Key facts
- Expenses must be wholly and exclusively for the purpose of the rental business.
- Repairs are fully deductible, but improvements are not (they reduce CGT instead).
- Mortgage interest is no longer deductible from rental income — you get a 20% tax credit instead (Section 24).
- The Replacement of Domestic Items Relief lets you deduct the cost of replacing furniture, appliances, and kitchenware on a like-for-like basis.
- You can claim a flat-rate mileage allowance of 45p per mile (first 10,000 miles) for property visits.
The “Wholly and Exclusively” Rule
To be deductible from your rental income, an expense must be incurred wholly and exclusively for the purpose of your rental business. If an expense has both a personal and a business element, only the business portion is deductible.[1]
Allowable Revenue Expenses
The following expenses can be deducted from your rental income:[2]
| Category | Examples |
|---|---|
| Repairs & maintenance | Fixing a leaking roof, repainting, replacing broken windows, plumbing repairs |
| Insurance | Buildings insurance, landlord liability insurance, rent guarantee insurance |
| Letting agent fees | Management fees, tenant-finding fees, inventory costs |
| Legal & professional fees | Renewing tenancy agreements, eviction costs, accountancy fees for rental accounts |
| Ground rent & service charges | Payments to freeholders, management companies |
| Council tax | Only when payable by the landlord (e.g. during void periods between tenants) |
| Utilities | Gas, electricity, water — only when paid by the landlord |
| Advertising | Online listing fees, “To Let” boards, photography costs |
| Travel | Journeys to the property for inspections, repairs, or rent collection |
| Stationery & phone | Business calls to tenants, letting agents, tradespeople |
| Bad debts | Rent owed by tenants that you cannot recover, if previously declared as income |
Repairs vs Improvements
This is one of the most important distinctions in landlord tax. Repairs restore the property to its original condition and are deductible from rental income. Improvements enhance the property beyond its original state and are capital expenditure — deductible from CGT when you sell, not from rental income.[3]
| Repair (Deductible) | Improvement (Not Deductible from Income) |
|---|---|
| Replacing a broken boiler with a modern equivalent | Installing central heating for the first time |
| Repainting walls and ceilings | Adding an extension or loft conversion |
| Replacing rotten window frames with modern equivalents | Installing double glazing where single glazing existed |
| Re-laying a worn-out kitchen to the same standard | Upgrading a basic kitchen to a luxury kitchen |
| Fixing a leaking roof | Converting a garage into a bedroom |
Tip: HMRC accepts that a “modern equivalent” replacement counts as a repair, not an improvement. For example, replacing a broken single-panel radiator with a modern double-panel radiator is a repair, because single-panel radiators are no longer readily available.
Replacement of Domestic Items Relief
If you let a furnished or part-furnished property, you can deduct the cost of replacing domestic items such as:[4]
- Furniture (beds, sofas, tables, chairs)
- Furnishings (curtains, carpets, linen)
- Appliances (washing machines, fridges, cookers)
- Kitchenware (crockery, cutlery, utensils)
The deduction covers the cost of a like-for-like replacement. If you upgrade (e.g. replace a basic washing machine with a high-end model), you can only deduct the cost of a basic equivalent. You can also deduct disposal costs for the old item.
Note: This relief only covers replacements, not the initial purchase of furnishings when you first let the property. Initial furnishing costs are capital expenditure.
Finance Costs (Mortgage Interest)
Since April 2020, individual landlords can no longer deduct mortgage interest (or other finance costs) from rental income. Instead, you receive a tax credit equal to 20% of your finance costs. This is known as the Section 24 restriction. See our detailed guide to the mortgage interest restriction.[1]
Travel Expenses
You can claim the cost of travelling to your rental property for management purposes. You have two options:[2]
- Actual costs: Fuel, parking, tolls (keep receipts)
- Mileage allowance: 45p per mile for the first 10,000 miles, 25p per mile thereafter
You cannot claim both. Choose one method and apply it consistently. Journeys must be for a property-related purpose — inspections, meeting contractors, collecting rent, attending viewings, etc.
Expenses That Are NOT Deductible
- The purchase price of the property (capital expenditure)
- Improvements and additions (capital expenditure — offset against CGT when selling)
- Personal expenses not related to letting
- Costs of initial furnishing when the property is first let
- Any expense that does not meet the “wholly and exclusively” test
Frequently Asked Questions
Can I deduct the cost of a new kitchen from my rental income?
It depends. If you are replacing a kitchen on a like-for-like basis (same quality and standard), it is a repair and fully deductible. If you are upgrading to a significantly better kitchen, the full cost is treated as an improvement and only deductible from CGT when you sell. In practice, HMRC accepts that a modern equivalent replacement is a repair.
Can I claim travel expenses for visiting my rental property?
Yes. You can claim the actual cost of travel or use HMRC’s flat-rate mileage allowance (45p per mile for the first 10,000 miles, 25p thereafter). Journeys must be for property management purposes such as inspections, meeting tradespeople, or collecting rent.
Are letting agent fees tax-deductible?
Yes. Letting agent management fees, tenant-finding fees, and inventory check costs are all allowable expenses. However, you cannot deduct the initial cost of purchasing or setting up the property — those are capital costs.
Can I deduct mortgage payments from my rental income?
No. Since Section 24 was fully phased in (April 2020), you cannot deduct mortgage interest from rental income. Instead, you receive a tax credit equal to 20% of your finance costs. This means higher-rate taxpayers pay more tax than before Section 24. See our Section 24 guide for details.
Further Reading
- Mortgage Interest Restriction (Section 24) — how the 20% credit works
- Declaring Rental Income — reporting expenses on the SA105
- Record-Keeping for Rental Income — what records to keep
- CGT on Rental Property — how improvements reduce your CGT bill
- Allowable Expenses (Income Tax) — general guide to business expenses
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