This article is for general information only and does not constitute tax advice. Consult an accountant.
HMRC allows landlords to deduct expenses from rental income if they are "wholly and exclusively" incurred for the purpose of letting the property. Expenses reduce your taxable profit, which reduces your tax bill.
The distinction between an allowable expense (deductible) and a capital improvement (not deductible against income, but potentially offsetting CGT when you sell) is the line every landlord needs to understand.
Deductible expenses
Insurance. Landlord buildings insurance, landlord contents insurance, rent guarantee insurance, and legal expenses insurance. All deductible.
Letting agent fees. Management fees (typically 8% to 12% of rent), tenant-find fees, inventory costs. All deductible.
Maintenance and repairs. Replacing a broken boiler with a like-for-like equivalent. Repainting walls. Fixing a leaking roof. Replacing worn carpets. The test is whether you are restoring the property to its previous condition, not improving it beyond its original state.
Accountancy fees. The cost of your accountant preparing your self-assessment return or company accounts.
Legal fees. Costs related to drawing up or renewing tenancy agreements, pursuing rent arrears, or defending claims. Not deductible: legal fees relating to the purchase or sale of the property (these are capital costs).
Ground rent and service charges. If you own a leasehold property and pay ground rent or service charges to the freeholder or management company.
Council tax. If the property is empty (void) and council tax falls to the landlord.
Travel. Mileage or travel costs for journeys to the property for management purposes (inspections, meeting contractors, collecting keys). Keep a log of journeys. HMRC allows 45p per mile for the first 10,000 miles.
Advertising. Costs of listing the property on Rightmove, Zoopla, or elsewhere to find tenants.
Stationery and admin. Phone calls, postage, printing tenancy agreements.
Professional membership. NRLA membership fees.
Compliance costs. Gas safety certificate, EICR, EPC, legionella risk assessment, smoke and CO alarms. All deductible as revenue expenses.
Not deductible (capital costs)
Capital improvements. Adding a new bathroom where none existed. Building an extension. Converting a loft into a bedroom. Installing central heating for the first time. These increase the property's value and are not deductible against rental income. They are added to the base cost of the property and reduce the CGT bill when you sell.
Mortgage capital repayments. The principal portion of your mortgage repayment is not an expense. It reduces your loan balance.
Mortgage interest (personal name). Since April 2020, personal-name landlords cannot deduct mortgage interest as an expense. Instead, they receive a tax credit at the basic rate (20%) on their finance costs. This is Section 24.
Mortgage interest (limited company). Fully deductible as a company expense.
Repairs vs improvements: the grey area
Replacing a single-glazed window with double glazing is an improvement (capital). Replacing a broken double-glazed window with a new double-glazed window is a repair (revenue).
Replacing a kitchen with a broadly equivalent kitchen is a repair (even if the new units are a different style). Upgrading from a basic kitchen to a luxury kitchen is an improvement.
HMRC's guidance on this is in their Property Income Manual (PIM2030). When in doubt, keep receipts and discuss with your accountant.
Keeping records
Under Making Tax Digital, landlords with rental income above £50,000 must keep digital records from April 2026 (lower thresholds apply from 2027). Even if you are below the MTD threshold, keeping organised records of every expense with dated receipts simplifies your tax return and supports deductions in the event of an HMRC enquiry.
Sources
- GOV.UK, "Work out your rental income when you let property". https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income [Accessed 6 May 2026]