Allowable Expenses for Landlords: The Full UK List (2026/27)

Allowable expenses are costs you incur wholly and exclusively for letting your property, deducted from rental income before tax is calculated. They include letting agent fees, repairs, landlord insurance, ground rent, service charges, accountancy and travel. Mortgage interest is not deductible — it gives a 20% tax credit instead. Improvements are capital costs and cannot be claimed against rental income.

Most UK landlords pay more tax than they need to, and it is rarely because of anything exotic. It is because a handful of ordinary costs never make it onto the tax return — the mileage to a check-out inspection, the accountant's fee, the replacement washing machine, the half of the phone bill that is genuinely business use. None of them are large on their own. Together, across a tax year, they routinely come to four figures.

This guide sets out what HMRC lets you deduct from rental income for the 2026/27 tax year, where the line falls between a repair and an improvement, and the two rules that trip up more landlords than anything else.

What makes an expense allowable?

HMRC applies one test: the cost must be incurred wholly and exclusively for the purposes of your property business. If a cost has both a private and a business element, you can usually claim the business proportion — a phone used 30% for lettings admin gives you 30% of the bill — but you cannot claim a cost that exists mainly for personal reasons and happens to touch the property.

The second test is whether the cost is revenue or capital. Revenue costs keep the property running and come off your rental income this year. Capital costs improve or extend the property and instead reduce your Capital Gains Tax bill when you eventually sell. Getting this wrong is the single most common error on a landlord's return.

The full list of allowable expenses

Here is what you can deduct from rental income, with the points that most often cause confusion.

Expense	Claimable?	Notes
Letting agent fees and management commission	Yes	Including VAT you cannot recover. Tenant-find fees count too.
Repairs and maintenance	Yes	Restoring what was there. Not upgrades.
Landlord insurance	Yes	Buildings, contents, rent guarantee and legal expenses cover.
Ground rent and service charges	Yes	Leasehold flats. Major works via service charge may be capital.
Council tax and utilities	Yes	Only where you pay them, e.g. void periods or inclusive lets.
Safety certificates (gas, EICR, EPC)	Yes	Inspections, testing and remedial repair work.
Accountancy and tax return fees	Yes	The property business element. Not personal tax planning.
Legal and professional fees	Partly	Tenancy agreements and renewals yes. Purchase conveyancing no.
Advertising and marketing	Yes	Portal listings, photography, To Let boards.
Travel to the property	Yes	45p per mile for the first 10,000 business miles, 25p after.
Phone, broadband, stationery, software	Partly	Business-use proportion only. Keep the basis of your split.
Landlord licensing and HMO fees	Yes	Selective and additional licensing scheme charges.
Ground staff, cleaners, gardeners	Yes	Including end-of-tenancy cleans you fund.
Subscriptions to landlord associations	Yes	NRLA and equivalent trade bodies.
Bad debts (unpaid rent)	Depends	Accruals basis only. Under cash basis you never taxed it anyway.

Repairs versus improvements: where landlords trip up

A repair puts the property back to the condition it was in. An improvement makes it better than it was. The first comes off this year's rental profit; the second sits on your Capital Gains Tax base cost until you sell.

Revenue — claim now	Capital — claim on sale
Replacing a worn kitchen with a similar modern one	Upgrading a basic kitchen to a high-spec one
Repainting and making good	Adding an extension or loft conversion
Replacing broken single-glazed units like for like	First-time installation of double glazing on a period property
Fixing a leaking roof	Replacing the whole roof as part of a redevelopment

HMRC accepts that using the modern equivalent material does not make a repair into an improvement. Swapping a rotten timber window for a uPVC one of the same size is still a repair, even though uPVC performs better, because uPVC is simply what windows are made of now.

One hard rule: work carried out on a property you have just bought, where the condition of the property was reflected in the price you paid, is capital. If you bought at a discount because the boiler was dead, replacing the boiler is part of the acquisition, not a repair.

Mortgage interest is no longer an expense

Since April 2020, individual landlords cannot deduct mortgage interest or other finance costs from rental income. Instead you get a basic-rate tax reducer worth 20% of your finance costs, applied after your tax is calculated. The same treatment applies to mortgage arrangement fees and interest on loans taken out to fund the property business.

The practical effect is that your taxable rental profit is now stated before interest, which can push you into a higher tax band even when your real-world cash profit has not moved. A landlord with £18,000 of rent, £4,000 of running costs and £9,000 of mortgage interest declares £14,000 of profit, not £5,000 — then takes a £1,800 credit off the resulting tax bill. If you are a higher-rate taxpayer, you effectively get relief at 20% on interest you are paying in full.

Replacing furniture, white goods and carpets

The old 10% Wear and Tear Allowance was abolished in April 2016. What replaced it is Replacement of Domestic Items Relief, and it works on actual spend rather than a flat percentage.

• You can claim the cost of replacing a domestic item — sofa, bed, fridge, washing machine, carpet, curtains, crockery.
• You cannot claim the cost of buying that item for the first time when you initially furnish a property.
• The claim is limited to the cost of a like-for-like replacement. Upgrade from a £300 fridge to a £900 American-style one and you claim £300.
• Deduct anything you got for the old item, whether sold or part-exchanged.
• Reasonable delivery, installation and disposal costs can be included.

Fixtures that form part of the building — a fitted kitchen, a boiler, a bathroom suite — are not domestic items. Replacing those is treated as a repair under the rules in the section above.

What you cannot claim

1. Mortgage capital repayments. Only the finance cost element attracts the 20% credit; the capital portion is never relievable.
2. Purchase costs. Stamp Duty Land Tax, survey fees and conveyancing on acquisition are capital and go against CGT.
3. Improvements and extensions. As above — capital, not revenue.
4. Your own time. You cannot pay yourself for managing your own property and deduct it.
5. Personal expenditure. Clothing, general household costs, or a holiday attached to a property visit.
6. Fines and penalties. Late-filing penalties and most regulatory fines are not deductible.

The £1,000 property allowance: when it beats claiming expenses

If your gross property income is £1,000 or less in a tax year, it is tax-free and you generally do not need to declare it. If your income is above £1,000, you can choose to deduct the £1,000 allowance instead of your actual expenses — but not both.

For a typical buy-to-let this is a bad trade: agent fees alone on an £800 pcm property let at 12% inc VAT come to over £1,150 a year. The allowance is really aimed at small-scale income — a lock-up garage, a parking space, a room let outside Rent a Room. Run both calculations before you choose. Note too that if you claim the property allowance, you cannot also claim the 20% finance-cost tax reducer on that income.

Cash basis or accruals — which applies to you

Since 2017/18 the cash basis is the default for individual and partnership property businesses with receipts of £150,000 or less. You record income when it lands and expenses when you pay them, with no debtors or creditors to track. You can elect out and use the accruals basis if you prefer, and you must use accruals above the threshold or if you run the property business through a company.

The choice matters at year end. Under cash basis, a January invoice you settle in April falls into the next tax year. Under accruals, it belongs to the year the work was done.

Records, receipts and Making Tax Digital

HMRC expects you to keep records for at least 22 months after the end of the tax year, and five years and ten months if you are self-employed as well. In practice, keep six years of invoices, bank statements, agent statements and mileage logs.

From 6 April 2026, landlords and sole traders with qualifying income over £50,000 must use Making Tax Digital for Income Tax — digital records, compatible software and quarterly updates to HMRC. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is gross, before expenses, so a landlord with £52,000 of rent and £20,000 of costs is in scope from this April even though the profit is well under the threshold.

If your agent produces monthly statements, that is most of your bookkeeping done. A good managing agent will itemise commission, contractor invoices and any rent arrears in a format your accountant can work from directly — one of the quieter arguments for full management over let-only. AgentCheck lists 14,353 letting agent branches across 771 UK areas, so comparing what each one actually gives you in reporting terms is worth ten minutes.

Related guides

• Landlord Tax: The Complete UK Guide for 2026/27
• Are Letting Agent Fees Tax Deductible? How to Claim Them
• Making Tax Digital for landlords: what is changing and when

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This guide is general information, not tax advice. Rules change and individual circumstances differ — check your position with a qualified accountant or HMRC before filing.

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