations
- Inventory clerk fees
Not allowable:
- Legal fees for buying the property (these are capital costs, added to the property’s purchase price)
- Legal fees for selling the property (these reduce Capital Gains Tax, not rental income)
- Fees for work unrelated to the rental (e.g., your accountant doing your personal tax return)
6. Replacement of Domestic Items (Furniture and Furnishings)
If you provide furnished accommodation, you can claim tax relief when you replace items like:
- Furniture (sofas, beds, tables, chairs)
- Appliances (washing machines, fridges, ovens, microwaves)
- Curtains, blinds, carpets
- Crockery, cutlery, linen
- Televisions
The rules:
- You can only claim for replacing an item, not the initial cost of furnishing the property
- The replacement must be like-for-like (e.g., replacing a single bed with a single bed)
- If you upgrade (e.g., replacing a single bed with a double bed), you can only claim the cost of a single bed
Example:
You originally furnished the property with a £500 sofa. Five years later, it’s worn out, so you replace it with a new £700 sofa (because prices have gone up).
You can claim the full £700, because you’re replacing a like-for-like item and the higher cost is just due to inflation or current market prices.
But if you replace a basic £500 sofa with a luxury £2,000 leather sofa, HMRC will likely only allow £500 — the rest is an improvement.
7. Travel Costs
If you travel to your rental property for business purposes, you can claim mileage or travel costs.
Allowable:
- Driving to the property to deal with repairs
- Visiting the property for inspections
- Meeting tenants at the property
- Collecting rent in person (if necessary)
Not allowable:
- Driving from your home to your regular place of work (even if that work is managing properties)
- Personal trips that happen to pass by the property
How to claim:
You can either claim:
- 45p per mile for the first 10,000 miles in a tax year, then 25p per mile after that (HMRC’s approved mileage rate), or
- The actual costs of running the car (fuel, insurance, repairs, tax) — but only the proportion used for rental business
Most landlords use the mileage rate because it’s simpler.
Record-keeping: Keep a mileage log with the date, destination, purpose, and miles travelled.
8. Office Costs and Stationery
If you run your rental business from home, you can claim a portion of your household costs.
Allowable:
- Phone and broadband (the proportion used for rental business)
- Stationery and postage
- Computer equipment and software (e.g., accounting software)
- Office furniture (if used exclusively for rental business)
Not allowable:
- Your normal household bills (unless you work from home and can prove a business-use proportion)
9. Advertising and Marketing
You can claim the cost of finding tenants.
Allowable:
- Online property listing fees (Rightmove, Zoopla, etc.)
- Newspaper ads
- Signboards
- Photography for listings
This is usually quite small, but if you’re advertising regularly (e.g., student lets that turn over every year), it can add up.
10. Costs of Evicting a Tenant
If you have to evict a tenant for non-payment or breach of contract, the costs are allowable.
Allowable:
- Court fees for eviction proceedings
- Bailiff costs
- Legal fees for the eviction
Not allowable:
- Costs unrelated to the eviction (e.g., general legal advice)
What About Mortgage Interest?
This is the big one — and the most misunderstood.
Before April 2020, landlords could deduct mortgage interest directly from their rental income before calculating tax.
That changed.
Since April 2020, you can no longer deduct mortgage interest as an expense. Instead, you get a basic rate tax credit worth 20% of your mortgage interest payments.
How it works now
Let’s say you:
- Earn £20,000 in rental income
- Spend £5,000 on other expenses (repairs, insurance, etc.)
- Pay £10,000 in mortgage interest
Under the new rules:
Rental income: £20,000
Minus expenses: £5,000
= Rental profit: £15,000 (mortgage interest is NOT deducted here)
You pay tax on the full £15,000 rental profit.
But you get a 20% tax credit on your mortgage interest:
Tax credit: 20% of £10,000 = £2,000
This £2,000 is deducted from your overall tax bill.
Why this matters for higher-rate taxpayers
If your total income (including rental profit) pushes you into the 40% tax band (over £50,270), you’ll pay 40% tax on some of your rental profit — but you only get 20% relief on your mortgage interest.
This is why some landlords have moved their properties into limited companies, where mortgage interest is still fully deductible.
What You CANNOT Claim: Capital Expenses
Capital expenses are costs that add value to the property, improve it, or are part of buying or selling it.
These cannot be deducted from rental income.
Examples of capital expenses:
- Buying the property
- Stamp Duty
- Legal fees for buying the property
- Surveyor fees when purchasing
- Building an extension
- Adding a conservatory
- Renovating a derelict property to make it rentable
- Converting a house into flats
- Adding a new bathroom or bedroom
- Major refurbishment or structural work
What happens to capital expenses?
They’re not wasted — they reduce your Capital Gains Tax when you eventually sell the property. But they don’t reduce your rental income tax in the year you spend the money.
How to Keep Records of Your Expenses
HMRC expects you to keep accurate records of all your rental income and expenses for at least 5 years after the 31 January filing deadline.
Here’s what you need:
For income
- Tenancy agreements
- Rent payment records (bank statements showing rent received)
- Records of any deposits you kept
- Records of charges for utilities or services
For expenses
- Receipts and invoices for everything you claim
- Bank statements showing payments
- Mileage logs (if claiming travel)
- Photos of repairs or damage (helpful if HMRC queries a claim)
How to organise your records
You have three options:
- Paper records — Keep physical receipts in a folder or filing cabinet
- Digital records — Scan or photograph receipts and store them in the cloud (Google Drive, Dropbox, etc.)
- Accounting software — Use software like QuickBooks, Xero, or FreeAgent to track income and expenses automatically
What Happens If You Don’t Keep Records?
If HMRC opens an enquiry into your tax return and asks to see proof of your expenses, you need to provide it.
If you can’t:
- HMRC will disallow the expenses and recalculate your tax bill
- You’ll owe more tax, plus interest on the amount you should have paid
- You might also face a penalty for poor record-keeping (usually 15% of the extra tax owed, but can be higher if HMRC thinks you were careless)
Even if the expenses were legitimate, “I’ve lost the receipts” isn’t a valid defence.
Can You Claim Expenses If You Have Multiple Properties?
Yes. HMRC treats all your UK rental properties as one rental business.
This means:
- You add up all the rental income from all properties
- You add up all the expenses across all properties
- You calculate one overall profit or loss
Example:
- Property 1: £10,000 income, £6,000 expenses = £4,000 profit
- Property 2: £8,000 income, £9,500 expenses = £1,500 loss
Overall profit: £4,000 – £1,500 = £2,500
You only pay tax on the £2,500 overall profit.
What If You Make a Loss?
If your total expenses are more than your total rental income, you’ve made a loss.
You can’t get a refund for the loss, but you can carry it forward to offset against future rental profits.
Example:
- 2024/25: You make a £3,000 loss
- 2025/26: You make a £7,000 profit
You can deduct the £3,000 loss from last year, so you only pay tax on £4,000 in 2025/26.
Losses can be carried forward indefinitely until you use them up.
Common Mistakes Landlords Make With Expenses
1. Claiming improvements as repairs
This is the most common mistake. Adding a new kitchen, bathroom, or extension is not a repair — it’s a capital improvement.
If you’re not sure, ask yourself: “Does this restore the property to its original condition, or does it make it better than it was?”
If it makes it better, it’s an improvement.
2. Claiming the initial cost of furnishing a property
You can only claim for replacing items, not for furnishing the property in the first place.
If you buy a sofa for a newly furnished rental, that’s a capital cost. If you replace that sofa five years later, the replacement is allowable.
3. Not claiming mortgage interest relief
Mortgage interest isn’t deducted automatically — you have to declare it on your tax return to get the 20% tax credit.
If you forget, you’ll overpay tax.
4. Forgetting to keep receipts
Even if you paid for something, if you don’t have proof, HMRC won’t allow it.
Take photos of receipts as soon as you get them and store them somewhere safe.
5. Claiming personal expenses
If you use something for both business and personal use, you can only claim the business portion.
Claiming 100% of your home broadband when you also use it for Netflix is a red flag for HMRC.
Should You Use an Accountant?
You don’t have to use an accountant, but many landlords do — especially if they have multiple properties or complex situations.
When an accountant is worth it:
- You have several properties, and keeping track of everything is overwhelming
- You’re not confident working out what’s allowable and what isn’t
- You want to make sure you’re claiming everything you’re entitled to
- You’ve received a letter from HMRC and don’t understand it
A good accountant will often save you more in tax than they charge in fees, simply by making sure you don’t miss any allowable expenses.
Final Thoughts
Allowable expenses are one of the most powerful tools landlords have to reduce their tax bill — but only if you know what you can claim and keep proper records.
Here’s the short version:
- You can claim any expense that’s wholly and exclusively for renting out the property
- Repairs are allowable; improvements are not
- You need to keep receipts and records for at least 5 years
- Mortgage interest no longer reduces your rental profit, but you get a 20% tax credit instead
- If you make a loss, you can carry it forward to future years
If you’re not sure whether something is allowable, or if keeping track of everything is becoming a headache, it’s worth getting professional help.
At Applegrow Financial Advisors, we specialise in helping landlords with their tax returns, Self Assessment, and tax planning. We’ll make sure you’re claiming every allowable expense, keeping proper records, and staying fully compliant with HMRC.
Get in touch and let us handle the paperwork while you focus on your properties.
Need Help With Your Landlord Expenses?
Whether you’re a first-time landlord or managing a property portfolio, we can help you claim all the expenses you’re entitled to — and avoid costly mistakes.
Contact us today to find out how we can help.
