Letting out a property comes with a long list of responsibilities, and one of the more confusing aspects is tax. Specifically, which expenses can landlords in East Anglia legally claim against their rental income?
This guide breaks it down clearly and simply, without offering advice, just solid, factual information to help you understand what counts as an allowable expense.
1. Mortgage interest
You can’t deduct your full mortgage payments from your rental income. But you may be entitled to a 20% tax credit on the interest portion if you’re a private landlord.
If the property is owned via a limited company, you can typically deduct the full interest as an allowable business expense.
2. Repairs and maintenance
Routine repairs and upkeep qualify as allowable expenses. That includes things like:
- Replacing broken tiles
- Fixing leaky taps
- Repainting damaged walls
- Mending faulty boilers
These are considered revenue expenses – the cost of keeping the property in usable condition.
3. Legal, professional and management fees
These cover the costs of running your rental operation, such as:
- Letting agent fees
- Accountancy services
- Legal costs for tenancy agreements or evictions
As long as the costs are directly linked to the rental activity, they’re generally allowable.
4. Insurance premiums
Landlord-specific insurance policies can be claimed, including:
- Buildings insurance
- Contents cover (if you provide furnishings)
- Rent guarantee insurance
- Public liability cover
5. Ground rent, service charges and utilities
If you’re responsible for paying these as the landlord, you may be able to claim them:
- Ground rent and service charges on leasehold flats
- Council tax and utility bills during void periods (when the property is unoccupied)
6. Travel and communication costs
If you travel to manage or maintain your rental property, those expenses may be allowable. Similarly, a fair portion of your phone or broadband bill can be claimed if used for rental business purposes.
You must be able to show that these costs were solely or partly for the rental activity.
What about capital expenses?
It’s essential to distinguish between revenue expenses (claimable annually) and capital expenses, which are not.
Capital expenses refer to improvements that increase the property’s value—like building an extension or fitting a new kitchen. These cannot be deducted from your rental income, but may instead reduce your Capital Gains Tax bill when you eventually sell the property.
Examples of capital expenses include:
- Installing a new conservatory
- Converting a loft into a bedroom
- Upgrading an entire heating system
Keeping detailed records will help you track these for future tax returns.
Final note
Understanding what expenses are allowable can help you stay compliant and informed. Keep receipts and records, and when in doubt, check with HMRC or a tax professional. This post is purely for informational purposes and does not constitute financial advice.
Article by Andrew Overman | Partner | Location Location East
