Allowable expenses for landlords
What you can deduct from rental income, the Section 24 finance cost restriction, and the difference between repairs and improvements.
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Landlord allowable expenses checklist
What you can claim against rental income: letting agent fees, repairs, insurance, and more. Plus what you cannot claim.
Section 24: mortgage interest restriction
How Section 24 changed mortgage interest relief for individual landlords, and why higher-rate taxpayers feel it most.
Repairs vs improvements
Repairs are deductible against rental income; improvements are capital and only reduce capital gains tax later. Here is how to tell the difference.
What expenses can a landlord claim?
Costs incurred wholly and exclusively for the letting: letting agent fees, repairs and maintenance, buildings and landlord insurance, ground rent and service charges, accountancy for the rental business, advertising for tenants, and replacement of domestic items in furnished lets.
The claim reduces your taxable rental profit. What it never does is include the capital cost of the property itself, or improvements to it — those wait for Capital Gains Tax relief when you sell.
Mortgage interest is different — Section 24
Interest on a residential buy-to-let is not an allowable expense for individual landlords. Instead you get a tax credit worth 20% of the interest — the basic rate — regardless of your own tax band.
That is why two landlords with identical rents and identical mortgages can have very different tax bills. A higher-rate taxpayer effectively gets relief at half their marginal rate, and because the credit works on taxable income rather than profit, mortgage-heavy landlords can be pushed into a higher band by income they never saw. This single rule drives most of the personal-versus-company structure conversations we have.
Repairs or improvements? The line that matters
A repair restores something to its previous condition — fixing the boiler, repainting, replacing a broken window like for like. It is deductible now. An improvement makes the property better than it was — an extension, a loft conversion, upgrading to something of a higher standard. It is capital, and waits for the CGT computation on sale.
Like-for-like replacement using modern materials still counts as a repair: replacing single glazing with standard double glazing is accepted as repair, not improvement. Where a project mixes both, split the invoice — and keep it either way, because one side of the line needs it now and the other side needs it for as long as you own the property.
The reliefs landlords forget
The £1,000 property allowance can replace expense claims entirely for very small lettings. Replacement of domestic items relief covers furniture, appliances, and kitchenware in furnished lets — the replacement, not the original purchase. Pre-letting expenses incurred up to seven years before the first let can qualify as if spent on day one.
Claiming everything you are entitled to, and nothing you are not, is exactly the discipline the Evidence Pack inside Compliance Vault™ exists for — categorised as it happens, not reconstructed in January.
Frequently asked questions
Can I claim my mortgage payments against rent?
Not the capital repayments, ever. The interest gets a 20% tax credit under Section 24 rather than being deducted from rental profit — so it reduces your bill, but less generously than a normal expense if you pay tax above the basic rate.
Can I claim for my own time managing the property?
No. Your own labour is not an allowable expense, however many hours the letting takes. Payments to a letting agent, a cleaner, or a tradesperson are claimable — a notional wage to yourself is not.
Are travel costs to my rental property allowable?
Yes, where the journey is wholly and exclusively for the letting — inspections, repairs, tenant matters. Use actual costs or approved mileage rates, keep a log, and remember journeys with a private purpose mixed in fail the test.
What is replacement of domestic items relief?
A deduction for replacing furniture, furnishings, appliances, and kitchenware in a let property — sofa for sofa, washing machine for washing machine. The initial purchase for a new let is not claimable; the replacement is, minus anything you got for the old item.
Can I claim expenses from before my first tenant?
Usually, yes. Revenue expenses incurred up to seven years before the letting starts — advertising, insurance from when the property was ready to let, minor repairs — are treated as incurred on day one of the rental business.