Are letting agent fees tax deductible in the UK?

Yes. Management commission, rent collection charges, renewal fees and re-letting costs are allowable revenue expenses deducted from rental income on the SA105 property pages. The exception is the cost of arranging a first letting with a term of more than one year, which HMRC treats as capital expenditure under PIM2120.

Do I claim agent fees including or excluding VAT?

Include the VAT. Residential rent is VAT exempt, so almost no landlord can reclaim it, which makes the gross invoice your real cost. A 12% plus VAT management fee is deductible at 14.4% of rent. Claiming the net figure means underclaiming by a fifth of the fee.

Which box on the tax return do letting agent fees go in?

They go in the Legal, management and other professional fees box on the SA105 UK property pages, box 27 on recent versions of the form. Box numbering can shift between tax years, so check the form for the year you are filing rather than relying on the number alone.

Can I claim the tenant-find fee for my very first tenant?

Only if that first tenancy runs for a year or less. HMRC treats costs connected with a first letting of more than one year as capital, so an agent fee tied to a two-year opening tenancy is not deductible from rental income. Keep the invoice to offset Capital Gains Tax on sale.

Do agent fees reduce my income for Making Tax Digital purposes?

No. MTD qualifying income is measured on gross rent and trading turnover before any expenses. A landlord grossing over £50,000 in rent is in scope from April 2026 even if agent fees, mortgage interest and repairs leave far less profit. The threshold falls to £30,000 in 2027.

Are Letting Agent Fees Tax Deductible? How to Claim Them (2026/27)

25 August 2026 · AgentCheck Editorial · 8 min read

Part of our Landlord Tax Guide

Yes. For UK landlords, letting agent fees are an allowable revenue expense. Monthly management commission, rent collection charges, renewal fees and the cost of re-letting are deducted from your rental income before tax on the SA105 property pages of your Self Assessment return. The main exception is the cost of arranging a first letting of more than one year, which HMRC treats as capital.

Are letting agent fees tax deductible?

HMRC applies one test to every cost you want to deduct from rental profit: was it incurred wholly and exclusively for the purposes of the property business? Letting agent fees clear that test comfortably. If you pay an agent 12% of rent to find tenants, collect rent, arrange repairs and inspect the property, that money is spent running the letting and nothing else.

The complication is not whether agent fees are deductible, it is when. HMRC splits professional costs into revenue (deduct now, against this year's rental profit) and capital (cannot deduct from rental income, but may reduce a future Capital Gains Tax bill). HMRC's Property Income Manual at PIM2120 sets out how this works for legal and professional fees, and it is where most landlords get caught out.

A pen sitting on top of a pile of papers — Photo: Unsplash

Which letting agent fees you can claim

Most of what a letting agent invoices you for over the life of a tenancy is claimable. The table below covers the charges that appear on a typical agent statement, with the fee ranges we see across the UK market.

Charge	Typical UK cost	Deductible?	Notes
Full management commission	10–15% of rent + VAT	Yes	Revenue expense, claim the VAT-inclusive figure
Rent collection only	8–10% of rent + VAT	Yes	Treated the same as management commission
Tenant-find fee, re-let	4–8% of annual rent	Yes	Allowable on every letting after the first
Tenant-find fee, first letting over 1 year	4–8% of annual rent	No	Capital under PIM2120, keep the invoice for CGT
Tenancy renewal fee	£60–£150	Yes	Renewals and extensions are revenue
Inventory and check-in	£100–£250	Yes	Unless bundled into a first letting package
Agent sales commission	1–2% of sale price	No	Capital, deduct from your CGT gain instead

One point landlords often miss: if you are not VAT registered (and almost no residential landlord is, because residential rent is exempt), you claim the gross fee including VAT. On a 12% plus VAT management fee, the deductible figure is 14.4% of rent, not 12%.

The first-letting rule that catches landlords out

PIM2120 states that expenses connected with the first letting or subletting of a property for a term of more than one year are capital, and therefore not deductible from rental income. That includes the agent's commission for finding that first tenant, plus the legal cost of drawing up the lease and any surveyor's fees tied to it.

Two things soften this in practice. First, the restriction only bites where the term exceeds a year, so a standard 6 or 12 month assured shorthold tenancy falls outside it. Second, it applies to the first letting only. Every subsequent tenant-find fee on that property is an ordinary revenue expense. If your first tenancy was a two-year agreement, treat the set-up cost as capital, file the invoice, and use it against Capital Gains Tax when you eventually sell.

A person sitting at a table with a laptop — Photo: Unsplash

Where agent fees go on your tax return

Rental income and expenses are reported on the SA105 UK property pages, which attach to your SA100 Self Assessment return. Letting agent fees belong in the "Legal, management and other professional fees" box, box 27 on recent versions of the form. Box numbering occasionally shifts between tax years, so check the form for the year you are actually filing.

Three practical points before you fill it in:

The £1,000 property allowance is an either/or. If you claim the allowance, you cannot also deduct agent fees. Only use it if your total expenses come to less than £1,000, which is unlikely once an agent is involved.
Joint owners split the expense. Married couples owning jointly normally report a 50/50 share of both income and costs unless a Form 17 declaration says otherwise.
Deadlines. 31 October after the tax year end for paper returns, 31 January for online filing and payment.

A worked example

Take a property let at £1,250 per calendar month on a fully managed service at 12% plus VAT. The agent takes £180 a month, or £2,160 a year. Here is what claiming it is actually worth:

Taxpayer	Rate 2026/27	Tax saved on £2,160	From April 2027
Basic rate	20%	£432	£475 at 22%
Higher rate	40%	£864	£907 at 42%
Additional rate	45%	£972	£1,015 at 47%

A higher-rate landlord on this property is paying roughly £1,296 net for full management once the tax relief is counted, not £2,160. That changes the maths on whether to self-manage, and it is worth running before you switch service tier.

Agent fees are one of several allowable expenses

If you are claiming agent fees and little else, you are probably underclaiming. The usual list for a residential letting includes:

Repairs and maintenance, but not improvements, which are capital
Landlord insurance, rent guarantee and legal expenses cover
Gas safety (CP12), EICR and EPC certificate costs
Ground rent and service charges on leasehold flats
Accountancy fees for preparing the property pages
Council tax and utilities you pay during void periods
Advertising and referencing costs you pay directly
Mileage for property visits at 45p per mile for the first 10,000 miles
Replacement of domestic items relief for like-for-like replacements in a furnished let

Mortgage interest is the notable exception. Since the Section 24 restriction fully bit in 2020/21, finance costs are not deducted as an expense. Instead you get a basic-rate tax reducer worth 20% of the lower of your finance costs, your property profit, or your income above the personal allowance. That rate rises to 22% from April 2027.

What Making Tax Digital changes from April 2026

Making Tax Digital for Income Tax started on 6 April 2026 for anyone whose qualifying income exceeded £50,000 in the 2024/25 tax year. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. If you are in scope, you keep digital records and send HMRC quarterly updates through recognised software, then make an annual declaration in place of the old return.

There is a trap worth flagging. Qualifying income is measured on gross rent and trading turnover, before expenses. Your agent fees do not pull you under the threshold. A landlord grossing £54,000 in rent who nets £22,000 after agent fees, interest and repairs is still inside MTD. If your agent already sends monthly statements as CSV or via a landlord portal, quarterly reporting becomes far less painful, so it is a fair question to put to an agent before you instruct them.

The April 2027 property income rate rise

At the Autumn Budget on 26 November 2025 the Chancellor announced separate rates of income tax on property income, set 2 percentage points above the main rates: 22%, 42% and 47% from April 2027. The same announcement confirmed the personal allowance will be set against employment, trading and pension income before property income, removing the flexibility some landlords used to allocate it.

The practical effect on this topic is small but positive: every pound of deductible agent fee becomes marginally more valuable, because it is being deducted at a higher rate. It does not offset the rise, but it does make accurate expense claiming worth more than it was.

Records to keep, and for how long

HMRC expects you to keep property records for at least five years after the 31 January filing deadline for the relevant tax year. For agent fees specifically, keep:

Every monthly or quarterly agent statement showing gross rent, commission and VAT
Invoices for one-off charges such as tenant-find, renewal and inventory fees
The management agreement, which evidences the fee basis if HMRC queries it
Tenancy start dates and terms, so you can prove which lettings were first lettings and how long they ran
Completion statements from any sale, where capital agent costs are set against the gain

Agent fee structures vary widely, and the cheapest headline percentage is rarely the cheapest total once one-off charges are added. AgentCheck lists 14,775 letting agents across 870 UK areas so you can compare fee structures and service levels side by side before you commit.

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