UK Landlord Allowable Expenses: Complete HMRC Guide 2026

If you rent out property in the UK, understanding which expenses you can claim against your rental income is critical for reducing your tax bill. This guide explains every allowable expense category, how Section 24 affects mortgage interest, and common mistakes to avoid.

What Are Allowable Expenses?

Allowable expenses are costs you can deduct from your rental income before calculating the tax you owe. HMRC allows you to claim expenses that are:

• Wholly and exclusively for the rental business
• Revenue expenses (day-to-day running costs), not capital expenses (improvements that add value)

The key distinction: repairs are allowable, improvements are not.

Complete List of UK Landlord Allowable Expenses

1. Letting Agent Fees and Property Management

Any fees you pay to a letting agent or property management company are fully allowable. This includes:

• Monthly management fees (typically 8-15% of rent)
• Tenant find fees
• Inventory and check-in/check-out costs
• Rent collection fees

2. Repairs and Maintenance

You can claim for repairs that restore the property to its original condition:

• Fixing a broken boiler or replacing it with a similar model
• Repairing or replacing damaged gutters, roof tiles, or windows
• Repainting walls (internal and external)
• Fixing or replacing broken appliances (if they came with the property)
• Damp treatment
• Repairing fences, gates, or garden walls

Not allowable:

• Improvements: Replacing single-glazed windows with double-glazing (this is an improvement)
• Extensions, loft conversions, or adding new bathrooms
• Installing a kitchen where there wasn't one before

Grey area: Replacing an old, basic kitchen with a new basic kitchen is generally a repair. Upgrading to a significantly better kitchen is an improvement. Keep records and justification.

3. Insurance

All property-related insurance is allowable:

• Landlord buildings insurance
• Contents insurance (if you provide furniture)
• Rent guarantee insurance
• Public liability insurance

4. Utility Bills (If Paid by Landlord)

If you pay the utility bills (common for HMOs or while the property is empty between tenants), you can claim:

• Gas
• Electricity
• Water
• Council tax (if you're liable, e.g., empty property or HMO)
• Internet/TV licence (if included in the rent)

5. Ground Rent, Service Charges, and HOA Fees

If the property is leasehold or in a development with shared costs:

• Annual ground rent to the freeholder
• Service charges for communal areas, lifts, gardens
• Managing agent fees (for the building, not your letting agent)

6. Accountancy and Legal Fees

Allowable:

• Accountant fees for preparing your property tax return
• Legal fees for evicting a tenant or recovering unpaid rent
• Legal fees for lease renewals (if short-term, less than 50 years)

Not allowable:

• Legal fees for buying or selling a property (these are capital costs, added to CGT calculations)
• Legal fees for arranging a mortgage

7. Travel Costs

You can claim travel expenses related to managing the property:

• Mileage to inspect the property, meet tenants, or oversee repairs (45p per mile for first 10,000 miles, 25p thereafter)
• Public transport, taxis, or parking fees
• Overnight accommodation if the property is far from your home (must be reasonable)

Not allowable: Travel between your home and your rental property if you live there part-time (this is commuting, not business travel).

8. Advertising for Tenants

Costs of finding tenants are allowable:

• Rightmove, Zoopla, or OpenRent listing fees
• Photography or virtual tours
• Classified ads

9. Telephone and Internet

If you use your personal phone or internet for landlord business, you can claim a reasonable proportion. Keep evidence (e.g., call logs to letting agents, tenants, contractors).

10. Stationery and Office Costs

Small costs for running your rental business:

• Postage (e.g., sending tenancy agreements)
• Printing and stationery
• Software subscriptions (property management tools, accounting software)

11. Bank Charges and Interest (But Not Mortgage Interest)

You can claim:

• Bank charges on a dedicated landlord account
• Interest on loans used to buy furniture or pay for repairs (but see Section 24 rules below)

You cannot claim mortgage interest as an expense anymore. See below.

Section 24: The Mortgage Interest Restriction

Since April 2020, landlords can no longer deduct mortgage interest as an expense when calculating taxable rental profit. Instead, you:

1. Calculate your profit as: Rental Income - Allowable Expenses (excluding mortgage interest)
2. Pay income tax on that profit at your marginal rate (20%, 40%, or 45%)
3. Then receive a 20% tax credit based on the lower of:
   • Your mortgage interest for the year, or
   • Your rental profit for the year

Example: Section 24 Impact

Scenario:

• Rental income: £15,000
• Allowable expenses (excl. mortgage interest): £3,000
• Mortgage interest: £6,000
• Landlord is a 40% taxpayer

Old rules (pre-2020):

• Profit = £15,000 - £3,000 - £6,000 = £6,000
• Tax at 40% = £2,400

New rules (Section 24):

• Profit = £15,000 - £3,000 = £12,000
• Tax at 40% = £4,800
• Less 20% mortgage interest credit: 20% × £6,000 = £1,200
• Net tax = £3,600

The landlord pays £1,200 more tax under Section 24.

Higher-rate taxpayers are hit hardest. Basic-rate taxpayers see less impact (they get a 20% credit and pay 20% tax).

Repairs vs Improvements: The Critical Distinction

This is where many landlords trip up. HMRC's rule: repairs are allowable, improvements are not.

What Is a Repair?

A repair restores something to its previous condition. It doesn't make the property better than it was. Examples:

• Replacing broken roof tiles with the same type
• Fixing a leak in the bathroom
• Repainting walls in the same colour
• Replacing a broken boiler with a similar model

What Is an Improvement?

An improvement adds value, functionality, or modernises the property beyond its original state. Examples:

• Installing central heating where there was none
• Converting a loft into a bedroom
• Adding an extension or conservatory
• Replacing single-glazed windows with double-glazing (an upgrade)
• Installing a brand-new kitchen where there was only a basic one

Improvements are capital expenses. You cannot deduct them from rental income, but they reduce your Capital Gains Tax (CGT) when you sell the property.

Grey Areas

Some situations are ambiguous:

• Replacing a kitchen: Like-for-like replacement of an old kitchen = repair. Upgrading to a significantly better kitchen = improvement.
• Replacing windows: Replacing broken single-glazed windows with new single-glazed = repair. Upgrading to double-glazing = improvement.
• Redecoration after purchase: If you buy a property in poor condition and redecorate immediately, HMRC may treat this as an improvement (making it lettable), not a repair. If the property was already let and you're maintaining it, it's a repair.

Rule of thumb: If you're making the property better than it was when you bought it, it's likely an improvement. If you're restoring it to that original condition, it's a repair.

The £1,000 Property Allowance

If your total gross rental income (before expenses) is £1,000 or less in a tax year, you can use the property allowance:

• You don't need to declare the income
• You don't file a Self Assessment return for that income
• You cannot claim any expenses

Above £1,000, you must register for Self Assessment and declare the income. You can then choose:

1. Claim the £1,000 property allowance (instead of actual expenses), or
2. Claim your actual allowable expenses

For most landlords, actual expenses far exceed £1,000, so you'll claim expenses.

What You Cannot Claim

HMRC does not allow:

• Mortgage capital repayments (only interest qualifies for the 20% credit under Section 24)
• Your own time or labour (if you paint the property yourself, you can't charge yourself and claim it)
• Furnishings (since April 2016, you can't claim the Wear and Tear Allowance anymore; you can only claim the actual cost of replacing items like sofas, beds, when they're replaced)
• Costs of buying or selling the property (solicitor fees, stamp duty, estate agent fees when selling — these are capital costs for CGT)

Record-Keeping for Landlords

HMRC requires you to keep records for at least 5 years after the 31 January submission deadline. For the 2025/26 tax year (filed by 31 Jan 2027), keep records until at least 31 Jan 2032.

You should keep:

• Tenancy agreements and rent payment records
• All receipts and invoices for expenses
• Bank statements showing rental income and payments
• Mortgage statements (for Section 24 calculations)
• Evidence of property-related travel (mileage logs, tickets)

A simple spreadsheet or Notion template works well. Track every expense by category as you go — don't wait until January to piece it together.

Common Mistakes Landlords Make

• Claiming improvements as repairs. HMRC will disallow them and charge penalties if you're investigated.
• Forgetting to claim small expenses. Advertising, travel, phone calls add up. Track everything.
• Not separating personal and business use. If you use your car for both personal and landlord trips, only claim landlord mileage.
• Claiming pre-letting expenses incorrectly. Expenses incurred before the property is first let may not be allowable. Check HMRC rules or ask an accountant.
• Poor record-keeping. Without receipts, HMRC may disallow your claimed expenses.

How to Reduce Your Landlord Tax Bill

1. Claim every allowable expense. Don't leave money on the table.
2. Keep meticulous records. Track expenses monthly, not yearly.
3. Plan for Section 24. Higher-rate taxpayers: consider setting up a limited company for new purchases (different tax rules).
4. Use the property allowance if beneficial. If expenses are low and income under £1,000, take the allowance.
5. Consider timing of repairs. If you're near a tax threshold, accelerating or deferring repairs can shift income between years.

Tools to Help You Track Landlord Expenses

Managing rental income and expenses manually is time-consuming and error-prone. While full accounting software like Xero or QuickBooks is overkill for most small landlords, a simple Notion template can keep everything organised.

We're building UK-specific landlord templates at Tallied. If you'd like to be notified when they launch, email harry@ecometric.co.uk with "Landlord Template" in the subject line.