A landlord can deduct the costs of running a let property from rental income, provided each cost is wholly and exclusively for the purposes of renting out the property. Day-to-day costs such as repairs, letting agents' fees, insurance and accountancy fees are an allowable expense. Capital spending, such as an extension or furnishing a property for the first time, is not. Replacement of domestic items relief covers replacing things like beds, carpets and fridges, but not buying them in the first place. For an individual landlord, mortgage interest is no longer a deduction from rent: it earns a tax reduction at the basic rate instead.
That is the shape of the rules. This complete 2026 guide to landlord allowable expenses covers the detail: where HMRC draws the line between a repair and an improvement, how the replacement relief is calculated, and the claims that most often go wrong.
Landlord allowable expenses: the test every allowable expense must pass
HMRC's guidance on working out your rental income says landlords can deduct expenses when they work out their taxable rental profit, as long as the expenses are wholly and exclusively for the purposes of renting out the property. Everything else in this article is a detailed application of that sentence.
In practice, every expense incurred needs two questions answered:
- Is it a cost of running the letting, rather than a cost of buying or improving the asset? This is the split between a revenue expense, which you can deduct, and a capital expense, which you cannot.
- Is it incurred solely for the letting, rather than for you personally?
HMRC describes capital expenses as those that will be used in the business over a longer period. The guidance gives three examples: adding something to the property that was not there before, altering, improving or upgrading something that already existed, and buying furnishings and equipment for the property.
The second question catches personal spending. HMRC's example is a suit bought to wear to a meeting about your rental business. It is partly for the business and partly to keep you warm, so no identifiable part is for the property business and none of it can be claimed as an allowable expense.
Repairs or improvements: the revenue expense versus capital line
This is the line most landlords get wrong, and it is worth getting right because a repair reduces your taxable profit this year, while an improvement does not.
HMRC defines a repair as something that restores an asset to its original condition, sometimes by replacing parts of it. Its examples are:
- replacing roof tiles blown off by a storm
- replacing a broken-down boiler
- redecorating between tenants to restore the property to its original condition
An improvement goes further than restoring. HMRC's examples of capital work that would not normally be allowable are adding an extension, installing a security system where there was not one before, and replacing a kitchen with one of a higher specification. A law firm's guide gives a simple version of the same point: swapping a laminate worktop for a more costly granite one is an improvement, not a repair.
When a repair includes a small upgrade
Replacing a part of the property with the nearest modern equivalent can still be a repair where the improvement is incidental to the repair. HMRC's example is replacing a single-glazed window with a double-glazed window. You are not choosing to upgrade the property; double glazing is simply what a replacement window now is.
The same like-for-like logic applies to fixtures. HMRC says the cost of renewing fixtures such as baths, washbasins or toilets is normally allowable as a repair to the building, provided the new one is a like-for-like replacement and not an improvement. Replacing small items such as cutlery, crockery, cushions and bed linen is also allowable as a running cost.
Can I claim a new kitchen on a rental property?
It depends on what the new kitchen is. If it replaces what was there and the specification is not higher, the like-for-like test applies, as it does to any other replacement. If it is a higher specification, HMRC treats it as capital and it is not deductible against rent.
Work before the first let
Buying a property in a run-down state and putting it right is where the rule bites hardest. HMRC says some costs of work before you lease or rent a property will be capital, including where you bought a derelict or run-down property, paid a substantially reduced price, or the property was not in a fit state for rental. Works to bring it up to a lettable standard are unlikely to be repairs, because they improve the property.
That does not make the money disappear. Capital spending is not allowable against rent, but HMRC says to keep records of it because you might be able to set it against Capital Gains Tax if you sell the property later.
Insurance and deposits
If an insurance policy pays for part of a repair, you can only claim the additional cost the pay-out did not cover. The same applies if you keep part of a tenant's deposit to cover damage: you can only claim repair costs above the amount you kept.
Your own labour
The cost of doing the work yourself is not an expense. You can claim what you pay a gardener, cleaner or tradesperson, but not a fee for your own time.
Allowable expenses for landlords: the expenses you can claim
HMRC's guidance lists the following costs that landlords can deduct when they pay for them themselves and they are wholly and exclusively for the letting.
| Cost | What HMRC's guidance says |
|---|---|
| Letting agent and management fees | Allowable |
| Landlord insurance | Landlords' policies for buildings, contents and public liability |
| Accountant's fees | Allowable |
| Ground rent and service charges | Allowable; rent is also allowable if you are sub-letting |
| Advertising for new tenants | Allowable, along with other direct costs such as phone calls and stationery |
| Water rates, council tax, gas and electricity | Allowable when you pay them |
| Gardeners and cleaners | Costs of services, including their wages |
| Legal fees | Only for lets of a year or less, or for renewing a lease for less than 50 years |
| Vehicle running costs | Only the proportion used for the rental business, including mileage rate deductions |
So what are the expenses you can claim in practice? A few of these need more than a table row.
Legal fees. The limit matters. Fees for a short let, or for renewing a lease of under 50 years, are allowable. Legal costs on buying the property are not: stamp duty, conveyancing fees and survey charges are treated as part of what the property cost you.
Utilities and council tax. The word that matters is pay. If you pay the council tax or the bills, landlords can claim them. If the tenant pays the supplier directly, there is nothing for you to claim.
Insurance. Beyond the buildings and contents policies, some landlords also buy cover for loss of rent. It sits naturally alongside the other landlord insurance policies as a normal cost of the letting.
Can I claim expenses during a void period?
Costs you pay yourself while the property is empty, such as council tax, gas, electricity and water, are costs of running the letting. They fall under the same rule as any other bill you pay: allowable if you meet the cost and it is for the rental business. If you are unsure how a particular void-period cost should be treated, check it with your accountant before you claim.
Travel expenses and mileage
Travel expenses are claimable where the journey is for the rental business, such as visiting the property or going to buy something for it. If you run your lettings as an individual, or in a partnership made up only of individuals, you can use flat-rate mileage rather than tracking fuel and wear. The rates relayed in a law firm's guide are 45p per mile for the first 10,000 business miles and 25p per mile after that. Check the current figures on GOV.UK before you rely on them. A journey from home to an office is a personal one if the rental business is not run from home, so it cannot be claimed.
Claiming part of an expense
Where only part of an expense is for the letting, you can deduct that part. An accounting software provider's example is a tin of paint: use half on a damaged wall in a let property and half at home, and you can deduct half the cost. A law firm gives a time-based example: a property used privately by its owner for three months and let for nine allows 9/12 of the mortgage interest to be taken into account. The proportion has to be fair, and you should be able to explain how you reached it.
Replacement of domestic items relief: tax relief for replacing furnishings
When the old wear-and-tear allowance went, replacement of domestic items relief took over. It applies to expenditure from 6 April 2016, and it exists because replacing furnishings and equipment is not a repair. HMRC says the costs of replacing furnishings or equipment are not allowable as maintenance and repairs, but they may qualify for this tax relief instead.
What qualifies
If you let out residential property (a dwelling house), you may be able to claim a deduction for replacing domestic items. HMRC's examples are:
- movable furniture, such as beds and free-standing wardrobes
- furnishings, such as curtains, linens, carpets and floor coverings
- household appliances, such as televisions, fridges and freezers
- kitchenware, such as crockery and cutlery
The conditions
HMRC sets out the conditions. You must carry on a property business that includes the letting of a dwelling house. An old domestic item provided for use in the dwelling house must be replaced by a new one, and:
- the new item is provided for the exclusive use of the tenant in that dwelling house
- the old item must no longer be available for the tenant's use
- the expenditure must not be barred by the wholly and exclusive rule, but would otherwise be barred by the capital expenditure rule
- capital allowances must not have been claimed on the new item
What it does not cover
There are two exclusions. You cannot claim the relief if you are renting a room in your own home, and you cannot claim it for the initial cost of buying domestic items for a dwelling house. The point is that the relief applies only when an item is genuinely replaced and no longer used in the property, not when you first kit it out.
The relief is not limited to fully furnished lets. HMRC says it can be claimed for dwelling houses that are unfurnished, part furnished or fully furnished.
The like-for-like rule
If the new item is an improvement on the old one, you can claim only the cost of an item the same as the original. HMRC's example: a new sofa costs £400 but you buy a sofa bed at £550. You claim £400, and no relief is available for the other £150.
HMRC says a new item counts as an improvement when:
- it is not the same or substantially the same as the old item
- its function has changed, for example from a sofa to a sofa bed
- you upgrade the quality or material, for example from synthetic carpet to wool
There is a sensible exception. If the new item is a reasonable modern equivalent, such as a fridge with a better energy-efficiency rating than the old one, it is not an improvement and the full cost qualifies.
How to work out the allowable deduction
HMRC's method has three steps:
- Add the cost of the new item to any incidental costs of disposing of the old item or buying the replacement.
- Deduct anything you received for the old item.
- If the new item is an improvement, use the cost of an equivalent item at step 1.
A consumer guide gives a worked example: new curtains at £200, a washing machine at £250 that costs £50 to dispose of, and a bed at £400. The relief is £200 + £250 + £50 + £400, a total of £900, deducted from rental income in working out profit.
To see step 2 at work, take an illustrative case. You replace a worn-out fridge-freezer with a similar model for £450, pay £30 to have the old one taken away, and a dealer gives you £20 for it. The allowable deduction is £450 + £30 − £20 = £460.
Do landlords have to replace washing machines?
Whether a landlord must supply or replace an appliance depends on the tenancy agreement and the landlord's wider legal duties, which this guide does not cover. What the tax rules say is narrower: if you do replace a washing machine or another appliance in a let dwelling house, the cost can qualify for the relief, subject to the conditions above.
What a UK landlord cannot claim
HMRC's guidance is explicit that these are not deductible:
- Improvements and enhancements that are capital expenditure, unless they qualify for replacement of domestic items relief.
- The full mortgage payment. Only the interest element counts, and for individuals even that is treated differently, as explained below.
- Private phone calls. Only calls relating to the rental business can be claimed.
- Clothing, even if bought for a rental meeting.
- Personal expenses of any kind not incurred solely for the property rental business.
The cost of buying the property is also outside the rules. The purchase price, stamp duty, conveyancing and survey fees and any auctioneer's costs are all part of what the property cost you. They are not rental expenses, and no landlord tax relief is available for them against rent.
There is one more case worth knowing. If you let a property on non-commercial terms, such as to a friend or relative at a reduced rent, HMRC says expenses can only be deducted up to the rent received for that property. You make neither a profit nor a loss, and you cannot carry the excess forward, even if you later start charging a commercial rent.
Mortgage interest, finance costs and tax relief for residential properties
Companies and individuals are treated differently. HMRC's guidance says the restriction does not affect UK resident or non-UK resident companies, which continue to receive relief for interest and other finance costs in the usual way. For individuals it applies to UK residents letting residential properties in the UK or overseas, non-UK residents letting UK residential properties, individuals letting through a partnership, and trustees or beneficiaries liable for Income Tax on residential property profits.
The finance cost restriction started on 6 April 2017. From 6 April 2020, Income Tax relief on all residential property finance costs is restricted to the basic rate. For most people that means a reduction in the amount of tax they pay equal to 20% of the interest, instead of a deduction from rent. An accounting software provider's example: with £200 of interest, you can usually take £40 off your tax bill.
The restricted costs are wider than just interest. HMRC lists interest on mortgages, loans (including loans to buy furnishings) and overdrafts, alternative finance returns, fees and incidental costs of getting or repaying mortgages and loans, and discounts, premiums and disguised interest. HMRC also says all residential landlords with finance costs are affected, but only some will pay more tax.
Two further points from HMRC's guidance:
- If one loan covers both residential and commercial property, or both a self-employed trade and residential property, you need a reasonable apportionment so that only the residential part is restricted.
- If you increase the mortgage on a buy-to-let, interest on the extra borrowing can be treated as a revenue expense or relieved against Income Tax only if the additional loan is wholly and exclusively for the letting business. Interest on borrowing above the property's capital value when it was brought into the letting business is not deductible.
The mechanics of the tax reduction, and what it does to a higher-rate taxpayer's bill, are covered in our guide to mortgage interest relief for landlords (section 24).
What is the most tax-efficient way to be a landlord?
There is no single answer, and the allowable expenses rules alone will not give you one. What the guidance does show is the difference in finance cost treatment: a company keeps relief for interest in the usual way, while an individual gets the basic-rate reduction. Ownership structure has consequences well beyond the income tax on rent, so take advice on your own circumstances before changing how you hold rental properties.
Property income, the £1,000 allowance and the cash basis
The £1,000 property allowance
The first £1,000 of property income is tax-free under the property allowance. The trade-off is stated plainly in HMRC's guidance: if you claim the property allowance, you cannot claim a deduction for your expenses. For a landlord with a small amount of rent, that is fine. For anyone whose costs are more than the allowance, claiming expenses is the better route.
For reporting, GOV.UK says to contact HMRC if your income from property rental is more than £1,000 a year, up to £2,500. You must report it on a Self Assessment tax return if it is more than £2,500 after allowable expenses or £10,000 before allowable expenses. If you do not usually send a tax return, you need to register by 5 October following the tax year in which you had rental income.
Cash basis
Most landlords file under the cash basis, which is automatic for those earning less than £150,000 but can be opted out of. On the cash basis, your tax return includes only the income you received in the tax year and the expenses you paid in that year. Under the accruals basis, anticipated income and expenses are included as well.
If you want the accruals basis, HMRC's guidance says you must check the box on your return to opt out of the cash basis. It is a positive step, not something that happens by default. Whether opting out suits you depends on how your income and bills fall across the tax year, and that is a decision to make with your accountant before filing, not after.
Rental properties, losses and the landlord who is also self-employed
Most landlords with more than one UK property treat the lettings as a single business. HMRC says to add together all your rental income, add together all your allowable expenses, and take one from the other. Expenses on one property can be set against income from another, and a loss on one is automatically offset against profits from another. If you make a loss for the year, it can be carried forward against future profits of the same business.
If HMRC asks you to send a tax return, you need to give details of your rental income and expenses even if you made a loss. If your rental business ends, losses carried forward are usually lost. You may be able to use earlier losses against profits from a new property if you continue the same business and start to rent again within three years, and HMRC says that depends on the circumstances of each case.
Can I claim allowable expenses if I am both a landlord and self-employed?
The test is the same: an expense can only be deducted against the letting if it is wholly and exclusively for the letting. A cost that serves both the letting and a separate trade has to be split, and only the letting share is an allowable deduction against rent. HMRC applies the same thinking to borrowing: where a loan was partly for a self-employed trade and partly for residential property, you need a reasonable apportionment of the interest.
Records, Making Tax Digital and what has changed for 2026
You do not send receipts with your tax return, but HMRC can ask for evidence later, and incorrect figures can lead to a fine. Keep the invoice or statement for each claim, a note of how you split any mixed-use cost, and a separate record of capital spending so you have it if you sell.
What are the new rules for landlords in 2026?
Two changes matter most for how landlords report and claim. First, the furnished holiday lettings rules ended on 6 April 2025 for Income Tax and Capital Gains Tax, so those lettings now follow the ordinary property rules described above. Second, for most landlords Self Assessment is being replaced by Making Tax Digital for Income Tax. If you own property jointly, see our note on jointly owned property and the MTD threshold to check whether and when it applies to you.
Frequently Asked Questions
Allowable expenses for landlords: what can you deduct?
Anything wholly and exclusively for renting out the property, such as repairs, letting agent and management fees, landlord insurance, accountant's fees, ground rent and service charges, advertising for tenants, and utilities or council tax that you pay. Capital improvements, the purchase cost of the property and personal spending are not deductible.
Can I claim painting my rental property as an expense?
Yes. Redecorating to restore the property to its original condition is a repair, and HMRC's examples include redecoration between tenants. The same work is not a repair if it is part of bringing a run-down property up to a lettable standard for the first time.
Can I deduct mortgage interest on a rental property?
Not as a deduction from rent if you are an individual letting residential property. Relief is restricted to the basic rate of Income Tax, so you get a tax reduction rather than a deduction. Only the interest element of a mortgage payment counts, never the capital repayment. Interest on a mortgage for a non-residential let can still be deducted.
Can I claim expenses on furnished holiday lettings?
The furnished holiday lettings rules ended on 6 April 2025 for Income Tax and Capital Gains Tax, so for 2025-26 onwards those lettings are treated under the ordinary property rules described above. For returns up to and including 2024-25, some of the old reliefs may still be claimable, and GOV.UK has a helpsheet for them.
Does replacement of domestic items relief apply if the property is unfurnished?
Yes. HMRC confirms it can be claimed for unfurnished, part-furnished and fully furnished dwelling houses. What matters is that you are replacing an item that was provided for the tenant's use, not providing one for the first time.
Where Deplexify fits
Deplexify prepares accounts and tax for UK landlords, among other small businesses and organisations. If you would like a second pair of eyes on how you have split repairs from improvements before you file, see our page for UK landlords and property.
Sources
- Work out your rental income when you let property - GOV.UK — gov.uk, read 2026-10-18
- Renting out your property: Paying tax and National Insurance - GOV.UK — gov.uk, read 2026-10-18
- PIM3200 - Furnished lettings: contents - HMRC internal manual - GOV.UK — gov.uk, read 2026-10-18
- Allowable Expenses - UK Landlord Tax — uklandlordtax.co.uk, read 2026-10-18
- Allowable expenses for landlords: what can you deduct? - FreeAgent — freeagent.com, read 2026-10-18
- What expenses can residential landlords claim | Bowcock & Pursail — bowcockpursaill.co.uk, read 2026-10-18
- Allowable Expenses for Landlords: A Complete 2026 Guide — osome.com, read 2026-10-18
- Allowable expenses landlords can claim - Which? — which.co.uk, read 2026-10-18
- A Guide To Landlord Allowable Expenses — axa.co.uk, read 2026-10-18