Allowable Expenses for Landlords

Being a landlord in the UK can be a rewarding venture, providing a steady stream of rental income and potential property appreciation. However, it also comes with its fair share of financial responsibilities. One crucial aspect of managing a rental property is understanding and optimising available allowable expenses for landlords.

Understanding Allowable Expenses for landlords

Allowable expenses are costs that landlords can deduct from their rental income to calculate their taxable rental profit. By claiming these expenses, landlords can effectively reduce their tax liability and ensure they are not paying more tax than necessary.

Types of Allowable Expenses for landlords

Mortgage Interest

If you have a buy-to-let mortgage on the property, you can claim tax relief on the mortgage interest payments. However, it’s essential to note that as of April 2020, tax relief on mortgage interest is being phased out and replaced with a basic rate tax deduction.

Repairs and Maintenance

Costs incurred for repairing and maintaining the property are usually allowable expenses. This includes fixing plumbing issues, repairing the roof, or repainting walls. It’s important to differentiate between repairs (which are usually allowable) and improvements (which are typically not).

Council Tax and Utility Bills

Landlords are responsible for paying the council tax and utility bills if the property is empty. However, during periods of occupancy, tenants are generally liable for these expenses.

Insurance Premiums

Landlords can claim insurance premiums related to the property, such as buildings insurance or landlord insurance policies.

Letting Agent Fees

If you use a letting agent to manage your property, their fees are generally allowable expenses.

Advertising Costs

Expenses related to advertising the property for rent can be claimed.

Ground Rent and Service Charges

For leasehold properties, ground rent and service charges are typically allowable expenses.

Accountancy Fees

Landlords can claim accountancy fees incurred for managing their rental business.

Furniture and Furnishings

Replacement and repair costs for furniture and furnishings provided with the property may be allowable expenses.

Helping you with Allowable Expenses for Landlords

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