What Expenses Can Landlords Claim? A Plain-English HMRC Guide

A landlord can claim any cost incurred wholly and exclusively for the purpose of the property rental business, including letting agent fees, landlord insurance, repairs, ground rent, service charges, accountancy fees and the cost of replacing domestic items. Understanding allowable expenses for landlords UK wide is the most effective way to reduce a rental profit legally, because every pound of allowable expenditure reduces taxable rental profit pound for pound.

The rules are not complicated, but they are unforgiving. HMRC draws a hard line between revenue costs, which are deductible in the year, and capital costs, which are not deductible against rental income at all. Getting that distinction wrong is the most common reason landlords either overpay tax or face an enquiry.

Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, works with landlords across the UK on exactly this problem. This guide covers what you can claim, what you cannot, how the capital versus revenue test works, and how replacement of domestic items relief operates in the 2026/27 tax year.

Key Takeaways

• Allowable expenses for a UK property rental business are costs incurred wholly and exclusively for the purpose of letting, deducted from rental income to arrive at taxable rental profit.
• Revenue costs such as repairs, letting agent fees and landlord insurance are deductible in the tax year they are incurred; capital costs such as an extension or a first-time fitted kitchen are not deductible against rental income.
• Replacement of domestic items relief allows a landlord to deduct the cost of replacing a like-for-like sofa, bed, carpet, fridge or similar domestic item in a let residential property, but not the cost of the first purchase.
• Finance costs, including buy-to-let mortgage interest, are not an allowable expense for individual landlords and instead attract a basic rate tax reducer at 20% under Section 24 of the Finance Act 2015.
• From 6 April 2026, landlords with qualifying income above £50,000 must keep digital records and file quarterly updates under Making Tax Digital for Income Tax, plus a final declaration by 31 January.
• The property allowance gives £1,000 of tax-free rental income, but a landlord who claims it cannot also deduct actual expenses.

What counts as an allowable expense for a UK landlord?

An expense is allowable if it is incurred wholly and exclusively for the purposes of the property rental business and is revenue rather than capital in nature. That two-part test governs every deduction a landlord claims.

The everyday costs that pass comfortably include letting agent and management fees, landlord and buildings insurance, ground rent and service charges on a leasehold flat, council tax and utilities paid during a void period, advertising for tenants, gas safety certificates and EPCs. Legal and professional fees qualify where they relate to the ongoing letting business: drawing up a short tenancy agreement, chasing rent arrears, or preparing the property pages of a tax return. Accountancy fees and landlord association membership qualify on the same basis.

Where a cost has both a business and a private purpose, it must be apportioned on a just and reasonable basis. A landlord who drives 2,000 miles a year, of which 600 are trips to inspect a rental property, can claim 30% of the motoring cost or use the simplified mileage rate of 55p per mile for the first 10,000 business miles.

What landlord expenses are not allowable against rental income?

Capital expenditure, private costs and buy-to-let mortgage interest are not deductible against rental income. This is where most claims go wrong.

Capital expenditure improves the property beyond its original condition or creates something new: a conservatory, a loft conversion, a fitted kitchen where none existed, an extension. These costs are not lost, because they are added to the property's base cost and reduce the capital gain on eventual sale, but they cannot be set against rental profit in the year. Private costs fail the wholly and exclusively test, so personal legal fees and travel to a property you also stay in are disallowed.

Buy-to-let mortgage interest is the exception that catches landlords out. Since Section 24 was phased in, an individual landlord cannot deduct finance costs from rental income at all. Instead, HMRC allows a basic rate tax reducer worth 20% of the finance cost, applied after tax on the profit has been calculated. A higher rate landlord paying £10,000 of mortgage interest obtains £2,000 of relief rather than the £4,000 available under the old rules. Mortgage arrangement fees and interest on a loan taken to fund a deposit follow the same treatment.

For a full overview of this topic, see our guide to allowable expenses for landlords.

How do you tell a repair from an improvement?

A repair restores an asset to its previous condition and is deductible; an improvement makes the asset better than it was and is capital. The practical test HMRC applies is whether the work has changed the character or extent of the asset.

Replacing rotten window frames with modern double glazing is treated as a repair, because double glazing is now the standard equivalent and no meaningful improvement has been made. Repainting, replastering, fixing a boiler, re-roofing after storm damage, and replacing a broken fence panel are all repairs. Building an extension to house a larger kitchen is unambiguously capital.

The trap is buying a property in poor condition, doing it up, and then claiming the cost. Where repairs are needed because the property was purchased in a dilapidated state, and the purchase price reflected that condition, HMRC treats the expenditure as capital. The clue is usually the price paid: if you bought at a discount because the roof leaked, fixing the roof is capital.

Worked example. A landlord in Guildford spends £4,200 in the 2026/27 tax year: £1,800 replacing a failed boiler with an equivalent modern model, £900 redecorating between tenancies, and £1,500 installing a downstairs shower room that did not previously exist. The £1,800 and the £900 are revenue repairs and reduce rental profit by £2,700 this year. The £1,500 shower room is capital, is not deductible now, and is added to the base cost for capital gains tax purposes on eventual sale.

How does replacement of domestic items relief work?

Replacement of domestic items relief allows a landlord to deduct the cost of replacing a domestic item in a let residential property, capped at the cost of a like-for-like modern equivalent. Domestic items include beds, sofas, carpets, curtains, fridges, freezers, washing machines, crockery and cutlery.

Three conditions apply. The old item must be disposed of or given to the tenant, the new item must be substantially the same, and the property must not be a furnished holiday letting or covered by rent-a-room relief. The initial cost of furnishing a property for the first time is never deductible.

Where the replacement is an upgrade, only the equivalent cost qualifies. A landlord who replaces a basic £400 washing machine with a £700 integrated model deducts £400. Proceeds from selling the old item are subtracted: sell the old machine for £50 and the deduction falls to £350. Rental property tax deductions of this kind are frequently missed simply because the receipts are never kept.

What records must landlords keep under Making Tax Digital?

From 6 April 2026, landlords with qualifying income above £50,000 must keep digital records of rental income and expenses using MTD-compatible software and submit quarterly updates to HMRC, followed by a final declaration by 31 January after the tax year ends. Qualifying income is gross rental and self-employment turnover combined, before expenses.

Landlords with qualifying income above £30,000 join from April 2027, and those above £20,000 from April 2028. A landlord below the current threshold continues to file a conventional self-assessment return by 31 January, but must still retain records for at least five years after that deadline.

The practical consequence is that buy-to-let expenses HMRC will now see are reported four times a year rather than once. Loose receipts in a shoebox no longer work. Every category of expenditure needs to be captured digitally at the point it is incurred, which makes the capital versus revenue judgement something you make monthly rather than the night before the deadline.

Frequently Asked Questions

Can I claim mortgage payments against my rental income?

No. An individual landlord cannot deduct buy-to-let mortgage interest from rental income. Instead, HMRC gives a basic rate tax reducer worth 20% of the finance cost, applied after tax on the rental profit is calculated. The capital repayment element of a mortgage payment has never been deductible and receives no relief at all.

Can I claim expenses before my property is let?

Yes, within limits. Revenue expenses incurred in the seven years before a property rental business starts are treated as incurred on the first day of letting, provided they would have been allowable had the business been trading. Costs of getting a property into a lettable state where it was bought in disrepair are capital and remain non-deductible.

Is a new kitchen an allowable expense for a landlord?

It depends on whether it is a replacement or an addition. Replacing a worn-out kitchen with a modern equivalent of similar standard is a repair and is deductible against rental profit. Installing a kitchen where none existed, or fitting a substantially higher-specification kitchen, is capital expenditure and is added to the property's base cost for capital gains tax instead.

What is the £1,000 property allowance?

The property allowance exempts the first £1,000 of gross rental income from income tax in the 2026/27 tax year. A landlord with rental income of £1,000 or less need not report it. A landlord who claims the allowance cannot also deduct actual expenses, so it only benefits those whose expenses total less than £1,000.

Can I claim for my time managing my own rental property?

No. HMRC does not allow a deduction for a landlord's own time or notional wages for self-management. Only actual costs paid to third parties, such as a letting agent's management fee, are allowable expenses. A landlord can, however, claim mileage at 55p per mile for the first 10,000 business miles driven to and from the property.

Do I need to keep receipts for every landlord expense?

Yes. HMRC can request evidence for any claimed deduction, and records must be retained for at least five years after the 31 January self-assessment deadline for that tax year. Landlords within Making Tax Digital for Income Tax from 6 April 2026 must additionally keep those records in digital form using compatible software.

How Blue Tick Can Help

Blue Tick Accountants advises landlords on exactly where the line falls between a deductible repair and a capital improvement, and reviews rental accounts to recover deductions that have been missed. The practice also prepares landlords for Making Tax Digital for Income Tax, setting up digital record-keeping so quarterly updates are a formality rather than a scramble. If you own one property or twenty, a short review usually pays for itself. Head to our website and book a meeting now.

Conclusion

Every allowable expense reduces your rental profit pound for pound, and the difference between a well-recorded property business and a poorly recorded one is often several thousand pounds of tax a year. The two judgements that matter most are whether a cost is revenue or capital, and whether a replacement item qualifies for replacement of domestic items relief. Get those right, keep digital records now that Making Tax Digital has arrived, and your tax position looks after itself. If a cost sits near the capital line, take advice before you claim it rather than after HMRC asks.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that helps landlords, limited company owners and the self-employed across the UK. Leon advises property investors on rental profit computation, Section 24 planning and Making Tax Digital compliance. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.

Related reading: Self-Employed Expenses Checklist: Are You Claiming Everything You're Entitled To?.

Related reading: Repairs vs Improvements: The Critical Tax Distinction Every Landlord Must Know.