What expenses are tax deductible for UK landlords renting out residential properties?
By Helen Everritt, Property Manager
It goes without saying that owning a number of residential properties for renting out comes with a range of costs for landlords – so with that in mind it is important to know how to alleviate some of those associated financial pressures.
One way is to ensure you know what costs can be claimed against your annual tax bill.
When people talk about ‘claiming back’ against tax, they often do so in a way to suggest it is wrong, and that in some way it is avoiding what you should be paying. It isn’t.
Claiming landlord expenses are a legitimate way to ensure people who are making properties available to renters, maintaining them in a good condition, only pay what is fair.
To help you understand what can and can’t be claimed, we have created this easy-to-understand guide.
What are landlord allowable expenses?
Whilst HMRC has strict rules about what tax deductions you can claim as a landlord, there are still a number of ‘allowable expenses’ available.
The main rule of thumb to follow is that you can claim any genuine expenses of running and maintaining the property – if it is incurred wholly and exclusively as a result of renting the premises.
Deducting these costs should be made in the profit section when filing a Self-Assessment tax return.
The reason for this is because the tax you pay is based on any profit made, rather than overall income. By declaring all your allowable expenses, it reduces the profit made during a tax year. As a result, your tax bill will also be reduced.
In practical terms, a property with an annual rental income of £15,000 might incur landlord allowable expenses of £5,000. As a result, the landlord would only need to pay tax on the £10,000 profit.
What landlord expenses are tax deductible?
At the time of publishing in June 2022, the following expenses are tax deductible for UK landlords.
Utility bills
The following can be claimed if paid by the landlord or when the property is standing empty.
- Water rates, gas and electricity
- Council tax
- Service charges (if sub-letting)
- Ground rent (flats)
Insurance
All of the following are allowable expenses;
- Buildings and contents insurance
- Public liability insurance
- Landlord insurance - to cover for loss of rent
Professional Fees
Paying for professional services is classed as an allowable expense and includes;
- Letting and Management Agency fees
- Accountancy fees
- Houses of Multiple Occupation (HMO) licence fee
- Gas and electrical safety certificates
- Membership of Landlords’ Association
- Legal fees - lets of a year or less
- Legal fees - renewing a lease less than 50 years
- Legal fees - in relation to debt collection
Fees for repairs
You can claim for the fees of anyone who carries out repair work in a rental property, including;
- Gardeners & Cleaners - as part of rental agreement
- Builders, Plumbers & Electricians etc
- Cost of disposing items - typically electrical goods
Travel costs
You can only claim travel expenses which are directly related to the running of a rental property.
- Public transport fares
- Fuel – 45p per mile
- Vehicle tax and insurance
Direct Costs
If they directly relate to running the rental property, you can claim for general running costs.
- Phone and broadband bill
- Office equipment & stationery
- Advertising & marketing fees
- Letting agent’s fees
- Photography
Are our property management fees tax deductible?
Yes, they are, so, why take on the stress and hassle of doing everything yourself?
We’ve been letting properties in Hull and the East Riding for more than 25 years and can provide a service tailored to your needs.
If you’d like to tap into our experience, call 01482 566057 for an informal discussion.
