Allowable expenses for landlords: the full UK list (2025/26)

Quick answer: As a UK landlord you can deduct any cost that is "wholly and exclusively" for renting out the property — repairs, letting agent fees, insurance, ground rent, service charges and professional fees — from your rental income before tax. You cannot deduct improvements, the capital part of a mortgage, or the value of your own time. Mortgage interest is handled separately as a 20% tax reducer (see our section 24 guide). If your gross rents are £1,000 or less, the property allowance may mean you claim nothing at all. Check whether you'll need to keep digital records with the MTD scope checker.

Getting your allowable expenses right is the difference between paying tax on your profit and paying tax on your turnover. This guide sets out the full list for the 2025/26 tax year, the crucial repairs-versus-improvements line, and the reliefs that are easy to miss.

Ledgers is bookkeeping and tax software, not a substitute for advice on your specific situation. The figures and rules below are current for 2025/26 and taken from HMRC guidance — always state the tax year when you record a figure.

The golden rule: wholly and exclusively

HMRC allows a deduction for a cost only if it was incurred wholly and exclusively for the purposes of the property rental business. That single test decides almost every borderline case. A cost that is partly private (a phone you also use personally, a car you also drive for the school run) is only allowable to the extent of the business proportion.

Source: HMRC PIM2005 — Deductions: general rules and Work out your rental income when you let property.

The full list of allowable expenses

For a residential letting in 2025/26, the everyday costs HMRC accepts include:

Sources: Work out your rental income (GOV.UK) and HMRC PIM2120 — legal and professional costs.

Legal fees — a common trap

Legal and professional fees for the day-to-day running of the letting are allowable — for example, renewing a short lease to a tenant, evicting a non-paying tenant, or drawing up a tenancy agreement. But legal fees connected with buying, selling or first acquiring the property are capital, not allowable against rental income (they may reduce a future Capital Gains Tax bill instead). See HMRC PIM2120.

Repairs vs improvements — the line that matters most

This is where landlords most often go wrong.

• A repair restores an asset to its previous condition. Allowable.
• An improvement makes the asset better than it was, or replaces it with something notably superior. Capital — not allowable against rental income.

HMRC's own example: replacing a rotten single-glazed window with a modern double-glazed equivalent is generally treated as a repair, because double glazing is now the standard equivalent — not an improvement. But adding an extension, fitting a new fitted kitchen where there was none, or upgrading a basic kitchen to a luxury one is capital. See HMRC PIM2030 — repairs: is it capital?.

Replacement of domestic items relief

You can't claim the initial cost of furnishing a rental, but you can claim the cost of replacing domestic items in a residential let — sofas, beds, carpets, curtains, white goods, crockery. This is replacement of domestic items relief, available for expenditure from 6 April 2016 onwards.

Key conditions:

• The old item must no longer be available to the tenant (you've genuinely replaced it).
• The relief is the cost of a like-for-like replacement. If you upgrade, you can only claim the cost of an equivalent standard item, not the deluxe version.
• If you sell the old item, deduct what you received from your claim.

Source: HMRC PIM3210 — Replacement of domestic items relief.

Mortgage interest is handled separately (section 24)

Do not put residential mortgage or finance interest in your expenses list. Since 2020/21, finance costs on residential lettings are not deducted from profit at all. Instead you get a basic-rate (20%) tax reducer on the finance costs. This is the "section 24" rule and it's easy to get wrong — read the section 24 landlord mortgage interest guide for how it actually reduces your bill.

(Note: the section 24 restriction applies to residential lettings. Interest on a genuine commercial let is still a normal deductible expense.)

The £1,000 property allowance

If your gross rental income for the year is £1,000 or less, it's tax-free and you generally don't need to report it. If your gross rents are above £1,000, you have a choice each year:

• Deduct the £1,000 allowance instead of your actual expenses, or
• Deduct your actual allowable expenses (as above).

You can't do both. The allowance is usually only worth taking if your real expenses are less than £1,000. Source: HMRC PIM4400 — property allowance. Our landlord tax guide walks through when to claim it.

What is NOT allowable

• The capital repayment part of your mortgage (only interest counts, and that's via the section 24 reducer for residential).
• Improvements and enhancements — these are capital.
• The initial cost of furniture and furnishings (only replacements qualify).
• The cost of buying, selling or acquiring the property, and related legal/survey fees (these are capital, relevant to CGT).
• The value of your own time or labour — you can't pay yourself and deduct it.
• Private portions of any mixed-use cost (personal phone calls, personal mileage).

Worked example (2025/26)

Priya lets one flat. Over the year she has:

Her allowable expenses total £4,640 (£1,440 + £320 + £480 + £600 + £1,800). The kitchen is capital and comes out of the expenses list entirely; the mortgage interest is handled separately.

Rental profit = £14,400 − £4,640 = £9,760.

She then gets a section 24 tax reducer of 20% × £5,200 = £1,040 off her tax bill. Estimate the tax on profits like this with the self-employed & landlord tax calculator.

Keeping records — and what MTD changes

Whichever expenses you claim, you must be able to evidence them. From April 2026 onwards, landlords whose gross property (plus self-employment) income is over the MTD thresholds must keep digital records and send quarterly updates. Categorising each cost correctly as you go — repair vs improvement, allowable vs capital — is exactly the discipline MTD rewards, and it's what Ledgers automates from your bank feed. See the MTD deadline calculator for your dates.

Frequently asked questions

Is a new kitchen an allowable expense for a landlord?

Only if you're replacing a like-for-like kitchen that has worn out — that's a repair. Fitting a kitchen where there was none, or upgrading a basic kitchen to a high-end one, is a capital improvement and is not allowable against rental income. See HMRC PIM2030.

Can I claim mortgage payments as a landlord expense?

No. The capital repayment is never allowable, and for residential lettings the interest is not deducted as an expense either — since 2020/21 you get a 20% basic-rate tax reducer on the interest instead. See the section 24 guide.

Can I deduct council tax and utility bills?

Yes, but only if you (the landlord) actually pay them — for example during a void period or on an all-inclusive let. If the tenant pays the bills, you have nothing to claim.

What is the £1,000 property allowance and should I use it?

It lets you deduct a flat £1,000 from gross rents instead of your actual expenses. It's usually only worth it if your real allowable expenses are below £1,000. If your gross rents are £1,000 or less, the income is tax-free and normally doesn't need reporting. See HMRC PIM4400.

Can I claim for my own time managing the property?

No. HMRC does not allow a deduction for the value of your own labour. You can claim what you pay third parties (agents, cleaners, tradespeople), but not a notional wage for yourself.