Repairs vs Improvements: What Landlords Can Deduct

The Basic Rule

The distinction is simple in principle:^[1]

Repairs restore something to its original condition — deductible
Improvements enhance or upgrade beyond the original — not deductible (but can reduce CGT when you sell)

What Counts as a Repair

These are generally allowable expenses:^[4]

Fixing a broken boiler or replacing it with a similar one
Replacing like-for-like kitchen units
Patching a roof or replacing damaged tiles
Repainting and redecorating
Replacing broken windows with equivalent ones
Fixing plumbing or electrical faults

What Counts as an Improvement

These are not deductible as expenses (they’re capital expenditure):^[4]

Building an extension
Converting a loft or garage
Upgrading from single-glazed to double-glazed windows
Installing central heating where there was none
Adding a new bathroom where one didn’t exist

Improvement costs can be added to your base cost when calculating CGT on sale.

The Grey Areas

The trickiest situation is replacing something that’s worn out with a modern equivalent. HMRC’s guidance:^[4]

Like-for-like replacement = repair (even if the new item is slightly better due to modern standards)
Significant upgrade = improvement (e.g. replacing a basic kitchen with a luxury one)

The key question: Am I restoring the property to its previous condition, or am I making it substantially better than before? If it’s the former, it’s a repair.

Replacement of Domestic Items Relief

For furnished rental properties, you can claim tax relief when you replace domestic items such as:^[5]

Furniture (beds, sofas, tables, chairs)
White goods (washing machine, fridge, cooker)
Carpets, curtains, and soft furnishings
Kitchenware (crockery, cutlery)

The deduction is the cost of the new item, minus any proceeds from selling the old one. If the new item is substantially better, you deduct only the cost of an equivalent replacement.

Initial Repairs on Purchase

Repairs carried out to bring a newly purchased property up to lettable standard are not deductible. They relate to the condition of the property at purchase and are treated as capital expenditure.^[4]

Record Keeping

Keep detailed records to support your classification — under Making Tax Digital, landlords record expenses digitally in MTD Income Tax software:^[1]

Invoices and receipts showing what work was done
Photos before and after (if possible)
Notes on what was replaced and why

Frequently Asked Questions

What is the difference between a repair and an improvement for tax?

A repair restores something to its original condition and is tax-deductible. An improvement enhances or upgrades beyond the original standard and is not deductible as an expense, though it can reduce CGT when you sell.

Is replacing a kitchen a repair or an improvement?

If you replace a worn-out kitchen with a similar standard equivalent, HMRC treats it as a repair. If you significantly upgrade it (e.g. basic to luxury), the additional cost over a like-for-like replacement is treated as an improvement.

Can I claim repairs on a property I have just bought?

No. Repairs carried out to bring a newly purchased property up to lettable standard are treated as capital expenditure and are not deductible as revenue expenses.

What is Replacement of Domestic Items Relief?

For furnished rental properties, you can claim tax relief when you replace domestic items like furniture, white goods, and soft furnishings. The deduction is the cost of the new item minus any proceeds from selling the old one.

Sources

Work out your rental income — GOV.UK
Expenses if you're self-employed — GOV.UK
Capital allowances — GOV.UK
Property Income Manual — GOV.UK
Replacement of domestic items relief — GOV.UK