Landlord allowable expenses: what you can (and can't) claim

Every pound of allowable expense saves you 20-45p of tax — yet most landlords under-claim, and a worrying number over-claim in ways HMRC's systems now spot easily. Under Making Tax Digital your expenses are reported quarterly and categorised, so getting the categories right matters more than ever.

What you CAN claim

• Repairs & maintenance — fixing a boiler, repainting, replacing a broken window like-for-like, roof repairs, damp treatment.
• Letting agent & management fees — including tenant-find fees and rent collection commission.
• Insurance — landlord buildings, contents and rent-guarantee policies.
• Council tax, ground rent, service charges and utilities — for periods you (not the tenant) pay them, e.g. voids.
• Legal & professional — accountancy for the rental business, tenancy agreements, eviction costs (but not the legal costs of buying the property).
• Replacement of domestic items — like-for-like replacement of sofas, white goods, curtains in furnished lets.
• Travel — mileage to inspect or maintain the property (45p/mile for the first 10,000 miles).
• Software subscriptions — including MTD record-keeping software.

What you CAN'T claim (the traps)

• Improvements — an extension, a loft conversion, upgrading a kitchen beyond like-for-like. These are capital costs, relieved only against Capital Gains Tax when you sell. The repair/improvement line is HMRC's favourite battleground.
• Mortgage interest as an expense — since Section 24, individual landlords get a 20% credit instead. Our Section 24 guide covers the maths.
• Mortgage capital repayments — never deductible, in any form.
• Your own time — you can't pay yourself for managing your own property.
• Full costs of mixed-use items — claim only the rental proportion of a phone or car used personally too.

The £1,000 shortcut

If your total property expenses are under £1,000 a year, the property allowance lets you deduct a flat £1,000 instead of tracking anything — but you then lose the mortgage-interest credit, so do the comparison before choosing. (MTDFox calculates both routes in its Year end module.)

Under MTD: category discipline

Quarterly updates report expenses by HMRC's categories — repairs, insurance, agent fees, finance costs and so on. Dumping everything into "other" is the classic spreadsheet habit that now creates year-end pain and enquiry risk. Software that categorises your bank statement automatically removes the problem at the source.