Landlord Expenses: What Can Property Owners Claim on Their Tax Return?

As a landlord, filing your Self Assessment tax return can seem complex. Claiming allowable landlord expenses is a key way to reduce your tax bill while staying compliant with HMRC. Here’s a guide for 2024/25, tailored to landlords and their specific costs, including letting fees.

Why Claiming Expenses Matters

Allowable expenses are costs incurred solely for running your rental business. Deducting these from your rental income lowers your taxable profit, reducing your Income Tax and National Insurance contributions. Accurate record-keeping is vital for a smooth tax return and to support claims if HMRC investigates.

The “Wholly and Exclusively” Rule

Expenses must be incurred “wholly and exclusively” for your rental business. For example, if you use a home office to manage your properties, you can claim a portion of your utility bills based on business use, but personal expenses like gym memberships are not deductible.

Common Allowable Landlord Expenses

Here are key expense categories landlords can claim:

• Property Maintenance and Repairs: Costs for fixing wear and tear (e.g., plumbing, roof repairs) but not improvements (e.g., adding an extension).
• Letting Fees and Management Costs: Fees paid to letting agents for tenant sourcing, referencing, or property management services.
• Utilities and Council Tax: Bills for rental properties, or a proportion of home costs (e.g., electricity, internet) if you manage properties from home.
• Insurance: Landlord-specific policies, such as buildings or liability insurance.
• Travel: Mileage (e.g., 45p per mile for cars up to 10,000 miles) or public transport costs for property visits or meetings with tenants/contractors. Personal travel is excluded.
• Equipment: Items like office computers or software for property management, claimed as revenue expenses or capital allowances for larger items.
• Legal and Professional Fees: Costs for accountants, solicitors (e.g., for tenancy agreements), or eviction services related to your rental business.
• Advertising and Marketing: Costs for listing properties (e.g., online portals) or promotional materials to attract tenants.
• Training and Subscriptions: Courses or memberships related to property management (e.g., landlord association fees).
• Simplified Expenses: Flat rates for home working (£6/week) or mileage can simplify claims.

Example: John, a landlord with two properties, claims letting agent fees, boiler repairs, a portion of his home internet for property management, and mileage for tenant visits, saving significantly on his tax bill.

Non-Allowable Expenses

You can’t claim personal expenses (e.g., personal phone bills), capital improvements (e.g., property extensions), or fines (e.g., late tax penalties). Client entertainment, like taking tenants out for meals, is also non-deductible.

Keep Records

Maintain receipts, invoices, and digital records (e.g., via software like Xero) to support your claims. Organized records streamline tax returns and protect you during HMRC audits.

Need Help?

Landlord expenses can be complex. Our expert advisors at Talwar Accountant help you maximize allowable claims while ensuring HMRC compliance. Book a free consultation to optimize your 2024/25 tax return!