What expenses can landlords claim against tax in the UK?

12.06.2023 8 min read

Recent changes to landlord tax relief rules have impacted the profitability of the buy-to-let sector for many UK landlords (in particular: changes to mortgage interest deductions). With this in mind, it’s more important than ever to take a diligent approach to your buy-to-let expenses. It’s the simplest way to manage your tax bill efficiently, and you might be surprised at what you can claim. Missing expenses, on the other hand, gives you a one-way ticket to reducing your profits, just because of admin issues. Nobody wants that.

Read on for all you need to know about claiming expenses as a UK landlord.

What expenses can landlords claim against tax in the UK?

As a UK landlord, you can (and should) claim business expenses associated with running and maintaining your properties in order to reduce your tax bill. The most common landlord expenses tend to be:

  • Property maintenance and repairs – but not major renovations or anything that’ll increase the property’s value 
  • Council tax, grounds rents, water rates, and gas and electricity
  • Landlord insurance (e.g. building and contents insurance and rental guarantee cover)
  • Fees for services such as gardeners and cleaners – as long as their use is written into the tenancy agreement
  • A portion of your mortgage interest payments (more on this below)
  • Accountancy fees, letting agent fees, and legal fees relating to tenancies of a year or less
  • Costs associated with advertising for new tenants
  • Phone usage directly relating to landlord activity 
  • Travel costs directly related to landlord activity – you can claim 45p per mile for the first 10,000 miles, then 25p per mile after this
  • Replacement of domestic items – e.g. white goods and furniture (this doesn’t cover replacing items with much more expensive items than the original – more on this below)

💡Top tip you can claim the cost of your Hammock subscription as well

Please note that the list above is not exhaustive. Our recommendation is to always check with an expert (your accountant or financial advisor) when dealing with tax matters.

A note on mortgage interest payments as a business expense

Landlords used to be able to claim the full amount of their mortgage interest payments as a business expense. But new rules have been phased in over the past few years meaning that you can’t do this anymore. Instead, you can claim a tax credit based on a 20% basic rate. Read more about it in our full guide to buy-to-let property tax.

A note on rental losses

As a landlord, you can offset your profits in the current financial year with any losses you made in the previous financial year. This form of tax relief can be significant for those who’ve had a year with more void periods than usual – see this fair warning from the Telegraph in January 2023 highlighting how landlords could miss out on thousands of pounds worth of relief through not carrying over losses from the pandemic.

Understanding the “wholly and exclusively” rule for landlord tax deductions 

HM Revenue & Customs (HMRC) has a rule that says you can only claim for expenses that are “wholly and exclusively” related to your buy-to-let business. Say, for example, you use your phone personally and for your buy-to-let business. You can only claim the percentage of your phone costs that directly relate to your activity as a landlord. 

The same goes if you have a car that you use personally and for your business. You can only claim for the miles directly related to being a landlord. And you can only claim a percentage of the car’s other running costs, like insurance, based on how much you use it for business. 

For example, you might work out that your car’s personal vs business use is split 70/30. In this case, you could claim 30% of your car insurance and maintenance costs as a business expense. 

Capital improvements – the expenses you can’t claim as a landlord

Landlords can claim expenses relating to the replacement of domestic items – like furnishings and white goods – in their rental properties. But there’s an important rule to be aware of here 👇.

You can only claim for the cost of replacements that are of a similar value and specification (or, you can claim for the cost of repairs). You can’t claim for replacements that are more expensive – or at least not for the full cost of these. Here’s a quick example:

  • The fridge in your furnished rental property needs replacing. 
  • The equivalent model today costs £150, but you decide to get a higher spec, more expensive model in the hope it’ll last longer and be more appealing to tenants. You choose a new fridge that costs £300. 
  • When it comes to doing your tax return, you can only claim £150 for the replacement of your fridge. The additional £150 can’t be included, as that money was used to get a more expensive, higher-spec model.

The same rule applies to bigger home improvements. For example, you can’t claim the cost of extending your rental property or renovating it in a way that goes beyond general upkeep. 

How to claim your landlord expenses against tax

If you earn more than £10,000 a year in rental income, you need to file a Self Assessment tax return.

A Self Assessment tax return is the official form where you declare your income and claim your business expenses, so HMRC knows how much income tax you owe. You do this online, or your accountant can do it on your behalf. During this process, the total amount of business expenses you’ve incurred gets deducted from your rental income – and the remaining figure is your taxable income. 

How to keep track of your landlord expenses

It’s important to keep a detailed record of your expenses throughout the year, as HMRC will want to see this if they need to look into your finances. 

You can do this manually (but see our important note below) – or by using a dedicated software like Hammock, which connects with your bank/s so you can track your expenses directly from your transactions. 

📣Important note: The Government’s upcoming Making Tax Digital (MTD) initiative means you must be using MTD-compatible accountancy software for your property bookkeeping by:

  • 6th April 2026 if you have self-employed and/or property income over £50,000 a year.
  • April 2027 if you have self-employed and/or property income over £30,000 a year. 

Important Self Assessment tax return dates

  • 6th April – 5th April following year: The financial year.
  • 5th October: If you’re new to being a landlord, you need to register for Self Assessment no later than the 5th October in your second year of being a landlord.
  • 31st January: You need to file your Self Assessment tax return and pay your tax bill by no later than 31st January for the previous financial year (so, a tax return for the year 6th April 2023 – 5th April 2024 would need to be filed by 31st January 2025). When you start paying tax through Self Assessment, you also need to make payments on account – which are essentially advance tax payments towards your next bill. You pay these twice a year by January 31st and then by July 31st.
  • 31st July: Second payment on account due. 

Capital gains allowances – claimable expenses when you sell a property

We’ve covered allowable expenses related specifically to rental income above ☝️. But as a landlord, you may also be in the business of buying and selling properties for profit. Even if you only own one or two properties – there’s a fair chance you’ll make a profit if you eventually sell these. 

This is where capital gains allowances come in – expenses you can claim against the profit you make from a property sale. Claiming these expenses reduces the amount of capital gains tax you need to pay.

What capital gains allowances can you claim for property? 

If you make a profit when you sell a property, you can claim the below as capital gains allowances:

  • Any Stamp Duty Land Tax you paid when you bought the property
  • Solicitor and estate agent fees relating to buying and/or selling the property

Landlord business expenses – closing thoughts

From property maintenance to insurance and ongoing letting agency fees, your buy-to-let expenses can soon rack up. To reduce these expenses’ impact on your profits, it’s important to leave no stone unturned when it comes to claiming everything you can against your tax liability. It’s not about paying less tax than you owe – it’s about avoiding paying more tax than you owe, which is easier to do than you might think. 

Your best bet? Keep an accurate record of your expenses throughout the year, in real-time, as leaving it all until the last minute makes missing claimable expenses much more likely. 

Hammock makes tracking your property expenses easy

If you’re new to our blog, you might not know about our landlord accounting software, Hammock – created by landlords, for landlords. Hammock lets you track your property expenses in real time, both on mobile and on the web. Plus, automatic reconciliation of all your property expenses seriously cuts down on your admin time, and helps make sure you never miss a claimable expense.

Our guide is for educational purposes only, as we don’t provide tax advice. We always recommend consulting experts (in this case your accountant or tax advisor) when dealing with rules and regulations.