As a landlord here in the UK, there’s more to your work than finding tenants and getting the rent in; you need to think about tax too. And one of the simplest, most efficient means of trimming that tax bill is to claim all the allowable expenses to which you’re entitled.

However, the issue is that many landlords miss out simply because they are unaware of what they can claim. Others inadvertently mess up, risking fines and unexpected tax bills further down the line.

This is precisely why it’s so crucial to understand what constitutes an eligible expense, whether you’re a novice at renting out property or have been doing it for some years. Knowing who to pay, when, and how much will prevent you from losing money and your composure.

In this guide, we will explain what allowable expenses are, what you can (and can’t) claim for and how to make sure you stay on the right side of HMRC.

What Are Allowable Expenses?

Allowable expenses are the costs of running a property that you can deduct from your rental income to calculate your profit for tax. They are, according to HMRC, costs that are “wholly and exclusively” to renting out your property.

If you spend money to manage, maintain, or let the property, chances are it falls under this type of expense. The goal is to make sure you’re taxed only on your net profit, not your entire rental income. And if you’re taking £15,000 in rent and have £5,000 in allowable expenses, you’ll be taxed on the remaining £10,000 (of course, some landlords also pay VAT on these expenses).

(And remember, you can’t write off future costs or nonexistent expenses; the expense you claim must have been real, you or your tenant must have actually paid for it.) Similarly, if an expense has both personal and rental uses, you can only deduct that part of the expense that pertains to the rental.

You can’t deduct things like your time or personal phone calls. However, if you are paying for repairs, insurance, or accountancy services for your rental property, that may also qualify. It is essential to maintain transparent and accurate records of these costs, as not doing so may result in penalties or unexpected bills from HMRC.

Common Allowable Expenses for UK Landlords

Mortgage interest

Due to the arrival of Section 24, landlords can no longer claim mortgage interest against rental income in full. You now receive a 20 per cent credit on interest payments instead. While this does restrict higher-rate relief, it’s still worth having. Remember that this is for the interest only, not for the principal payment.

Repairs and maintenance

The costs of repairs that restore your property to its original condition are generally allowable expenses. This may involve tasks such as mending leaky taps, repairing broken windows, painting, or laying new carpets. It’s also crucial that the work does not result in the property being better than it was before; that would constitute a capital expenditure, not an allowable repair.

Insurance costs

You can also deduct the cost of landlord insurance, i.e. buildings, contents (if furnished) and public liability insurance. These policies are designed to protect you from the financial risks associated with letting property and are entirely legitimate business expenses under HMRC rules.

Council tax and utilities

If you are paying for council tax, gas, electricity or water bills, such as during void periods or if the cost of utilities is included in the rent, you can deduct the costs for these. But if your tenants pay them directly, you can’t deduct them. You’ve always got to be sure your records are keeping a clear and logical account of what you’ve paid and when.

Letting agent and professional fees

Letting agents frequently impose fees for finding tenants, showing the property and managing the property. These are fully deductible. You can also deduct expenses for professional services, such as those of accountants, solicitors (where the fee relates to a lease of less than 50 years or where the landlord is attempting to evict a tenant), and surveyors, if their services are directly linked to your rental business.

Service charges and ground rent

If the rental is leasehold, you’ll pay annual service charges or ground rent. These are deductible to the extent that they incur costs for building maintenance, such as cleaning common areas or other duties a landlord would typically perform. If you’re unsure whether a charge should qualify, review the lease and consult a tax advisor.

Other expenses

There are lots of smaller allowable costs that add up:

• Travel costs (e.g. mileage for property inspections)
• Phone calls and postage directly related to letting
• Advertising the property for rent
• Safety certificates (e.g. gas, electricity)
• Accountancy software or filing services for tax returns

Capital vs. Revenue Expenditure

One of the grey areas that can be confusing for landlords is the difference between capital and revenue expenditure. It’s essential that you are aware of this, as it will affect what you can include in your Self Assessment return.

Revenue costs are associated with the management and upkeep of your property for rent. These are the repairs and operating expenses we covered earlier, such as replacing a broken oven, repainting walls or fixing a leaky roof. These are deductible within the tax year.

Capital costs increase the value or quality of the property. For instance, adding a conservatory, converting a loft, or undertaking some levels of conversion, or replacing a kitchen with a higher-spec version would count as capital expenses. And without deducting these from rental income, write them off against Capital Gains Tax if you do sell the property.

Here’s a quick example:

• Replacing old, worn carpet with similar quality? Revenue – allowable.
• Installing underfloor heating where there was none before? Capital – not immediately allowable.

When in doubt, speak to a tax adviser or accountant. Misclassifying expenses is a common mistake that can be easily avoided.

Restrictions and Disallowed Expenses

But not everything you pay for your rental property counts as an allowable expense. HMRC has strict rules on what doesn’t count, and it’s easy to trip up if you’re not paying attention.

First, personal costs are always non-allowable. That includes your own time (so, no deduction for weekends spent cleaning), personal travel, clothes or mobile phone bills unless they are used exclusively to manage the rental. Any dual-use items must be split clearly, and only the rental portion is claimable.

Penalties and fees are also prohibited, whether or not they are due to the rental. That could result in late tax filing penalties, council fines, or legal costs for violating the rules.

Other disallowed expenses include:

• Costs of buying the property (e.g. stamp duty, surveys, legal fees)
• Capital improvements (covered earlier)
• Training courses or qualifications not directly related to managing an existing property

Be careful with multiple claims, such as claiming for mortgage repayments rather than just the interest.

It’s also important not to assume something’s allowable just because you paid for it. If you’re ever unsure, check HMRC guidance or get professional advice. The risks of over-claiming include penalties, interest, and unwanted attention from HMRC.

Record Keeping and Reporting

Poor record-keeping can get you in trouble even if you’re claiming only what’s permissible. Landlords are required to keep accurate records of all costs, such as receipts, invoices and mileage logs, for at least six years, according to HMRC.

Each cost you pay should have clear documentation that states what you paid, for what, and on what date. If you do not have evidence to support a claim, you could lose the dispute. For landlords with multiple properties, it is smart to keep track of expenses by property address.

And with landlords making over £50,000, they’ll need to enter into Making Tax Digital (MTD) for Income Tax in 2026. Digital records won’t only be useful – they’ll be compulsory. This requires using approved software to monitor income and expenses, as well as filing quarterly reports.

If you haven’t been using any tools for accounting, now’s the time to get everything set up. A subscription software service in the cloud can connect to your bank account, store receipts and automatically categorise transactions, for example, saving time and reducing errors.

Realising your tax well doesn’t simply hinge on understanding the rules; it’s also a matter of maintaining good records. HMRC will not accept your word without proof. So keep organised, keep accurate, and keep out of trouble.

Conclusion

Let’s face it: Being a landlord isn’t always easy. However, taxes don’t have to be a burden. Through understanding what you can claim and maintaining good records, you can reduce your tax bill and concentrate on the running of your property.

Remember, you can also write off a wide range of costs, including mortgage interest, repairs, agent fees, insurance and more. However, be aware of the distinction between valid revenue costs and capital improvements, and avoid personal or disallowed expenses.

Proper record-keeping is as important as knowing the rules. As the taxman also continues to home in on compliance and Making Tax Digital looms, there’s never been a better time to tidy up your rental finances.

At Reed & Co, we work with landlords to ensure they are operating within the law, claiming all relevant expenses, and avoiding any potential pitfalls. If you have anything from one rental to a growing portfolio, our property tax specialists are here to help.

Are you seeking help with your landlord tax return? Get in touch today with Reed & Co to discuss how we can help you through personalised advice, digital products, and easily done taxes!