Section 24 and income
Landlord allowable expenses: what you can claim
What rental expenses landlords can claim: repairs vs improvements, replacement of domestic items relief, what you can't claim and the £1,000 property allowance.
You can claim costs you incur wholly and exclusively for the letting, such as repairs, insurance, agent fees and replacing furnishings, but not improvements, the capital part of your mortgage or personal costs. Landlords who claim too little pay more tax than they need to. Those who claim too much risk HMRC enquiries.
What you can claim
| Expense | Notes |
|---|---|
| Repairs and maintenance | Restoring to original condition, including like-for-like replacement |
| Insurance | Buildings, contents, landlord and rent guarantee |
| Letting and management fees | Agent fees, including VAT you can't recover |
| Services | Cleaning, gardening, communal areas |
| Utilities and council tax | Where you pay them, for example between tenants |
| Ground rent and service charge | For leasehold properties |
| Advertising | Finding tenants |
| Legal and accountancy fees | Allowable ones; see below |
| Travel | For journeys made for the letting |
| Replacement of domestic items | Like-for-like replacement of furnishings and appliances |
If your income is above the Making Tax Digital threshold, keep these records in software through the year. See Making Tax Digital for landlords.
Repairs versus improvements
This is where most arguments arise. A repair puts something back as it was. An improvement makes the property better than it was.
- Repair: fixing a leak, repainting, replacing a broken boiler with a similar one, replacing single glazing with double glazing, replacing a fitted kitchen like for like.
- Improvement: an extension, a loft conversion, a conservatory or a higher-specification kitchen.
Repairs are deducted from rent. Improvements are capital and can't be deducted from income, though they reduce the gain when you sell. Check which category applies before the invoice is paid, because work can be mixed. Where it is, apportion it and keep a note of how.
Replacement of domestic items relief
For dwelling houses, you can claim when you replace items such as beds, curtains, fridges and crockery, if the cost would otherwise be blocked as capital. It applies from 6 April 2016 and replaced the old wear and tear allowance. It doesn't cover the initial purchase. If the new item is an upgrade, such as a sofa bed replacing a sofa, you claim only the like-for-like cost.
What you can't claim
- Capital improvements and the cost of buying the property. These go into the capital gains tax calculation. See capital gains tax on rental property.
- The capital part of your mortgage. Only interest counts, and only as a tax credit for individuals.
- Personal or mixed costs, such as private phone calls, clothing and the part of a home used personally.
- Fines and penalties, including late tax payment interest and penalties.
- Initial furnishing costs. Only replacements qualify.
The £1,000 property allowance
You can receive up to £1,000 of property income a year tax-free. If you use it, you can't also deduct expenses. It makes sense only where your expenses would be lower, for example a spare room let occasionally. Landlords with ordinary lettings almost always do better claiming actual expenses.
A worked example
This is an illustration, not a client example. A landlord lets a house for £24,000 a year.
| £ | |
|---|---|
| Rent | 24,000 |
| Letting agent (10% plus VAT) | (2,880) |
| Insurance | (450) |
| Repairs | (1,900) |
| Gas and electrical safety checks | (220) |
| Accountancy | (300) |
| Replacement washing machine (like for like) | (400) |
| Taxable profit before finance costs | 17,850 |
Without the claims, the landlord would be taxed on £24,000. For a higher-rate taxpayer, the £6,150 of expenses is worth £2,460 at 40%. Mortgage interest does not come off the profit: it is relieved by a 20% credit on the tax. Our Section 24 calculator shows the effect.
Keep the evidence
- Keep invoices and receipts for at least the period HMRC can enquire, which is longer for careless errors.
- Note what each repair job covered, including the date and property.
- Keep a mileage log.
- Separate the rental bank account where you can.
Unclaimed expenses can often be corrected on a tax return within the time limits, and unreported income is a bigger risk than overlooked costs. See undeclared rental income if you have missed something.
Grey areas to watch
- Mixed jobs. Redecorating while fitting a new bathroom suite is partly repair and partly improvement. Split the invoice where you can.
- Costs before the first tenant. Spending to get a newly bought property ready may be capital, especially where it brings the property up to a lettable standard. Take advice before claiming.
- Furnished versus unfurnished. Replacement of domestic items relief applies in both cases where you provide the item for the tenant's use.
- Joint ownership. Each owner claims their share of the expenses in line with how the income is split.
- Holiday lets and short lets. The old separate rules ended in April 2025, so the same expense rules now apply.
Claiming through a company
If a company owns the property, the rules differ. The company deducts costs of running the lettings from its rental profit, and it also deducts mortgage interest in full. Expenses must still be incurred wholly and exclusively for the business, and a director's personal costs can't be put through the company without tax consequences. Whether you own personally or through a company, the best habit is the same: keep clear records through the year, so that you claim everything you are entitled to and can show why.
Talk to us
If you are not sure what you can claim, or you think you have missed items in earlier years, book a call. We will review your position on a fixed fee agreed upfront.
This article is general information, not advice. Tax rules change and their effect depends on your circumstances. Please speak to us before acting.
