Complete Guide to Allowable Expenses for Landlords in 2025/26

The UK property investing landscape has changed a lot in recent years. Reforms such as Section 24, which limited mortgage interest relief, and increased regulatory costs, have made it increasingly challenging to run a profitable buy-to-let portfolio. These changes mean landlords must now take a more proactive approach to managing their finances and understanding their allowable expenses.

And with Making Tax Digital (MTD) set to require quarterly digital tax submissions from April 2026, accurate expense tracking is no longer optional. Knowing which costs qualify as allowable expenses can significantly reduce your tax bill and improve your bottom line.

In this article, we outline the top allowable expenses for landlords and explain how to track and claim them effectively using the best digital tools for increased portfolio returns.

Quick Answer: What Expenses Can I Claim As A Landlord?

UK landlords can claim expenses that are "wholly and exclusively" incurred for renting out property. These include repairs and maintenance, insurance, letting fees, professional services, utilities (when landlord-paid), travel costs, and service charges. Finance costs receive 20% tax relief under Section 24 rules.

Average annual savings: Landlords who properly track allowable expenses typically reduce their taxable profit by 25-40%, saving £2,000-£5,000+ in tax annually.

Most overlooked deductions: Accountancy fees, mileage for property visits, proportional office costs, and like-for-like appliance replacements.

The Landlord Financial Markets 2025/26: Why Are Landlord Allowable Expenses Important?

Despite record-high UK rental prices, many landlords are seeing profits stagnate or decline due to rising operational costs and tighter tax rules.

The Revenue–Cost Disconnect

Average UK rents hit £1,343 per month in September 2025, with private rental prices up 8.7% year-on-year. Yet landlords’ net returns tell a different story. Across the board, cost inflation is outpacing income growth, squeezing profits even as rents rise.

Major cost pressures include:

• Finance costs: Since Section 24 fully took effect in 2020, mortgage interest is no longer fully deductible, replaced by a 20% tax credit. Higher-rate taxpayers now face significantly increased tax liabilities.
• Insurance premiums: Building and contents insurance costs have climbed 20–30% since 2022 due to higher claim volumes and updated risk models.
• Energy and compliance upgrades: Achieving an EPC rating of ‘C’ by 2028 could cost an average of £12,000 per property, with most upgrades classed as capital (non-deductible) expenses.
• General inflation: Labour, materials, and maintenance costs continue to rise, particularly in skilled trades.
• Expanded regulation: Licensing schemes, mandatory inspections, and safety certifications have increased admin and professional expenses.

While gross yields average 6% nationally (and up to 7.5% in some regions), these figures mask the mounting costs landlords must absorb.

Growing Compliance Burden

And to top it all off, regulation continues to tighten:

• Making Tax Digital (MTD): Quarterly digital reporting starts in April 2026 for landlords earning £50,000+, and from 2027 for those above £30,000, requiring compliant accounting software, and estimated to increase accountant costs by as much as 5 times.
• Furnished Holiday Let (FHL) regime abolished (April 2025): Landlords lose access to capital allowances, increasing taxable income.‍
• Renters’ Rights Bill: Expected reforms include abolishing Section 21, restricting rent increases, and expanding tenant protections.

Why Claiming Allowable Expenses is Essential

Beyond basic tax compliance, claiming allowable expenses represents strategic financial management.

Tax Savings By Rate

Landlords who meticulously record and claim allowable expenses typically reduce taxable profits by 25–40%, saving £2,000–£5,000+ annually, depending on portfolio size and tax bracket.

What Are Allowable Expenses for Landlords?

Allowable expenses are business costs that landlords can deduct from rental income when calculating taxable profit. To qualify, expenses must meet HMRC's "wholly and exclusively" test, which means they're incurred solely for the purpose of renting out property, not for personal use. 

Core Principles of Allowable Expenses for Landlords

An expense qualifies as allowable if:

• It's necessary for managing your rental business
• It maintains (but doesn't improve) the property
• It's used exclusively for rental purposes (or you claim only the business proportion)
• You have proper documentation (receipts, invoices, bank statements)

What This Means In Practice

If you purchase a laptop that is used 60% for property management and 40% for personal use, you can claim 60% of the cost. If you buy a lawnmower exclusively for maintaining your rental property's garden, the full cost is allowable. If you use the same lawnmower at your personal residence, it's not claimable.

Overview: Allowable Expenses for Landlords

Understanding which costs qualify as an allowable expense for landlrods is essential for maximising profitability and reducing your overall tax liability. These expenses can be deducted from your rental income before tax is calculated, helping you operate more efficiently and stay compliant with HMRC rules.

• Finance costs (tax relief on financing is subject to Section 24)
• Property maintenance and repairs
• Insurance premiums (e.g., landlord insurance)
• Ground rent and service charges
• Council tax (if the landlord is responsible for payment)
• Management and legal fees
• Wages for employees (e.g., property managers, cleaners)
• Travel expenses related to property management
• Administrative costs (e.g., office supplies, phone bills)
• Other finance-related costs associated with the rental property

View the Full Rental Property Deductions Checklist here.

Categories of Allowable Expenses for Landlords

Allowable expenses for rental income are bracketed into five main categories according to the HMRC. For an expense to be claimable against your buy-to-let income, it must be used ‘wholly and exclusively’ for the management of your property. 

In this context, wholly and exclusively means that the expense cannot also be used for personal or other business use. For example, if you buy office equipment and use it for personal use, it would no longer qualify as an allowable expense for landlords.

The five main categories for rental income allowable expenses are:

• General business expenses – For example, office expenses, travel costs such as petrol, phone and broadband, marketing and letting agents’ fees
• Professional fees – For example, your accountant fees, costs of surveyors, solicitors,  building insurance, and content and rent protection cover.
• Service fees – For example, gardening costs, cleaning, decorating, and building services
• Repairs – Only repairs or replacements that do not count as an improvement to the property. Expenses that count as improvements are not allowable.
• Property charges – For example, council tax, and utility bills.

Many costs incurred when running a buy-to-let property, however, are not allowable expenses. This includes:

• Improvements – work done to the property or costs incurred that improve the value of the property are not allowable. This includes things like new furniture or appliances or extensions to the property.
• Restoration – If you buy a property that is not in a rentable condition the costs to make it rentable are not allowable buy to let expenses.
• Interest payments – buy to let tax relief on the interest of finances for buying a buy to let property has been replaced with a tax credit under section 24 tax changes.

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Complete List: What Expenses Can I Claim As A Landlord?

Finance Costs (20% Tax Credit Only)

Since April 2020, mortgage interest and other finance costs cannot be fully deducted from rental income. Instead, landlords receive a 20% tax credit on:

• Mortgage interest payments
• Mortgage arrangement fees
• Loan interest for property purchases
• Bank charges on rental business accounts

How it works: If you pay £5,000 in mortgage interest annually, you receive a £1,000 tax credit (20% of £5,000) applied against your overall tax liability—not deducted from rental income.

Important: This restriction applies to residential property. Limited companies still receive full interest deductions.

General Maintenance and Repairs

Fully allowable:

• Repainting and redecorating between tenancies
• Fixing broken appliances, plumbing, or electrical systems
• Repairing structural damage (roof repairs, damp treatment)
• Replacing broken windows, doors, or fixtures
• Garden maintenance and cleaning services
• Annual boiler servicing

Not allowable (improvements):

• Adding extensions or converting lofts
• Installing new kitchens or bathrooms (unless like-for-like replacement)
• Upgrading single-glazed to double-glazed windows as a planned improvement
• Landscaping that enhances property value

Example: Repair vs. Improvement

Sarah's rental property has a broken £400 washing machine. She has three options:

1. Like-for-like replacement (£400): Fully allowable expense
2. Upgrade to £800 model: Can claim £400 (original value only)
3. Buying first washing machine for unfurnished property: Not allowable (capital expenditure)

The distinction hinges on restoration versus enhancement.

Insurance Premiums

Claimable insurance:

• Buildings insurance
• Contents insurance (for furnished properties)
• Landlord liability insurance
• Rent guarantee insurance
• Appliance breakdown cover
• Legal expenses insurance

Not claimable:

• Life insurance
• Personal health insurance
• Car insurance (unless specifically for rental business use only)

2025 average costs: UK landlords pay £150-£300 annually for buildings insurance and £50-£150 for contents cover, making this a significant allowable expense category.

Letting Agent and Property Management Fees

All fees charged by letting agents or property managers qualify as allowable expenses:

• Tenant finding fees (typically 8-12% of annual rent)
• Property management charges (10-15% of monthly rent)
• Inventory preparation costs
• Rent collection fees
• Tenant referencing costs
• Check-in and check-out services

Cost perspective: For a property generating £12,000 annual rent with a 10% management fee, that's £1,200 in allowable expenses—reducing a higher-rate taxpayer's bill by £480.

Professional Fees

Fully deductible professional services:

• Accountancy fees for preparing rental tax returns
• Tax advisor consultations
• Solicitor fees for debt collection, evictions, or lease renewals under 50 years
• Surveyor fees for property condition reports
• Property valuation costs for remortgaging (business purposes only)

Not deductible:

• Legal fees for initial property purchase
• Solicitor costs for leases over one year
• Professional advice on selling the property

Service Fees and Ground Charges

For leasehold properties or shared facilities:

• Ground rent payments
• Service charges for communal areas
• Estate management fees
• Building management costs
• Shared utility costs for common areas

These expenses accumulate quickly. Annual ground rent of £300 plus £800 in service charges represents £1,100 in allowable deductions.

Council Tax, Utilities, and Property Charges

Claimable when landlord pays:

• Council tax during void periods or when specified in tenancy agreement
• Water rates
• Gas and electricity bills
• Broadband (if provided to tenants)
• TV licence (if included in furnished lets)

Important timing rule: If tenants normally pay utilities, you can only claim for vacancy periods. Document void dates meticulously.

Office and Administrative Costs

Proportional expenses for mixed-use items:

• Phone bills (percentage used for rental business)
• Broadband costs (business proportion)
• Office supplies (paper, printer ink, stationery)
• Computer software for property management
• Postage and printing costs

Calculation example: If your £40 monthly phone bill includes 25% rental business use, claim £10 per month (£120 annually).

Travel and Vehicle Costs

Two claiming methods:

Method 1: Actual costs (proportional)

• Fuel costs
• Vehicle insurance
• Road tax
• MOT and servicing
• Repairs
• Breakdown cover

Calculate the percentage of business mileage, claim that proportion of total vehicle costs.

Method 2: HMRC mileage rates (simpler)

• 45p per mile for first 10,000 business miles
• 25p per mile thereafter

Example: 800 business miles annually × 45p = £360 allowable expense

Claimable journeys:

• Travel to rental properties for inspections
• Trips to purchase maintenance supplies
• Meetings with contractors or letting agents
• Bank visits for rental business banking

Not claimable:

• Regular commute from home to office
• Parking fines or speeding tickets
• Personal journeys

Wages and Employee Costs

If you employ people for your rental business:

• Cleaner wages
• Gardener payments
• Property manager salaries
• Administrative assistant costs

Employment status matters: Ensure proper classification. If you provide regular hours, materials, and supervision, they're likely employees requiring PAYE compliance. Self-employed contractors are simpler but must be genuinely independent.

Marketing and Advertising

Allowable promotional costs:

• Online property listing fees (Rightmove, Zoopla)
• Photography and virtual tour creation
• Print advertising costs
• "To Let" signage
• Property website expenses

Typical costs: Professional photography (£100-£200) and premium listing placement (£100-£300) are worthwhile investments that qualify as full deductions.

Other Allowable Landlord Expenses

• Membership fees for landlord associations (National Residential Landlords Association, etc.)
• HMO licensing fees
• Selective licensing costs
• Training courses on property management or landlord law
• Professional development related to rental business

Replacement of Domestic Items Relief

The Replacement of Domestic Items Relief replaced the previous wear-and-tear allowance in 2016. This relief allows landlords to claim tax relief on replacing moveable furniture, furnishings, appliances, and kitchenware.

What Qualifies under The Replacement of Domestic Items Relief

Eligible items:

• Furniture (sofas, beds, wardrobes, tables, chairs)
• White goods (washing machines, fridges, dishwashers)
• Furnishings (curtains, carpets, light fittings)
• Kitchenware (crockery, cutlery, pans)
• Televisions and audio equipment

Key Requirements

1. Must be a replacement: Initial furnishing doesn't qualify
2. Like-for-like principle: Claim cost of equivalent replacement, not upgrades
3. Deduct disposal proceeds: If you sell the old item, subtract that amount

Example: Replacement Relief Calculation

Tom's rental property has a 5-year-old £300 fridge that stops working. He buys a new £500 energy-efficient model and sells the broken fridge to a repair shop for £50.

Allowable expense calculation:

• Old fridge equivalent value: £300
• Disposal proceeds: -£50
• Claimable amount: £250

If Tom were a 40% taxpayer, this £250 deduction saves him £100 in tax.

For more on claiming replacement relief, read our article here.

Capital Expenditure vs Revenue Expenditure: Understanding The Distinction

This distinction confuses many landlords but significantly impacts tax liability.

Revenue Expenditure (Allowable)

Day-to-day running costs that maintain property in current condition:

• Repairs restoring original state
• Maintenance preventing deterioration
• Service costs
• Management fees

Tax treatment: Deduct from rental income in the year incurred

Capital Expenditure (Not Immediately Allowable)

One-time costs that improve, alter, or acquire assets:

• Property purchase
• Major improvements
• Extensions or conversions
• Initial furnishing

Tax treatment: Cannot deduct from rental income, but may reduce Capital Gains Tax on disposal

Example: The Grey Area

Claire needs a new boiler. The distinction depends on circumstances:

Scenario 1: Repair (Revenue) Old boiler breaks; replaced with a similar modern equivalent → Allowable

Scenario 2: Improvement (Capital) Working basic boiler replaced with premium system heating additional rooms → Capital

Scenario 3: Mixed Broken boiler replaced with more efficient model (incidental improvement) → Allowable under HMRC guidance if improvement is incidental to necessary repair

Understanding Part Expenses: Mixed Personal and Business Use

Many costs involve both personal and business use. HMRC allows claiming the business proportion if clearly identifiable.

Common Part Expenses

• Mobile phone: Calculate business call percentage from usage patterns 
• Vehicle: Calculate business mileage as percentage of total annual mileage 
• Home office: Claim proportion of house used exclusively for business (rare for landlords) 
• Broadband: Estimate business usage hours

Documentation Requirements

Maintain records proving your calculation:

• Vehicle mileage logs with dates, destinations, purposes
• Phone bills with annotations marking business calls
• Diary showing business use hours

HMRC scrutiny: Part expenses attract attention during investigations. Conservative, defensible calculations are prudent.

How To Claim Allowable Expenses For Landlords

Step 1: Register for Self Assessment

If you haven't already, register with HMRC for Self-Assessment by 5 October following the tax year you received rental income.

Example: First rental income received in July 2024 (tax year 2024/25) → Register for Self-Assessment by 5 October 2025

Step 2: Choose Your Accounting Basis

Cash Basis (Default for income under £150,000)

• Record income when received
• Record expenses when paid
• Simpler for most landlords
• Matches bank statements

Accruals Basis (Traditional accounting)

• Record income when due
• Record expenses when incurred
• Required for rental income over £150,000
• More complex but potentially advantageous

Most landlords benefit from cash basis simplicity. If you’re looking for an MTD-ready cash basis accounting tool designed for landlords, Landlord Studio provides all the rental accounting tools you need in a simple, easy-to-use tool.

Step 3: Maintain Comprehensive Records

HMRC requires keeping records for 5 years after the 31 January submission deadline.

Essential documentation:

• Bank statements showing all rental transactions
• Receipts for all expenses (digital or paper)
• Invoices from contractors and suppliers
• Mortgage statements showing interest paid
• Letting agent statements
• Tenancy agreements
• Mileage logs for vehicle expenses
• Records explaining part expense calculations

Step 4: Complete SA105 Supplementary Pages

Report rental income and expenses on the SA105 (UK Property) pages alongside your main SA100 form.

Key sections:

• Property income
• Expenses (itemised by category)
• Mortgage interest (reported separately for 20% tax credit calculation)
• Losses brought forward
• Adjustments for cash/accruals differences

Step 5: Submit By The Deadline

• Paper returns: 31 October (following tax year end)
• Online returns: 31 January (following tax year end)

Late filing penalties: £100 immediate penalty, escalating significantly for extended delays

Making Tax Digital: Preparing For Mandatory Compliance

Making Tax Digital (MTD) for Income Tax fundamentally changes record-keeping requirements for landlords.

MTD Implementation Timeline

• April 2026: Landlords with gross income over £50,000 must comply 
• April 2027: Threshold reduces to £30,000 income

Key Requirements

1. Digital record-keeping: Maintain rental income and expense records in MTD-compatible software
2. Quarterly submissions: Submit summary updates every three months
3. End-of-period statements: Annual reconciliation replacing traditional Self Assessment
4. Digital links: Ensure seamless data flow from records to submissions

What MTD Means For Expense Claims

Manual spreadsheets and paper receipts will no longer be HMRC-compliant. Landlords need digital systems like Landlord Studio that will allow them to capture expenses in real-time, categorise correctly, and store receipts.

The compliance burden increases significantly, but proper software can automate most processes.

MTD preparation strategy: Create your free Landlord Studio account today, before your mandatory MTD start date. This provides time to test and learn the software and establish workflows without deadline pressure.

Allowable Expenses For Landlords: Final Words

This is by no means an exhaustive list of allowable expenses, but we have highlighted some of the most significant deductions that many landlords overlook.

To ensure you maximise your tax deductions, it’s critical to use a proper system like Landlord Studio to track income and expenses accurately and with MTD changes coming into effect in 2026 quality digital record-keeping software is no longer optional.

By leveraging Landlord Studio, you can:

• Keep real-time digital records of your property income and expenses‍
• Generate professional tax reports for easy submission to HMRC‍
• Ensure full compliance with MTD and Self-Assessment requirements‍
• Use automated tools like rent reminders, tenant invoicing, document storage, and tax reporting to streamline property management

On a final note, preparing for MTD now will save time and stress down the road. Create your free Landlord Studio account today and get ahead of the curve—simplify your tax compliance, automate expense tracking, and maximise your rental income.

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Landlord Allowable Expenses FAQs

What expenses can I claim as a landlord?

Landlords can claim expenses wholly and exclusively incurred for renting property, including repairs, insurance, letting fees, professional fees, utilities (when landlord-paid), travel costs, and service charges. These expenses reduce taxable rental profit.

Can I claim mortgage interest as a landlord?

Since April 2020, mortgage interest cannot be fully deducted from rental income. Instead, you receive a 20% tax credit on interest payments through Section 24 relief. This means £5,000 interest provides a £1,000 tax credit.

What's the difference between a repair and an improvement?

A repair restores property to its original condition (allowable expense). An improvement adds value or changes the property substantially (capital expenditure, not immediately allowable). Repainting is a repair; adding an extension is an improvement.

Can I claim expenses for work I do myself?

No, you cannot claim for your own labour. Only materials and professional fees are claimable. If you personally paint your rental property, claim paint costs but not your time.

How long must I keep expense receipts?

HMRC requires keeping records for at least 5-6 years after the relevant tax year's 31 January submission deadline. Digital records are acceptable and often preferable for MTD compliance.

What happens if I use something for both personal and business use?

You can claim the business proportion only. Calculate the percentage used for rental business and claim that amount. For example, if you use your car 20% for property business, claim 20% of vehicle costs.

Can I claim furniture costs?

You cannot claim initial furnishing costs. However, Replacement of Domestic Items Relief allows claiming like-for-like replacements of furniture, white goods, and furnishings when worn items need replacing.

What is the £1,000 property allowance?

If your total rental income is under £1,000 annually, you can claim this allowance instead of actual expenses, making the income tax-free. For income above £1,000, claiming actual expenses is usually more beneficial.

Do I need an accountant to claim expenses?

Not required, but accountant fees for preparing rental tax returns are themselves claimable expenses. Professional advice often identifies deductions exceeding the fee cost. MTD-compliant software like Landlord Studio can automate much of the process.

When does Making Tax Digital apply to landlords?

MTD for Income Tax Self Assessment applies from April 2026 for landlords earning over £50,000 annually, and April 2027 for those earning over £30,000. Affected landlords must maintain digital records and submit quarterly updates.

Can I claim costs before my property was rented?

No, expenses incurred before first letting (e.g., renovating to make property rentable) are capital costs, not allowable expenses. Once the property is let, subsequent repairs and maintenance qualify.

What if HMRC questions my expenses?

HMRC may request evidence during routine reviews or investigations. Maintain comprehensive documentation proving expenses were wholly and exclusively for rental purposes. Unclear claims or poor records invite scrutiny.

2025 Legislative Updates Affecting Landlord Expenses

Furnished Holiday Lettings Abolition

From 6 April 2025, the Furnished Holiday Lettings (FHL) regime was abolished. Properties previously qualifying as FHLs now follow standard residential letting rules for expense claims and tax treatment.

Impact: Loss of capital allowances on furniture and equipment for these properties.

Related: About The Furnished Holiday Let Tax Changes

Energy Efficiency Requirements

By 2028, rental properties must achieve EPC rating C for new tenancies. While improvement costs aren't immediately allowable expenses, energy efficiency upgrades may qualify for capital allowances or CGT relief.

Average upgrade costs: £12,000 to reach EPC rating C—landlords should plan for this capital expenditure.

Related: The Landlord's Complete Guide to EPC Regulations For 2025

Renters' Rights Bill Implications

Expected 2025 passage of the Renters' Rights Bill may generate additional allowable expenses:

• Legal costs related to new possession procedures
• Compliance costs for enhanced tenant protections
• Administrative expenses for new regulatory requirements

Monitor developments as implementation details emerge.

Related: An Update on the Renter’s Rights Bill: It’s Worse Than We Thought