In our previous blog we gave some examples of general expenses that can be claimed. You can read that here. 

Essentially, the costs need to be for the purposes of generating income for your property business.

The costs of professional services directly related to the management of your rental properties are deductible. This can include fees for legal, accounting, and management services. Examples of allowable professional fees:

• Letting agent fees for managing the property.
• Legal fees incurred for drafting tenancy agreements or handling evictions.
• Accountancy fees for preparing profit calculations or offering financial advice.

Legal fees for acquiring or selling properties are not deductible as running costs but will likely qualify as capital costs to reduce capital gains tax when selling.

The cost of work that keeps your property in good condition is allowable but not improvements as these will be capital and may be allowable costs to reduce capital gains tax when selling.

Examples of allowable repairs and maintenance expenses:

• General repairs to fix wear and tear, such as replacing a broken window or mending a roof.
• Painting and decorating to maintain the property in a habitable state.
• Servicing of appliances like boilers or electrical fittings.

As a landlord, you will incur various running costs associated with letting out your property. These expenses are typically allowable as long as they are directly related to the day-to-day operation of your rental business. Examples include:

• Utility bills: If you, as the landlord, pay for electricity, water, or gas on behalf of tenants.
• Insurance: Including landlord’s insurance, which covers buildings, contents, and public liability.
• Council tax and other local authority charges (if paid by the landlord).

For property companies that manage multiple units, running costs might also include administrative expenses like software subscriptions or office supplies.

If you need to travel to your rental property for inspections, maintenance, or meetings with tenants or agents, you can claim travel expenses. Allowable travel expenses include:

• Mileage if using your personal vehicle for property-related visits.
• Public transport costs such as train or bus fares.

You should keep detailed records of your trips, including receipts and the purpose of the visit, as HMRC may request evidence of your travel.

Finding new tenants often requires advertising and marketing efforts, and these costs are also deductible. Whether you’re paying for:

• Listings on property websites
• Leaflets or other promotional materials
• Paid social media ads

The Replacement of Domestic Items Relief allows you to deduct the cost of replacing furnishings, appliances, and other household goods. It is not available for the initial purchase of these items. This relief is only available for items provided for the tenant’s use, such as:

• Furniture (e.g. sofas, beds, and wardrobes)
• Appliances (e.g. washing machines, fridges, and dishwashers)
• Kitchenware (e.g. crockery, cutlery, and utensils)

Individuals with mortgaged rental properties cannot deduct the full mortgage interest as an expense against their rental income. Instead, a maximum of 20% can be claimed as a tax relief. Property companies can still deduct mortgage interest as an allowable expense so full tax relief is available.

It’s essential to distinguish between capital expenses and revenue expenses. Capital expenses are costs related to acquiring, improving, or selling a property (e.g. extensions or adding new rooms), and these are not deductible from your rental income. Instead, they may be claimed against Capital Gains Tax (CGT) when you sell the property.

Revenue expenses, on the other hand, are related to the day-to-day running of your rental business, and these are allowable for deduction from your rental income.

It’s important to keep records of the costs, including photos of the work done where the may be a question of whether a cost is revenue or capital.

CJL Accountancy are a specialist accountant for landlords, who can help navigate the complex tax rules and keep your accounting records clear and up to date.