ibuy2let

Individuals with income from UK residential property 

If you receive income from UK residential property, HMRC’s online support has the latest information for you.

There’s more help for landlords on HMRC’s YouTube channel, including:

•What allowable expenditure can I claim against Capital Gains Tax?  •If I have income from property, how do I fill in my tax return?

Our ‘Capital Gains Tax for land and buildings‘ and ‘Property Rental‘ toolkits provide additional guidance.

You can find additional information in our ‘Property rental‘ and ‘Capital Gains Tax for land and buildings‘ toolkits.

What expenses can I deduct?

If you have paid for them, you can deduct the following expenses:

General property repairs and maintenance

You may claim on fees made for property repairs, such as the fee to replace a faulty sink. However, no expenses may be claimed for upgrades, such as replacing wooden with marble countertops.

Tax, water, gas and electricity fees

Tax is attributable to the property, and therefore qualifies it in some circumstances as an allowable deduction. You should check with your local council on the appropriate rent; for example, if you qualify for business rates or a standard Council Tax charge. Energy fees may also be assessed and deducted if you charge for these within the rent fee.

Insurance, including building, contents and public liability

Landlord insurance falls under allowable expense. You should shop around for the most appropriate insurance type, including contents, liability, rent guarantee, and home emergency.

Service fees, such as gardeners, letting agents, and management

Any fees incurred that are wholly for the purpose of the managing and upkeep of the rental property are considered allowable expenses, and as such, are likely considered tax deductible.

Legal fees for lets under a year, or for lease renewals less than 50 years

Legal fees for lets under a year, or for lease renewals less than 50 years are subject to tax deductions. Any fees outside of these parameters will not be deductible, so it is vital that you seek advice on what is eligible for a tax deduction before claiming.

Accountant fees

If an accountant’s fees are directly and solely related to the rental property, you may claim a tax deduction. You cannot, however, claim fees associated with the purchase of the property.

Rents (if sub-letting) and service charges

You can claim back the fees on rent, ground rents and service charges – but only if you are responsible for paying them. If your tenant is responsible for paying utility bills, you may only be able to deduct the cost when the property is empty.

Advertising for new tenants

You may claim back for the advertising costs when looking for a new tenant. On the other hand, permanent signs are considered capital costs, and do not qualify for a tax deduction.

Vehicle expenses, including mileage deductions

The cost of a vehicle is not tax-deductible, but reasonable costs of travelling are. You can claim the standard mileage rate deduction of 45p per mile for the first 1,000 business miles, and 25p per additional business mile. These are calculated on a tax-year basis.

What expenses can I not deduct?

Even if you made the payment, you cannot deduct tax on the following expenses:

• Your full mortgage payment amount – only the mortgage interest payment can be deducted
• Personal phone calls not relating to the rental business
• Clothing
• Personal expenses