What expenses can landlords claim against rental income?
Allowable expenses are the running costs of a letting business that can be deducted from rent before income tax: repairs, agent fees, insurance, service charges, accountancy and similar. Improvements and purchase costs are capital, so they are not deductible from rent but may reduce Capital Gains Tax when you sell. Mortgage interest gets only a basic rate credit for individual landlords.
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Common costs and how they are treated
| Cost | Treatment |
|---|---|
| Repairs and maintenance | Deductible from rent |
| Letting and management fees | Deductible from rent |
| Insurance, ground rent, service charges | Deductible from rent |
| Accountancy, tenancy legal fees | Deductible from rent |
| Mortgage interest (individuals) | Basic rate tax credit only |
| Extensions, conversions, upgrades | Capital: may reduce CGT on sale |
| Buying and selling costs | Capital: count for CGT |
The basic rule
A cost is allowable if it is incurred wholly and exclusively for the letting business and is revenue in nature, meaning it keeps the property in its existing state rather than improving it. Costs for your own use, or for a property while you live in it, are not allowable.
Repairs or improvements?
Replacing a broken boiler, re-roofing with modern equivalent materials or redecorating between tenants are repairs. Adding an extension, converting a loft or turning a house into an HMO are improvements. Improvement costs are not deductible from rent but are added to your base cost as capital improvements, reducing the gain on sale. Replacing furnishings has its own relief; see replacement of domestic items relief.
Finance costs
For individual landlords, mortgage interest and arrangement fees are not deducted from rent. Instead they give a tax credit at the basic rate under Section 24, due to be 22% from April 2027 in line with the new property income rate. Companies deduct finance costs in full.
Records and the cash basis
Most unincorporated landlords use the cash basis by default, recording income and costs when paid. Keep invoices and receipts for at least five years after the 31 January filing deadline. Landlords in Making Tax Digital must keep these records digitally. Costs incurred up to seven years before letting starts can be claimed if they would have been allowable during the letting.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
Allowable expenses are the running costs of a letting business that can be deducted from rent before income tax: repairs, agent fees, insurance, service charges, accountancy and similar. Improvements and purchase costs are capital, so they are not deductible from rent but may reduce Capital Gains Tax when you sell. Mortgage interest gets only a basic rate credit for individual landlords.
No. You cannot pay yourself and deduct it, though genuine payments to a family member for real work at a fair rate can be allowable.
Yes, if the property remains part of the letting business and you intend to let it again.
No. Agent and legal fees on a sale are capital costs deducted in the CGT calculation.
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