What Property Expenses Can I Take Against Property Income

UK landlords can deduct “wholly and exclusively” incurred expenses from rental income to reduce taxable profit. Common allowable expenses include letting agent fees, repairs/maintenance (not capital improvements), insurance, utility bills, council tax, and professional accountant fees. For residential properties, mortgage interest is restricted to a 20% tax credit for individuals but not companies.

Key Allowable Expenses 

• Property Management: Letting agent fees, management fees, and rent collection costs.
• Maintenance & Repairs: Repairs to maintain the property (e.g., fixing a boiler) are allowed, but improvements (e.g., adding an extension) are capital costs not deducted from income.
• Services: Cleaning, gardening, and concierge services.
• Bills: Council tax, water rates, gas, and electricity, especially during void periods.
• Insurance: Landlord buildings, contents, and public liability insurance.
• Professional Fees: Accountancy fees for preparing rental accounts and legal fees for lets of one year or less.
• Administrative Costs: Phone calls, stationery, and advertising to find new tenants.
• Replacement of Domestic Items: Costs for replacing furniture, carpets, and white goods (for residential). 

Important Notes

• Residential Finance Costs: Individuals cannot deduct mortgage interest directly. Instead, they receive a 20% tax credit on interest payments. A company though can take the whole payment through for interest as a cost.
• Property Allowance: A £1,000 tax-free property allowance can be claimed instead of actual expenses.
• Capital Expenditure: Costs to improve or alter a property (e.g., new kitchen, loft conversion) are not deductible from income but can reduce capital gains tax upon sale.