Top Allowable Expenses for Landlords: Maximise Your Rental Returns in 2026
- Modified: 12 March 2026
- 8 min read
- Property
Gabi Bellairs-Lombard
Author
Gabi is a content writer who is passionate about creating content that inspires. Her work history lies in writing compelling website copy, now specialising in product marketing copy. Gabi's priority when writing content is ensuring that the words make an impact on the readers. For Osome, she is the voice of our products and features. You'll find her making complex business finance and accounting topics easy to understand for entrepreneurs and small business owners.
Mosan Ali
Reviewer
Mosan Ali is our Accounting Manager based in the UK and has a wealth of knowledge of UK GAAP, VAT, and PAYE. With 12 years of experience crunching numbers and ensuring compliance, he keeps our financial reporting ship-shape. Think of Mosan as our blog's accounting guru. He carefully reviews our UK-focused content, ensuring it's accurate, up-to-date, and packed with helpful tips for UK businesses. Get your taxes right from day one with our informative blog posts.
As a landlord in the UK, calculating your income tax involves unique considerations. Your income tax bill depends on your total rental income minus the expenses you can deduct from your property income. Understanding which costs are deductible on your tax return is key to reducing your taxable rental income and maximising profits. These deductible expenses cover any costs incurred solely from renting out your property. Below, we outline what qualifies, common pitfalls to avoid, and the benefits of optimising your claims.
Key Takeaways
- Allowable expenses in the context of landlords are costs wholly and exclusively incurred from renting out property, which can be deducted from rental income to lower the taxable profit and ultimately reduce the tax bill.
- There are many allowable expenses, such as finance costs, property management company costs and repairs, insurance premiums, council tax, and administrative fees. Each allowable expense helps to maximise rental returns and claim tax relief.
- It is crucial to differentiate between capital expenditures (not deductible) and revenue expenses (deductible), as well as to maintain accurate records and report taxable profits to HMRC to ensure compliance and avoid penalties.
What Are Allowable Expenses for Landlords?
Allowable expenses refer to business costs that can be subtracted from your income to determine your overall profit for tax purposes. These expenses are a great help in reducing taxable income. These are costs that are wholly and exclusively incurred for the purpose of renting out property. Some examples of such expenses include:
- General maintenance;
- Utility costs;
- Insurance;
- Letting agent fees.
Want to be sure you’re claiming all allowable expenses correctly? Osome’s accounting services for UK landlords help you track costs, stay compliant with HMRC, and file your tax return accurately — without the admin burden.
Why Claiming Allowable Expenses Matters
Claiming an allowable expense is more than just a matter of compliance; it's a strategic financial move. When you claim these expenses, you effectively decrease the amount of your taxable rental profit. And a lower taxable rental profit means a reduced tax bill. This can significantly enhance your after-tax returns, making a considerable impact on your overall rental income.
Thus, comprehending and learning how to claim allowable expenses can be a significant advantage for private residential landlords.
Top Allowable Expenses for UK Landlords
Having grasped the concept and importance of an allowable expense, we can now delve into the specifics. Some of the top landlord allowable expenses include:
- Finance costs, such as mortgage interest.
- Property maintenance and repairs.
- Insurance premiums.
- Ground rents and service costs.
- Council tax.
- Property management fees and legal fees.
- Wages.
- Travelling expenses.
- Administrative expenses.
- Only the interest element of any mortgage or mortgage arrangement fees.
- Any other finance costs related to the property rented out.
Individual landlords cannot deduct mortgage interest directly from rental income but may claim a basic-rate tax credit, while limited companies can usually deduct finance costs in full.
Each of these expenses, when handled correctly, can contribute to maximising your rental returns.
Finance costs
Finance costs are an important consideration for landlords when calculating tax on rental income. These costs typically include interest paid on loans or mortgages used to purchase or maintain a rental property.
For individual landlords, mortgage interest cannot be deducted directly from rental income. Instead, they can claim a basic-rate (20%) tax credit on finance costs. For limited company landlords, finance costs such as mortgage interest are generally fully deductible as a business expense when calculating taxable profits.
It is also important to distinguish finance costs from rules under the Capital Gains Tax Bill, which apply when a landlord sells a property that has increased in capital value since its purchase price. When calculating capital gains tax, landlords can claim capital expenses, such as certain transaction costs and capital improvements made during ownership. However, finance costs like mortgage interest cannot be deducted from the capital gain.
Landlords cannot claim mortgage capital repayments as allowable expenses. Only the interest portion of mortgage payments and other finance costs, such as mortgage arrangement fees, are deductible. This distinction helps ensure compliance with HMRC rules.
If you increase your mortgage loan on a buy-to-let property, the mortgage interest on the additional borrowing may qualify as a revenue expense where the funds are used for the rental business. This means landlords may be able to claim relief on the interest as part of their rental income tax calculations, subject to the current mortgage interest relief rules.
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Property maintenance and repairs
Another crucial category is property maintenance and repairs. These include general repairs, such as fixing leaking pipes, repairing electrical faults, and repairing appliances. Redecorating costs, including painting, re-plastering walls, and replacing flooring, are also considered maintenance expenses and can be deducted from your rental income.
It's important to remember that the value of like-for-like replacements cannot be superior when claimed as allowable expenses.
Insurance premiums
Insurance premiums also fall under the list of tax-deductible expenses for landlords. These include building and contents insurance, as well as landlord insurance, which offers liability protection and loss of rent coverage. By deducting these premiums, you can significantly lower the amount of tax you owe to the government.
Ground rent and council tax
If you bear the responsibility of paying ground rent or paying council tax for your buy-to-let properties, these can be claimed as tax-deductible expenses. If tenants cover these costs, you can still claim expenses for periods when the rental property is unoccupied. It's an area that is often overlooked but can significantly contribute to reducing your tax liability.
Management fees and legal fees
Management and legal fees are also included in the ambit of allowable expenses. These include:
- Fees for the renewal of a lease.
- Shorthold tenancy fees.
- Eviction procedure fees.
- Rent collection fees.
- Accountancy fees.
However, it's worth noting that legal expenses for the initial letting of a property or for letting agreements that last more than a year are not allowable expenses.
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Wages
An often overlooked aspect is that wages for property-related employees can also be claimed as allowable costs. For instance, you can deduct the wages of gardeners, cleaners, and other staff directly involved in maintaining and managing your rental property from your rental income when calculating your taxable rental profit. This can include payments to contractors or employees hired specifically for property upkeep or tenant services.
Travelling expenses
Travel expenses arising out of business purposes related to your rental property, such as inspections, tenant meetings, or trips to purchase supplies, can be claimed as allowable expenses. However, the rules around claiming travel expenses are quite specific and require careful documentation.
You cannot claim the cost of travelling from home to an office if the rental business is not run from home, as that classifies as personal expenses. But you can claim travel costs incurred when travelling from your office or another business location to the rental property. Keeping detailed records of mileage, dates, and purposes of trips will help ensure these claims are valid.
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Administrative expenses
Administrative expenses, encompassing personal costs such as postage, stationery, phone calls, and office supplies related to managing your rental property, can also be deducted. These costs support the day-to-day running of your property business and are considered allowable expenses.
Costs for advertising for new tenants, whether online or offline, can be deducted as well. This includes expenses for online listings, newspaper adverts, signage, and any other promotional efforts to find suitable tenants.
Service charges
In the UK, service charge costs that have been incurred by landlords in relation to their rental properties can be claimed too, provided that the expense is relevant or 'service charges direct costs' to the rental property in question. These might include charges for cleaning communal areas, maintenance of shared facilities, or building security fees.
Other expenses
Lastly, expenses incurred wholly for the property business can also be claimed. One example of a deductible expense for landlords is the licence fee for Houses of Multiple Occupation (HMO). This expense can be claimed as a part of the property costs on your tax return. Other examples might include subscriptions to landlord associations, training courses related to property management, or costs for professional advice directly connected to your rental business.
If you're a property business owner or a landlord of a residential property in the UK, Osome can simplify the process of filing taxes and staying compliant for you. With Osome, you can get a personal accountant for your property rental business from day one. Free yourself from the stress of managing your taxes. Our dedicated experts and easy-to-use tools can make everything easy and smooth. Contact us today.
Claiming Relief for Domestic Items Replacement
Let's now turn our attention to the Replacement of Domestic Items Relief, a form of tax relief for landlords. As a landlord, you can claim this relief for the cost of replacing domestic items in your properties. This can be a significant saving, especially given the wear and tear on these items over time.
What qualifies for the relief?
So, what qualifies for this relief? The relief applies to domestic items commonly used within a dwelling-house for tenants. This includes:
- Moveable furniture;
- Furnishings;
- Household appliances;
- Kitchenware;
- Televisions.
However, to qualify for the relief, the replaced domestic items must be like-for-like replacements of the old items.
How to claim the relief
Making a claim for this relief is a straightforward process. All you need to do is deduct the cost of the replacement item from your rental income. But remember, you need to subtract any proceeds from the sale of the old item and any disposal costs.
Capital Expenditure Vs. Revenue Expense
Let's now explore another crucial distinction — the difference between capital expenditure and revenue expense. While both are expenses for your rental property, they differ in their nature and how they are treated for tax purposes.
What is a capital expense?
Capital expenses typically involve the enhancement of the property through alteration or improvement, like enlarging a driveway. It also includes property improvements and initial refurbishments before letting out the property. However, these costs are not deductible from rental income.
What is revenue expense?
On the other hand, revenue expenses relate to the costs that are incurred from day-to-day rental operations. These include interest on loans, arrangement fees, and bank charges on rental property bank accounts. While finance costs are a form of revenue expense, for most residential properties, there is a restriction allowing only 20% of costs incurred to be claimed against tax liability as a tax credit rather than a deduction from rental income.
Record Keeping and Reporting Taxable Profits
As we conclude our exploration of expenses, let's consider two very important aspects — maintaining records and reporting taxable profits. While it may not seem directly related to expenses, these are crucial for compliance and avoiding penalties when you pay tax.
The significance of proper record-keeping
Accurate and complete records are a must for any landlord. You are required to maintain records of rental income and expenses for a minimum of five years after the tax return deadline. This is crucial not only for your personal comprehension and monitoring of your rental business but also for adhering to HMRC requirements.
Reporting taxable profits to HMRC
Communicating your rental income to HMRC isn't merely a requirement; it's a fundamental aspect of managing the finances of your rental business. It is important to register for Self Assessment by 5 October after the tax year in which you earned rental income. This will ensure compliance with tax regulations. Depending on your circumstances, you may choose to file tax returns using either the cash basis or the accrual basis.
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How Osome Can Help
Understanding what expenses you can deduct as a landlord is one thing — managing your taxes and compliance effectively is another. Osome helps UK landlords stay on top of their tax obligations while making the most of allowable expenses and allowable deductions.
With Osome’s specialised landlord accounting services, you get expert support on:
- Accurate tracking and categorisation of allowable expenses, ensuring your deductible costs are recorded properly and nothing eligible is missed.
- Preparing and submitting self-assessment tax returns, so your filing reflects all allowed deductions and total allowable expenses and stays compliant with HMRC requirements.
- VAT registration and returns if applicable, removing the complexity of compliance from your hands.
- Personalised advice on tax-efficient structures, whether you’re a new landlord or managing multiple properties.
Osome combines expert accountants familiar with the UK property market with easy-to-use financial tools that give you clarity and control over your rental income, allowable expenses, and tax position.
Whether you’re maximising allowable expenses or preparing for year-end reporting, Osome works with you every step of the way — keeping things compliant, efficient, and stress-free.
Summary
We've covered a lot of ground in this blog post. We've explored the concept of allowable expenses that can be deducted, the various types of expenses that landlords can claim, the importance of record keeping and reporting to HMRC, and so much more. The key takeaway is that understanding and managing your expenses can significantly impact your rental returns. By leveraging these insights, you can position yourself for greater profitability and success in your rental or property business.
If you're a property business owner or a landlord of a residential property in the UK, Osome can simplify the process of filing taxes and staying compliant for you. With Osome, you can get a personal accountant for your property rental business from day one. Free yourself from the stress of managing your taxes. Our dedicated experts and easy-to-use tools can make everything easy and smooth. Contact us today.
Gabi is a content writer who is passionate about creating content that inspires. Her work history lies in writing compelling website copy, now specialising in product marketing copy. Gabi's priority when writing content is ensuring that the words make an impact on the readers. For Osome, she is the voice of our products and features. You'll find her making complex business finance and accounting topics easy to understand for entrepreneurs and small business owners.
