Allowable Expenses for Landlords UK: What You Can and Can’t Claim

Are you a landlord in the UK, wondering if you’re paying more tax than you should? You’re not alone. 

Many property investors unknowingly miss out on hundreds, sometimes thousands of pounds in allowable expenses every tax year.

HMRC allows landlords to deduct a variety of day-to-day property costs from their rental income before tax is calculated, but the thing is, most people don’t fully understand what’s eligible, and the rules aren’t always crystal clear.

What if you could reduce your tax bill while staying fully compliant without second-guessing yourself or falling foul of HMRC? 

By getting a clear grip on allowable expenses, you can not only boost your bottom line but also make smarter financial decisions all year round. This is especially crucial now, with Making Tax Digital expanding its reach and stricter compliance on the horizon.

In this guide, we’ll demystify allowable expenses for UK landlords, highlight common mistakes to avoid, and show you how to track and claim expenses with confidence or even better, with the help of a savvy property accountant.

What Counts as Allowable Expenses for Landlords in the UK

Let’s start with the basics: what exactly qualifies as an allowable expense?

Allowable expenses are costs you incur wholly and exclusively for the purpose of renting out your property. In simpler terms, these are the necessary expenses that help you run your rental business, and HMRC lets you subtract them from your rental income before working out how much tax you owe.

Here are some of the most commonly accepted allowable expenses for landlords in the UK:

• Letting agent fees – Fees you pay to a letting or property management agent to find tenants or manage your property.
• Repairs and maintenance – This includes fixing leaks, replacing broken appliances, or repainting (but not improvements — more on that later).
• Accountant fees – Professional fees for managing your rental accounts or preparing your Self Assessment tax return.
• Landlord insurance – Premiums for specialist insurance policies covering buildings, contents, or rent guarantee.
• Council tax, utility bills, and ground rent – But only if you, the landlord, are paying them (often the case in HMOs or short-term lets).
• Service charges – Regular charges for flats or leasehold properties.
• Travel expenses – Mileage or public transport costs for property visits, inspections, or repairs. Be sure to keep records.
• Legal fees – Only if related to lets of one year or less, or for renewing a lease under 50 years.

Also note, since the introduction of Section 24 (2017–2021), landlords can no longer deduct full mortgage interest payments as an expense. 

Instead, you now receive a 20% tax credit based on the interest paid. This impacts higher-rate taxpayers the most. Learn more from Gov.uk’s guidance on tax relief changes.

Keep Good Records

HMRC may ask for proof. So store your invoices, receipts, bank statements, and mileage logs, ideally for at least 5 years after the 31 January submission deadline.

Common Mistakes Landlords Make with Allowable Expenses

Even seasoned landlords fall into traps when it comes to expense claims. 

Here are a few common tax mistakes UK landlords make and how to avoid them:

1. Confusing Repairs with Improvements

This is probably the #1 mistake. HMRC only allows repairs and maintenance as expenses. If you upgrade or improve the property, say replacing laminate flooring with solid oak, it’s considered a capital expense, not allowable against rental income. Instead, it may reduce your Capital Gains Tax (CGT) when you eventually sell.

Stick to like-for-like replacements if you want to deduct the cost.

2. Mixing Personal and Business Costs

Let’s say you drive to B&Q to buy supplies for your rental, but also grab something for your own home. If you don’t split the receipt, you may not be able to claim anything at all.

HMRC expects a clear separation between personal and rental-related costs. Blurry records can get you into hot water during an enquiry.

3. Forgetting “Small” Expenses

Many landlords forget to claim little things like:

• Phone calls to tenants or contractors
• Postage for letters and notices
• Cleaning costs between tenancies
• Travel costs for viewings or inspections

Individually, they may seem minor, but over the year, these can add up to hundreds of pounds in missed deductions.

4. Poor Record Keeping

If you don’t have proof, HMRC may deny your claim. With Making Tax Digital (MTD) rolling out for income tax by April 2026, digital records will soon be mandatory. Tools like Xero, QuickBooks, or Landlord Vision can make this process easy.

5. Relying on Outdated Info or Assumptions

Tax laws change often. What was deductible in 2016 may not be today. For instance, many landlords still mistakenly claim full mortgage interest, unaware that Section 24 has changed the rules.

Always double-check with HMRC or your accountant before submitting your return. Here’s the official HMRC property income manual for reference. 

Capital vs Revenue Expenses 

One of the most important distinctions in property accounting is knowing the difference between capital and revenue expenses. 

Misunderstanding this can mean claiming the wrong expenses or losing out on future tax relief.

Let’s break it down.

What Are Revenue Expenses?

Revenue expenses are the day-to-day costs you incur to keep your rental business running. These are the allowable expenses we’ve been talking about; they’re deductible from your rental income in the same tax year.

Examples of revenue expenses include:

• Routine repairs and maintenance
• Letting agent fees
• Insurance premiums
• Utility bills and council tax (if you pay them)

They’re recurring or ongoing, and don’t add long-term value to the property.

What Are Capital Expenses?

Capital expenses, on the other hand, relate to improvements or upgrades that increase the value of your property or extend its lifespan. These can’t be deducted from rental income as allowable expenses.

Instead, you claim these costs against Capital Gains Tax (CGT) when you eventually sell the property.

Common examples include:

• Building an extension
• Upgrading the kitchen from laminate to granite
• Installing double-glazed windows
• Converting a loft into a bedroom

So, if you’re simply repainting walls, that’s revenue. But if you knock down a wall to create an open-plan space? That’s capital.

Why It Matters

If you wrongly claim a capital cost as an allowable expense, you could face penalties during an HMRC review. Conversely, failing to record capital improvements properly means you might overpay CGT later on.

For clarity, HMRC has a useful guide on capital versus revenue expenses.

Top Tax-Deductible Expenses Landlords Should Know in 2025

As we approach 2025, the cost of owning and managing property continues to rise, which makes knowing your tax-deductible expenses more crucial than ever.

Here are some top allowable expenses UK landlords should be aware of (based on current HMRC guidance):

1. Letting and Property Management Fees

Whether you hire an agent to find tenants or manage the property entirely, those fees are fully deductible.

2. Repairs and Maintenance

Think boiler servicing, roof leak repairs, or replacing broken appliances. These are all allowable as long as you’re not improving or upgrading.

3. Insurance

Buildings insurance, contents cover, and even landlord liability insurance can be claimed.

4. Accounting and Legal Fees

Fees paid to accountants for preparing your rental accounts and Self Assessment tax return are allowable. So are legal fees, provided they relate to short-term lettings or lease renewals under 50 years.

5. Utility Bills and Council Tax

If you, the landlord, are responsible for paying these (common in HMOs or furnished lets), they’re allowable expenses.

6. Ground Rent and Service Charges

Ongoing leasehold costs can be claimed against your rental income.

7. Travel Costs

Mileage for property visits or tenant meetings can be claimed using HMRC’s approved mileage rates.

8. Cleaning and Safety Checks

Regular end-of-tenancy cleaning, gas safety inspections, and EICRs (Electrical Installation Condition Reports) are all allowable.

Staying on top of these in 2025 will not only reduce your tax bill but also keep your finances compliant and audit-ready.

How to Keep Records and Claim Allowable Expenses Efficiently

Understanding allowable expenses is one thing, but being able to prove them to HMRC is a different story altogether.

Many landlords lose out on valuable tax deductions simply because they didn’t keep accurate records. If you want to make full use of your tax-deductible expenses while staying compliant with HMRC rules, you need a streamlined, reliable system in place.

1. Use Digital Tools and Software

With the UK government continuing to roll out Making Tax Digital (MTD) for landlords, now’s the time to shift to digital recordkeeping. MTD will apply to landlords earning over £50,000 from April 2026, and eventually everyone else shortly after.

Some reliable tools to help you stay on track include:

• Xero – integrates with banks and allows categorisation of property expenses
• QuickBooks – great for self-employed landlords and includes mobile receipt capture
• Landlord Vision – made for landlords with tools for tenant management and tax reports
• FreeAgent – ideal for sole traders and small landlords looking for an all-in-one

Digital tools help you log every expense in real-time and can generate reports when it’s time to file your Self Assessment return.

2. Keep All Receipts and Proof of Expenses

HMRC can ask for evidence of your claims, even years down the line. So whether it’s a repair invoice, council tax bill, or letting agent fee, keep a copy of all supporting documents.

You can store:

• Digital scans of physical receipts
• Emails and PDF invoices
• Bank statements that correspond to each expense

Make it a habit to upload or scan these into your chosen software or even a cloud-based drive like Google Drive or Dropbox.

3. Keep Personal and Property Finances Separate

This might seem obvious, but it’s often overlooked: always use a dedicated bank account for your rental business. This makes your financial trail clean, minimises errors, and saves tons of time when reconciling expenses.

4. Know the Deadline

Allowable expenses are claimed via the Self Assessment tax return, typically due by 31 January each year. Late submissions may attract fines, and poorly documented claims could trigger an HMRC enquiry.

When to Work with a Property Tax Accountant

There comes a point in every landlord’s journey where DIY accounting stops making sense. If you’re asking questions like:

• “Is this expense allowable or capital?”
• “Am I missing anything that could reduce my tax bill?”
• “How do I handle taxes for multiple properties or limited companies?”

…it’s probably time to bring in an expert.

Here’s when hiring a property accountant is a smart move:

1. You Own More Than One Property

Managing tax across multiple rentals increases the chance of errors. An accountant ensures you don’t miss allowable expenses and can help you plan more effectively for future taxes.

2. You’re Switching to a Limited Company Structure

The tax implications of incorporating are significant — from Corporation Tax to dividend strategies. A qualified accountant can walk you through this with clarity.

3. You’re Renovating or Selling Property

As soon as Capital Gains Tax or capital vs revenue expense distinctions come into play, it’s worth having someone on your side to help you claim every pound you’re entitled to.

4. You’re Unsure About Making Tax Digital (MTD)

A property accountant can help you set up the right systems now so that you’re fully prepared when MTD becomes mandatory.

5. You Want Peace of Mind

You can sleep easier knowing your accounts are correct, compliant, and tax-efficient. This lets you focus on what matters: growing your property portfolio.

Tip: Make sure your accountant is familiar with property tax, specifically, not just general accounting. Look for someone who has experience with landlords, property investors, and rental tax planning in the UK.

Conclusion

Understanding allowable expenses as a UK landlord isn’t just about avoiding penalties; it’s about maximising your net income and building a sustainable rental business.

When you claim the right expenses, separate capital from revenue correctly, and keep digital records that are clean and audit-proof, you not only reduce stress you boost profitability.

And remember: the UK tax landscape is always shifting. What’s allowable today may change next year. That’s why working with a property-focused tax accountant can be one of the best investments you’ll make.

So, whether you’re just getting started or managing a growing portfolio, take action now:

• Review your current expense practices
• Adopt the right tools
• Get professional guidance when you need it

Tax shouldn’t be a drain; it should be a lever for growth.