What Are Allowable Expenses for UK Landlords?
Allowable expenses are costs you can deduct from rental income when working out taxable rental profit, provided they are incurred “wholly and exclusively” for renting out the property. Where only a definite part of a cost is for the rental business, you may be able to deduct that part (GOV.UK: work out your rental income).
The key distinction is between revenue expenditure, the day-to-day cost of running the lettings, and capital expenditure, which adds to or improves the property. Rental income less allowable revenue expenses gives rental profit, which is added to your other income and taxed at your rates. Several UK properties count as one property business, so their income and expenses are combined.
Illustrative example: rent of £12,000 less allowable expenses of £2,500 gives a rental profit of £9,500 before other adjustments. The figures are invented and do not determine anyone’s tax bill.
Which Landlord Expenses Can You Claim in 2026?
These are the main categories HMRC recognises. Each must still pass the wholly-and-exclusively test, so treat the examples as illustrations, not guarantees.
1. Letting-agent and management fees
Fees for finding tenants, collecting rent or managing the property can be deducted if you pay them. Example: 10% of £1,200 monthly rent is £120 a month. Private elements do not qualify. Reference: GOV.UK landlord guidance.
2. Repairs and maintenance
Costs that restore the property to its previous condition are normally allowable; improvements are not (see below). Example: £300 to fix a leaking pipe and redecorate the damaged ceiling. If insurance or a kept deposit covers part of the repair, claim only the excess. Reference: PIM2025 and PIM2030.
3. Landlord insurance
Policies for buildings, contents and public liability are listed as deductible. Example: a £320 annual landlord policy. A policy that also covers your own home needs apportioning. Reference: GOV.UK landlord guidance.
4. Utilities and council tax paid by the landlord
Water rates, council tax, gas and electricity can be deducted where you, not the tenant, pay them. Example: bills on an inclusive let; when a dwelling is empty, council tax falls on the owner. Costs while a property is not genuinely available to let may be challenged. Reference: GOV.UK landlord guidance and PIM2140.
5. Ground rent and service charges
Leasehold landlords can generally deduct ground rent and service charges they pay. Example: £250 ground rent and a £1,350 service charge. If a charge funds capital improvements, that element may be capital, so ask for a breakdown. Reference: GOV.UK landlord guidance.
6. Accountancy and qualifying professional fees
Accountant’s fees are deductible, and legal fees qualify for lets of a year or less or lease renewals under 50 years. Example: drafting a 12-month tenancy agreement. Only the rental part of a wider fee qualifies, and acquisition costs are capital. Reference: GOV.UK landlord guidance and PIM2030.
7. Advertising and tenant-finding costs
Direct costs such as advertising for new tenants, phone calls and stationery can qualify. Example: a £60 portal listing. Private phone calls do not. Reference: GOV.UK landlord guidance.
8. Cleaning and gardening
Cleaners’ and gardeners’ wages and similar service costs can be deducted. Example: a £90 clean between tenants. A vacuum also used at home is not claimable. Reference: PIM2076 and HMRC’s worked examples.
9. Replacement domestic items
Replacing furniture, furnishings, appliances and kitchenware in a residential let can qualify. Initial furnishing costs do not, nor do rent-a-room lets or items with capital allowances claimed. Example: a £400 sofa replaced by a £550 sofa bed allows a £400 deduction. Reference: PIM3210 and GOV.UK landlord guidance.
10. Other qualifying property-business costs
Vehicle running costs, including mileage-rate deductions, are deductible for the proportion used for the rental business. Example: a 40-mile trip to inspect a let property, logged. Only journeys solely for the rental business count. Reference: GOV.UK landlord guidance.
Repairs vs Improvements: What Is the Difference?
HMRC describes a repair as restoring an asset to its original condition, sometimes by replacing parts of it. Replacing something with the nearest modern equivalent can still be a repair where any improvement is incidental. An improvement adds something new or upgrades what was there, and is capital expenditure. If a job mixes both, the repair element can remain allowable (PIM2030).
| Type of work | Typical examples | General treatment |
|---|---|---|
| Repair | Replacing storm-damaged roof tiles; fixing leaks; redecorating between tenants | Revenue expense, normally deductible |
| Like-for-like fixture replacement | Renewing a bath, toilet or boiler without upgrading | Normally a repair |
| Improvement | Adding an extension; a security system where there was none; a higher-specification kitchen | Capital, not deducted from rental income |
| Making a run-down property fit to let | Putting a derelict property into lettable state | Likely capital |
| Replacement domestic items | Sofa, fridge, carpets, crockery | May qualify for replacement domestic items relief |
Capital costs cannot be deducted from rental income, but keep the records because they may be set against Capital Gains Tax if you sell. Ask contractors to itemise repairs and upgrades separately. See HMRC’s guidance on capital expenditure.
Can Landlords Claim Mortgage Interest in 2026?
Not as an ordinary expense, if you are an individual with residential lets. Since 6 April 2020, relief on residential finance costs is restricted to the basic rate. Instead of deducting them from rental income, you receive a tax reduction of the basic rate (currently 20%) of the lowest of: your finance costs, your property business profits, and your adjusted total income above the personal allowance. Unused costs carry forward, and the reduction cannot create a refund (HMRC: tax relief for residential landlords).
Finance costs include interest on mortgages, loans and overdrafts, plus arrangement and repayment fees, but not capital repayments. Companies are outside the restriction, and interest on a non-residential let is deducted normally. Partnerships, trusts and mixed-use properties have extra rules (PIM2054).
Illustrative example, not tax advice: with rental income of £14,400, other expenses of £3,510 and mortgage interest of £4,000, profit before finance costs is £10,890 and the interest is not deducted. If adjusted total income above the personal allowance is at least £4,000, the tax reduction is 20% of £4,000, or £800. Other income, losses and joint ownership can change the result.
From 6 April 2027, HMRC’s technical note sets out property income rates of 22%, 42% and 47% in England, Wales and Northern Ireland, with finance cost relief at 22% (HMRC technical note). Check the current position before relying on it.
What Landlord Expenses Are Not Allowable?
Treatment always depends on the circumstances, but HMRC guidance identifies several common exclusions (GOV.UK):
- Personal expenditure not incurred solely for the rental business, such as private phone calls or clothing.
- Capital improvements, unless they qualify for replacement domestic items relief.
- The full mortgage payment. Only the interest is a finance cost, and for residential lets it is relieved through the tax reduction.
- Costs already recovered, such as repairs paid for by an insurance pay-out or a deposit you kept.
- Expenses on uncommercial lets. If you let to a friend or relative at a reduced rent, expenses can only be deducted up to the rent received (HMRC’s uncommercial let example).
The £1,000 Property Allowance Explained
The property allowance is a tax exemption of up to £1,000 a year on gross property income for individuals. If your gross property income is £1,000 or less, you generally need not tell HMRC, unless you cannot use the allowances. Above that, you can deduct the allowance instead of actual expenses, but not more than your income. Joint owners can each claim it against their share (GOV.UK: tax-free allowances on property and trading income).
The choice is either/or. Claim the allowance and you cannot also deduct expenses against that income, so it helps only where real expenses are under £1,000. It is unavailable if, for example, you claim the finance cost tax reduction, or the income comes from a company or partnership you or someone connected to you controls.
Do not confuse it with the trading allowance. That is a separate £1,000 exemption for trading income such as self-employment. Each allowance applies only to its own type of income.
How to Calculate Your Rental Profit
An illustrative example for one let property, using invented figures: agent fees £1,440, insurance £320, repairs £850, ground rent and service charge £600, accountancy £180 and advertising £120.
| Rental income | Example qualifying expenses | Total relevant expenses | Illustrative rental profit |
|---|---|---|---|
| £14,400 | Agent, insurance, repairs, ground rent, accountancy, advertising | £3,510 | £10,890 |
This is not a complete tax calculation. Finance costs, allowances, losses, jointly owned property, other income and the personal allowance can all change the final figure. Mortgage interest is excluded because of the separate tax reduction.
What Records Should Landlords Keep?
You must keep accurate records of rent received and expenses incurred, for at least 5 years after the 31 January tax return deadline for each tax year. HMRC can charge a penalty if records are inaccurate, incomplete, unreadable or not kept for the required period (GOV.UK: record keeping, GOV.UK: rental income records). A practical checklist:
- Rental income records, rent books and the dates properties were let
- Invoices and receipts for every expense you claim
- Letting-agent statements
- Mortgage interest and other finance-cost statements
- Insurance documents
- Repair and maintenance invoices, itemised where possible
- Service-charge and ground-rent statements
- Utility and council tax bills you paid as landlord
- Relevant bank statements
- Records of capital improvements, which may matter for Capital Gains Tax
- Records supporting any allowance or relief you claim
How Does Making Tax Digital Affect Landlords in 2026?
Not every landlord has to use Making Tax Digital for Income Tax (MTD ITSA) in 2026. You must if you are registered for Self Assessment, receive self-employment or property income, and your qualifying income is over the relevant threshold (GOV.UK: find out if and when you need to use MTD for Income Tax):
- over £50,000 for 2024 to 2025: start from 6 April 2026
- over £30,000 for 2025 to 2026: start from 6 April 2027
- over £20,000 for 2026 to 2027: start from 6 April 2028
Qualifying income is self-employment and property income before expenses, based on your previous Self Assessment return, with your share counting for jointly owned property. Employment income, pensions and dividends do not count (GOV.UK: work out your qualifying income). HMRC has been signing up people it identifies as required to join (GOV.UK step-by-step guide for sole traders and landlords).
- Digital records of income and expenses are kept in compatible software, which HMRC does not provide, alongside your original invoices and statements (GOV.UK: create digital records).
- Quarterly updates are due by 7 August, 7 November, 7 February and 7 May on standard update periods. HMRC says it will not apply penalty points for late quarterly updates in 2026 to 2027 (GOV.UK: send quarterly updates).
- Your tax return is completed and submitted in your software by 31 January after the tax year. Older material mentions an end-of-period statement and final declaration, so check your software’s terms (GOV.UK: submit your tax return).
Confirm thresholds and dates against current HMRC guidance. For more, read our complete MTD ITSA guide, our guide to landlord quarterly records under MTD ITSA, and our explainer on digital records and digital links. Sole traders who also let property may want our guide to allowable expenses for the self-employed; see also our MTD software for landlords page and our guide to Self Assessment deadlines and penalties.
Common Landlord Tax Mistakes to Avoid
- Treating improvements as repairs. Have contractors itemise repairs and upgrades, and check each against HMRC’s guidance.
- Deducting all mortgage interest as an ordinary expense. Individual residential landlords get a basic-rate tax reduction instead.
- Claiming personal expenditure. Claim only the part that is wholly and exclusively for the rental business.
- Confusing the property and trading allowances. They are separate £1,000 exemptions for different income.
- Not keeping invoices and receipts. Store them for at least 5 years after the 31 January deadline.
- Assuming every property payment is deductible. Test each against the wholly-and-exclusively rule and capital-versus-revenue treatment.
- Using outdated thresholds. Check GOV.UK each year, especially MTD thresholds and the 2027 property rate changes.
Frequently Asked Questions
What expenses can landlords claim against rental income in 2026?
Costs incurred wholly and exclusively for the rental business, such as letting-agent fees, insurance, repairs, ground rent and service charges, accountancy fees, and utilities or council tax you pay. Capital improvements and private costs are treated differently. See GOV.UK.
Can landlords claim repairs and maintenance?
Generally yes. A repair restores an asset to its original condition and is normally a revenue expense. An improvement is capital. See PIM2025 and PIM2030.
Is mortgage interest tax-deductible for UK landlords?
Not as an expense for individual residential landlords. Relief is a tax reduction at the basic rate of Income Tax, currently 20%. Companies are outside the restriction. See HMRC’s guidance.
Can landlords claim letting-agent fees?
Yes, where they relate to your rental business. HMRC lists letting-agent and management fees as deductible expenses you pay yourself. See GOV.UK.
Can landlords claim for replacing a kitchen or bathroom?
A like-for-like replacement of an existing fixture is normally a repair. Adding something new or upgrading to a higher specification is capital expenditure. See HMRC’s examples and PIM3210.
What is the £1,000 property allowance?
A tax exemption of up to £1,000 a year for individuals with property income. Above £1,000 of gross income you can deduct it instead of expenses. See GOV.UK.
Can I claim the property allowance and actual expenses?
No. Claim the allowance and you cannot also deduct expenses against that income, and it is unavailable if you claim the finance cost tax reduction. See GOV.UK.
What records must landlords keep for HMRC?
Rent books, receipts, invoices, bank statements and mileage logs, kept for at least 5 years after the 31 January tax return deadline. See GOV.UK.
Do landlords need Making Tax Digital in 2026?
Not all. It applies if you are registered for Self Assessment and your qualifying income is over £50,000 for 2024 to 2025 (from April 2026), £30,000 for 2025 to 2026 (from April 2027) or £20,000 for 2026 to 2027 (from April 2028). See GOV.UK.
Can landlords claim expenses when a property is vacant?
It depends on the facts, because the wholly-and-exclusively rule still applies. When a dwelling is empty, council tax falls on the owner (PIM2140). Keep evidence of your efforts to re-let.
Final Takeaway
Landlord allowable expenses 2026 come down to a few principles:
- Claim only qualifying expenses incurred wholly and exclusively for the rental business.
- Treat repairs and capital improvements differently, and keep itemised invoices.
- Give residential finance costs special attention: relief is a tax reduction, not a deduction.
- The property allowance has specific rules and is either/or.
- Accurate records support compliance and digital reporting.
- Check current HMRC guidance, or a suitably qualified UK tax adviser, before claiming.