You can deduct expenses from your rental income when you work out your taxable rental profit as long as they are wholly and exclusively for the purposes of renting out the property.

Types of expenses you can deduct if you pay for them yourself are:

  • general maintenance and repairs to the property, but not improvements (such as replacing a laminate kitchen worktop with a granite worktop)

  • water rates, council tax, gas and electricity

  • insurance, such as landlords’ policies for buildings, contents and public liability

  • costs of services, including the wages of gardeners and cleaners

  • letting agent fees and management fees

  • legal fees for lets of a year or less, or for renewing a lease for less than 50 years

  • accountant’s fees

  • rents (if you’re sub-letting), ground rents and service charges

  • direct costs such as phone calls, stationery and advertising for new tenants

  • vehicle running costs (only the proportion used for your rental business) including mileage rate deductions for business motoring costs

Expenses you cannot claim a deduction for include:

  • the full amount of your mortgage payment - only the interest element of your mortgage payment can be offset against your income

  • private telephone calls - you can only claim for the cost of calls relating to your property rental business

  • clothing - for example, if you bought a suit to wear to a meeting relating to your property rental business, you cannot claim for the cost as wearing the suit is partly for your rental business and partly to keep you warm - no identifiable part is for your property rental business

  • personal expenses - you cannot claim for any expense that was not incurred solely for your property rental business

Allowable expenses do not include ‘capital expenditure’, such as buying a property.

Claiming part expenses

Where only part of an expense is for your property rental business, you can deduct that part as long as it’s wholly and exclusively for the property business. To claim a part expense in Earnr, manually add a transaction and capture the share of the expense that applies to the property.

The above content was shared under the Open Government Licence v3.0.

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