Allowable Expenses for Landlords 2025/26 — Complete Guide

As a landlord in the UK, you pay Income Tax on your net rental profit — your rental income minus allowable expenses. Getting your expenses right is one of the most effective ways to reduce your tax liability legally.

This guide covers every category of allowable expense for residential landlords in 2025/26, the key restrictions that apply since Section 24, and common mistakes to avoid.

What Counts as an Allowable Expense?

HMRC allows landlords to deduct expenses that are incurred “wholly and exclusively” for the purposes of the letting business. Expenses that are partly personal (e.g. a car used for personal trips as well as property visits) must be apportioned.

Full List of Allowable Expenses for Landlords

1. Repairs and Maintenance

You can claim the cost of repairing your property to keep it in a lettable condition. This includes:

• Fixing a broken boiler, leaking roof or damaged windows
• Repainting and decorating between tenancies
• Replacing broken appliances (like-for-like only)
• Pest control
• Garden maintenance included in the tenancy

What you cannot claim: Improvements that add value (e.g. a new extension, converting a garage, or upgrading a standard kitchen to a premium one). These are capital expenditure and are instead set against any Capital Gains Tax liability when you sell.

2. Letting Agent Fees

All fees charged by a letting agent are fully deductible, including:

• Tenant-find fees
• Management fees (typically 10–15% of rent)
• Renewal fees
• Inventory check fees

3. Insurance

Premiums paid for landlord-specific insurance are fully allowable:

• Buildings insurance
• Contents insurance (for furnished lets)
• Rent guarantee insurance
• Landlord liability insurance

4. Accountancy and Professional Fees

Fees paid to an accountant for preparing your Self Assessment return or advising on your rental business are fully deductible. This includes:

• Accountancy and bookkeeping fees
• Tax advice fees
• Legal fees for drawing up tenancy agreements (but not legal costs to acquire the property)

5. Council Tax and Utility Bills

If you pay council tax or utility bills during void periods (when the property is empty between tenancies), these are allowable expenses. If your tenants pay their own bills, you cannot claim them.

6. Ground Rent and Service Charges

If you own a leasehold property, ground rent and service charges paid to the freeholder are deductible.

7. Travel Expenses

You can claim the cost of travelling to inspect a property, carry out repairs or meet tenants. This includes:

• Mileage at the HMRC approved rate (45p per mile for the first 10,000 miles)
• Public transport costs
• Parking fees

You cannot claim travel between your home and a letting agent’s office as that is a business commute — only travel directly to the property qualifies.

8. Advertising Costs

Costs of advertising your property for rent are deductible — Rightmove listings, Zoopla, OpenRent fees, and any other advertising spend.

9. Office Costs and Subscriptions

Stationery, software (including accounting software like Xero or QuickBooks), postage and professional subscriptions (e.g. a landlord association membership) are all deductible.

10. Replacement of Domestic Items (Furnished Lettings)

Since the Wear and Tear Allowance was abolished in 2016, furnished landlords can claim the Replacement of Domestic Items Relief. This allows you to deduct the cost of replacing items like:

• Furniture (sofas, beds, wardrobes)
• White goods (washing machine, fridge, oven)
• Carpets and flooring
• Curtains and blinds

The relief is for like-for-like replacement only. If you upgrade to a higher-spec item, only the cost of an equivalent replacement is deductible.

Section 24 — The Mortgage Interest Restriction

Since April 2020, landlords can no longer deduct mortgage interest as an expense when calculating rental profit. Instead, you receive a 20% tax credit on the interest paid.

For basic-rate (20%) taxpayers, the effect is broadly the same. But for higher-rate (40%) or additional-rate (45%) taxpayers, the restriction significantly increases the tax bill — because the credit is fixed at 20% regardless of your tax rate.

Example: How Section 24 Works in 2025/26

Landlords in this position often benefit from transferring properties to a limited company (though this comes with Stamp Duty and CGT implications on transfer), or restructuring their portfolio. This is where specialist landlord tax advice is invaluable.

What You Cannot Claim

• Capital improvements (adding an extension, converting a loft) — these reduce CGT when you sell
• Personal expenses with no business purpose
• The cost of purchasing the property
• Mortgage capital repayments (only the interest element qualifies for the tax credit)
• Costs of finding a mortgage or remortgaging (though arrangement fees can sometimes be spread)
• Fines or penalties (e.g. local authority fines)

Property Allowance — An Alternative to Expenses

If your total rental income is £1,000 or less, you don’t need to declare it. If it’s above £1,000, you can either:

• Claim the £1,000 Property Allowance instead of your actual expenses (simpler), or
• Deduct your actual allowable expenses (usually better if expenses exceed £1,000)

You cannot use both in the same year.

Keep Your Records

HMRC expects you to keep records for at least 5 years after the 31 January Self Assessment deadline for the relevant year. For rental property, this means:

• Receipts for all expenses claimed
• Rent statements and invoices
• Bank statements showing rental income and payments
• Mortgage statements showing interest charged
• Contracts and tenancy agreements

Summary

• Landlords are taxed on net rental profit — income minus allowable expenses
• Fully deductible: repairs, letting fees, insurance, accountancy, utilities during voids, travel, advertising
• Section 24 restricts mortgage interest to a 20% tax credit — not a full deduction
• Capital improvements are not deductible as expenses (but reduce CGT)
• Keep all receipts and records for at least 5 years
• MTD for Income Tax now applies to landlords with income over £50,000 (April 2026)

If you’d like us to review your rental property accounts and ensure you’re claiming everything you’re entitled to, get in touch for a free initial consultation.