The Complete Checklist of Allowable Expenses for UK Landlords

Every pound of legitimate expense you record reduces the rental profit you pay tax on. Yet expenses are also the area where landlords most often slip up — either by missing deductions they are entitled to, or by claiming things HMRC will later disallow. With Making Tax Digital for Income Tax bringing quarterly digital record-keeping into force, getting your expense categories right from the start matters more than ever, because you will be reporting these numbers four times a year, not scrambling once in January.

This guide sets out what UK landlords can and cannot deduct, explains the all-important distinction between repairs and improvements, unpacks the "wholly and exclusively" rule, and works through realistic examples. It applies to private residential landlords letting property in the UK. Furnished holiday lettings followed different rules in the past, but the FHL regime was abolished from April 2025, so most landlords now sit under the standard property income rules described here.

The core principle: "wholly and exclusively"

The foundation of every property expense claim is one phrase from tax law: a cost is only deductible if it is incurred wholly and exclusively for the purposes of the property rental business. If an expense serves your business and nothing else, it is allowable. If it serves a private purpose as well, the default position is that the whole thing is disallowed.

There is an important exception that helps landlords: where an expense has an identifiable business portion that can be separated out, you can deduct that portion. This is called apportionment. The classic case is mileage to inspect a property, or using a room at home to manage your lettings. You cannot deduct the personal element, but you can claim a fair, evidenced business share.

Test yourself with this question: "Did I spend this money only because I let property, or would I have spent some of it anyway?" If the answer is "only because of the lettings", it is usually allowable in full. If "I'd have spent some of it anyway", you can usually only claim the business slice.

The checklist: expenses you can usually deduct

The following are typically allowable in full against rental income, provided they meet the wholly-and-exclusively test and relate to a let (or genuinely available-to-let) property:

• Letting agent and management fees — tenant find fees, ongoing management commission, inventory and check-in fees.
• Legal and professional fees — accountancy for the rental business, costs of renewing a lease under 50 years, and fees for routine evictions. Note that legal costs of buying a property are capital, not revenue.
• Insurance — buildings, contents, landlord liability, rent guarantee and emergency cover.
• Repairs and maintenance — see the dedicated section below, as this is where mistakes happen.
• Ground rent and service charges — on leasehold property you let.
• Utilities and council tax — where you (not the tenant) pay them, for example during void periods or in an HMO with bills included.
• Direct running costs — advertising for tenants, phone calls, stationery, postage and software subscriptions used to run the lettings business (including MTD-compatible bookkeeping software).
• Travel and motoring — trips to inspect, maintain or manage the property. Most individual landlords use HMRC's simplified mileage rate of 45p per mile for the first 10,000 business miles in the tax year, then 25p thereafter.
• Services you buy in — gardening, cleaning between tenancies, gas safety certificates (the annual CP12), EPCs where required, and electrical safety inspections.
• Subscriptions and memberships — to a landlords' association or relevant professional body.
• Bad debts — rent you have genuinely written off as irrecoverable (not rent simply paid late).
• Use of home — a reasonable amount for administering lettings from home, either via a flat-rate simplified expense or an apportioned share of actual costs.

Expenses you cannot deduct (and the special case of mortgage interest)

Some costs are simply not allowable against rental income, most often because they are capital in nature or have a private element:

• The cost of buying or selling the property — purchase price, Stamp Duty Land Tax, survey, legal and estate agent fees on a sale. These are capital and may instead affect Capital Gains Tax when you sell.
• Improvements and enhancements — anything that upgrades the property beyond its original condition (covered next).
• Your own time and labour — you cannot pay yourself a wage for managing your own properties.
• Personal expenses — clothing, meals, or any cost that is not genuinely for the rental business.
• Capital repayments on the mortgage — only the financing cost is relevant, and even that is restricted (see below).

Mortgage interest deserves its own paragraph because the rules changed significantly. Since April 2020, individual landlords can no longer deduct finance costs — mortgage interest, loan fees, interest on loans for furnishings — as an expense. Instead you receive a basic-rate (20%) tax reducer on those finance costs, applied after your profit is calculated. For a higher-rate taxpayer this is a real difference: £6,000 of interest no longer wipes out £2,400 of tax, it knocks off a flat £1,200. Do not enter mortgage interest as an ordinary expense — it goes in the separate finance-costs box.

Repairs vs improvements: the line that catches everyone

This is the single most misunderstood area of landlord tax. Repairs are revenue expenses you deduct now. Improvements are capital and are not deductible against rental income (they may reduce CGT later). The test is whether the work restores the property to its previous condition, or whether it makes the property better than it was.

A genuinely useful rule of thumb: replacing something with the nearest modern equivalent is usually a repair; upgrading or adding something is usually an improvement.

Work done	Treatment	Why
Replacing a broken boiler with a similar modern boiler	Repair (allowable)	Restores function; "nearest equivalent" rule
Replacing single-glazed windows with double glazing	Repair (allowable, by HMRC concession)	Double glazing is now the standard replacement, not an upgrade
Repainting, re-tiling, fixing a leaking roof	Repair (allowable)	Maintains existing condition
Adding an extension or extra bedroom	Improvement (capital)	Enhances the property beyond original state
Ripping out a basic kitchen and fitting a high-spec one	Mostly improvement (capital)	Goes beyond a like-for-like replacement
Converting a property you just bought in poor condition	Likely capital	Repairs needed to make a newly-bought property usable are often part of the purchase

One frequent trap: if you buy a run-down property cheaply because it needs work, the cost of putting it right is usually treated as capital, not a deductible repair — HMRC views it as part of getting the asset into a lettable state.

The replacement of domestic items relief

Since the old "wear and tear allowance" was scrapped in 2016, landlords of residential property claim the replacement of domestic items relief instead. You can deduct the cost of replacing free-standing or movable items provided for the tenant — beds, sofas, fridges, washing machines, carpets, curtains, crockery — but only the replacement, not the first time you provide an item. The deduction is capped at the cost of a like-for-like replacement: if you upgrade, you can only claim the equivalent-standard cost, less anything you get for the old item.

Worked examples

Example 1 — mixed repair and improvement. You spend £8,000 on a kitchen. £5,000 replaces tired-but-equivalent units, worktops and appliances; £3,000 adds a brand-new island unit and integrated wine cooler that were never there before. You can deduct the £5,000 like-for-like element as a repair. The £3,000 enhancement is capital.

Example 2 — apportioned travel. Over the year you drive 600 business miles inspecting and maintaining your two flats. At 45p per mile that is a £270 allowable expense — no fuel receipts needed if you use the mileage method, but keep a log of dates, destinations and purpose.

Example 3 — the finance-cost reducer. Your rental profit before finance costs is £12,000 and you paid £6,000 mortgage interest. You do not deduct the interest. You are taxed on £12,000, then receive a 20% reducer of £1,200 (£6,000 × 20%) against your tax bill.

Record-keeping under Making Tax Digital

Under MTD for Income Tax, landlords above the income threshold must keep digital records and send quarterly updates of income and expenses to HMRC through compatible software, followed by a year-end finalisation. In practice this means categorising every expense as it happens rather than once a year. Good habits that pay off:

• Use a separate bank account for rental income and costs — it makes the wholly-and-exclusively test far easier to evidence.
• Photograph or scan receipts and attach them to the transaction in your software.
• Note why a cost was incurred, especially for anything that could be questioned (was that £900 a repair or an improvement?).
• Keep records for at least the period HMRC can enquire into — generally five years after the 31 January filing deadline for the relevant tax year.

When the rules don't apply or differ

A few situations sit outside the standard picture. If you let through a company rather than personally, finance costs are an ordinary deductible expense and the 20%-reducer restriction does not apply. If your gross rental income is under the £1,000 property allowance, you can simply deduct the allowance instead of actual expenses (but you cannot claim both). And if you let a furnished room in your own home, the separate Rent a Room scheme may be more generous than claiming expenses. Always check which basis leaves you better off.

Quick FAQ

Can I claim expenses on a property that wasn't let yet?

You can claim qualifying costs incurred in the seven years before your rental business starts, treated as if spent on day one — provided they would have been allowable had the business already been running.

Are mortgage arrangement fees deductible?

They are finance costs, so for individuals they fall under the restricted 20% tax-reducer rules, not as a straight expense.

Is a new fitted carpet a repair or capital?

Replacing an existing carpet is generally a deductible repair (or covered by replacement of domestic items relief). Carpeting a property for the very first time is more likely capital.

Can I deduct the cost of evicting a tenant?

Routine legal costs of recovering possession or chasing arrears on an existing let are normally allowable. Costs tied to acquiring or improving the property are not.

This article is general information for UK landlords and not professional, financial or legal advice. Tax rules change and individual circumstances vary — consult a qualified accountant or HMRC guidance before making decisions. Published by the Filesy editorial team, NexoraOS.