We are often asked about which expenses can be offset against residential property income before calculating any tax.

Landlords can deduct expenses from rental income to work out the taxable rental profit as long as they are wholly and exclusively for the purposes of renting out property.

Examples of allowable expenses include:

  • General maintenance and repairs to the property (but not improvements) such as:

o       Repairs for water or gas leaks

o       Electrical repairs

o       Replacing broken windows, doors, gutters, roof slates

o       Repairing internal and external walls, roofs, floors

o       Repainting and redecorating

o       Treating damp or dry rot

o       Re-pointing and stone cleaning

o       Hiring equipment to carry out necessary repair work

o       Replacing existing fixtures and fittings i.e. radiators, boilers, water tanks, bathroom suites and kitchens

  • Water rates, council tax, gas and electric
  • Landlord’s insurance policies for buildings, contents or public liability
  • Letting agent fees and management fees
  • Accountant’s fees for preparing accounts
  • Cost of services e.g. cleaners and gardeners
  • Sub-letting fees, ground rent and service charges
  • Direct costs e.g. phone calls, stationery and advertising
  • Legal fees for lets and renewing leases for less than 50 years
  • Vehicle running costs used for rental business
  • Bank charges
  • Mortgage interest (companies and furnished holiday lets only)

Examples of expenses which aren’t allowable include:

  • Capital element of mortgage payments
  • Mortgage interest – this is restricted so that individual landlords (including partnerships, LLPs and trustees) only receive a basic rate tax deduction from 2020/21 onwards. However if your property is a furnished holiday let or you run your portfolio through a company let then full relief for any mortgage interest is available
  • The capital payments towards the mortgage are never allowable