Landlord Expenses: Allowable, Capital and Disputed

Introduction

Most landlord conversations in self assessment season start with the same question: “What can I claim?” It’s the wrong question to start with. It’s also the reason so many property returns look fine in January and then fall apart in an HMRC enquiry two years later.

The honest answer is that a landlord can claim almost any cost of running the letting, provided it passes three tests. That isn’t very useful on its own. What decides whether a claim holds up is classification. Each cost has to sit on the right side of the revenue and capital line, and the preparer has to spot where a specific rule changes how it’s relieved.

We’ve prepared a lot of landlord files for UK practices over the years, and the same pattern keeps showing up. The claims HMRC challenges are rarely made up. They are real costs, genuinely paid, and put in the wrong box. A new kitchen goes into repairs. A mortgage broker’s fee goes into professional fees. Mortgage interest ends up in general expenses. Each one looks minor when it’s posted.

This isn’t another list of allowable expenses; there are plenty of those already. This is the framework our team uses when we prepare SA105 working papers for the practices we support. It is followed by the questions landlords and preparers actually ask about each area.

Why classification matters more than the list

Picture a landlord with three buy-to-let flats and £38,000 of rent. Their spreadsheet shows £19,600 of “repairs”. When someone opens the invoices, £8,900 turns out to be a new kitchen in a flat bought in May that had no usable kitchen at completion. Another £3,400 is a garden room. The rest is genuine repair work.

If that client is a higher-rate taxpayer, the £12,300 that shouldn’t be there turns into £4,920 of extra tax. HMRC adds late payment interest at Bank of England base rate plus 4%. If it decides the error was careless, it can also charge a penalty of up to 30% of the tax. Careless errors can be reopened for up to six years, so a habit of misclassifying costs can become a multi-year enquiry.

HMRC is also better placed to find these errors than many landlords realise. Figures obtained by accountancy firm Price Bailey show HMRC recovered £104.3 million from landlords in 2025/26, the third year in a row above £100 million. The firm says HMRC is increasingly using Land Registry records to find people who own several residential properties and may have undeclared rental income. It also reports that the mortgage interest rules are still causing problems.

This season also has three changes that make classification harder:

• Former holiday lets. 2025/26 is the first full year in which former furnished holiday lets fall under the ordinary property rules.
• Quarterly reporting. Landlords above the Making Tax Digital threshold are now classifying costs every quarter, not once a year.
• New tax rates. Property income gets its own higher tax rates from April 2027.

The wholly and exclusively test

Rental profits are calculated on broadly the same principles as trading profits. Two rules borrowed from the trading legislation do most of the work. First, a cost is only deductible if it was incurred wholly and exclusively for the property business. Second, capital spending is kept out of the calculation entirely. We put every expense through three gates, in this order.

Gate 1: Was it for the letting business? 

Some costs fail this gate outright: the landlord’s own household bills, holidays that happen to include a property visit, and subscriptions with no link to the letting. Where one cost has both a private and a business purpose, HMRC can refuse the whole amount. Where a definite part of a cost is used for the business, that part can be claimed. A phone contract or a car used partly for property visits are typical examples.

Gate 2: Is it revenue or capital? 

This is where most of the money is. Revenue costs keep the property business running as it is. Capital costs buy, improve or change the asset. Capital costs never reduce rental profit, although many of them reduce the gain when the property is sold.

Gate 3: Does a specific rule change the treatment? 

A cost can pass the first two gates and still be relieved in a different way. The main examples are residential finance costs, which are relieved through a tax credit, and replacement furniture, which has its own relief with its own conditions. Pre-letting costs also have their own timing rule.

A few items fail at the first gate however, they are presented. The landlord’s own time isn’t an expense. Materials for a job they did themselves are deductible, but a notional charge for their labour is not. Wages paid to a spouse or adult child are allowable only if the work was actually done and the pay is what you would pay someone unconnected.

How the common costs land

Put the usual landlord costs through the three gates and a pattern appears quickly. This is how they typically come out on the files we see:

Cost	Deciding gate	Usual treatment	Where HMRC pushes back
Redecoration between tenancies	2	Revenue	Rarely, unless part of a wider refurbishment
Roof, windows or boiler replaced with modern equivalent	2	Revenue	Where the new specification is a clear upgrade
New kitchen or bathroom	2	Revenue if similar standard; capital if a significant improvement	First year of ownership, high specification, rent rise afterwards
Extension, loft conversion, garden room	2	Capital	Claimed as general “building works”
Work to make a newly bought property lettable	2	Capital	Claimed as pre-letting repairs
Replacement furniture and white goods	3	Replacement relief, like-for-like only	Initial furnishing, upgrades claimed in full
Residential mortgage interest	3	Basic rate tax credit, not a deduction	Deducted in full; capital repayments included
Commercial property interest	1	Fully deductible	Mixed-use property not split
Broker and arrangement fees	3	Finance costs	Posted to professional fees
Agent fees, accountancy, eviction costs	1	Revenue	Rarely
Conveyancing, SDLT, purchase survey	2	Capital (reduces the gain on sale)	Claimed against rent
Travel to the property	1	Revenue if wholly for the business	Viewing trips, mixed-purpose visits
Use of home	1	Share of actual costs	Large percentages with no stated basis
Void period costs	1	Revenue if the property is available to let	Family occupation, long voids before a sale

The pattern is simple. Costs decided at gate 1 are rarely disputed if the records are clean. Costs decided at gates 2 and 3 are where enquiries start. Most of the extra tax HMRC collects from landlords comes from gate 2.

Repairs versus improvement

This is the most common landlord dispute and the one that costs the most when it goes wrong. A repair puts something back into the condition it was in, using the materials reasonably available today. An improvement changes the character of the asset, adds something new or makes it materially better. Repairs reduce rental profit. Improvements don’t, although they may reduce the taxable gain on a later sale.

Modern materials usually still count as a repair. HMRC accepts that like-for-like means today’s equivalent. Its guidance at PIM2030 treats changes that come from advances in technology as repairs where the asset’s function and character stay broadly the same. Replacing single glazing with double glazing is the example it gives. The line is crossed when the new version is clearly better than the old. Moving from a basic rental kitchen to a high-specification one with extra units is an improvement. So is adding an en suite where there wasn’t one.

A significant improvement can make the whole job capital. Many landlords assume they can always claim “what a like-for-like replacement would have cost”. That isn’t HMRC’s position. Its manual says that where a change of materials produces a significant improvement, the entire cost is capital, including redecoration carried out after the main work. The route that does work is separate repair work done at the same time. HMRC accepts that genuine repairs carried out alongside capital works stay deductible and can be apportioned on a reasonable basis. A contractor’s split of the bill can support this, but HMRC will review the figures if capital work has been described as repairs. The practical point is to ask the builder to split the invoice at the time. Reconstructing the split eighteen months later is much harder to defend.

Decide what the asset is. Replacing a whole roof sounds like a big capital job, but the asset is the house and the roof is part of it. In HMRC’s worked example at BIM46915, a completely renewed roof is treated as a repair because it only returns the roof to its original condition. So a £15,000 roof can be fully deductible while a £4,000 garden room is not.

Look at the property’s condition when it was bought. This is where the largest mistakes happen. HMRC’s manual says that buying a property shortly before the repairs does not by itself make them capital. The repairs become capital when the property wasn’t fit to be let until the work was done, or when the price was substantially reduced because of its poor state. A price that only reflects normal wear and tear does not stop the deduction. So before a preparer puts first-year repairs into box 25, they should see the purchase particulars, the survey and the date the first tenant moved in.

Replacement of domestic items

Replacement of domestic items relief lets residential landlords deduct the cost of replacing movable items such as beds, sofas, curtains, carpets, white goods and kitchenware. It replaced the old wear and tear allowance in 2016 and is narrower than many landlords expect.

The new item must replace an old one that is no longer available for use in the property. The deduction is limited to the cost of a like-for-like replacement. Delivery and disposal costs can be added, and anything received for the old item must be deducted. Unlike the repairs rules, an upgrade only loses the excess over like-for-like, not the whole claim.

For example, a basic fridge-freezer fails, and the landlord buys an American-style model for £1,400. A comparable replacement would have cost £550, and removing the old one cost £45. The claim is £595. The other £805 gets no relief, because capital allowances aren’t available for plant and machinery in a dwelling.

There are three limits to watch:

• No relief for first furnishing. The relief does not cover furnishing a property for the first time. This is the most common error we see in landlord records.
• Fixtures follow the repairs rules instead. Fixed items are not domestic items. As practitioners on AccountingWEB point out, replacing an integrated unit is treated as a repair instead. Built-in appliances, fitted kitchens and boilers therefore go through the repairs analysis above.
• Unfurnished lets still qualify. The relief applies to furnished, part-furnished and unfurnished lets, as long as an existing item is being replaced.

Capital allowances for former holiday lets. From 6 April 2025 for income tax and 1 April 2025 for corporation tax, new spending on plant and machinery in a former FHL no longer qualifies for capital allowances. Replacement furnishings may qualify for replacement of domestic items relief instead. Existing FHL businesses with a pool of qualifying expenditure from before the change can keep claiming writing down allowances on it. Check that the pool is carried forward when the file rolls into 2025/26, because it is easy to lose when a former FHL is merged into a single property schedule.

If a capital allowances claim was missed on spending before the regime ended, act soon. The deadline for individuals and partnerships to amend the final 2024/25 return is 31 January 2027.

Finance costs after the restriction

Individual residential landlords don’t deduct finance costs from rental profit. Instead, they get a tax reduction at the basic rate. The reduction is based on the lowest of three figures: the finance costs, the property profits, and adjusted total income above the personal allowance. Any unused amount carries forward.

“Finance costs” covers mortgage interest, interest on loans for furniture or repairs, arrangement fees and broker fees. Capital repayments are never deductible. HMRC’s guidance is clear that only the interest part of a mortgage payment counts, not the whole payment.

There are four areas where preparers commonly go wrong:

• Mixed loans. Where one loan funds both residential and commercial property, the interest must be split on a reasonable basis, because only the residential share is restricted. Commercial interest stays fully deductible.
• Equity release. Interest on a remortgage can qualify even if the money was spent privately, provided total borrowing doesn’t exceed the capital put into the letting business. That capital is broadly the property’s market value when it was first let.
• Software and handover errors. Bookkeeping apps often post mortgage interest into general expenses, which gives a full deduction the landlord isn’t entitled to. Unused finance costs from earlier years also get dropped when a client changes accountant.
• Former holiday lets. Former FHLs are now inside the restriction. For clients who used to deduct interest in full, the change to their tax bill can be significant.

What changes in 2027 ? From April 2027, property income will be taxed at 22% (basic rate), 42% (higher rate) and 47% (additional rate). The personal allowance will be set against employment, trading or pension income first. Mortgage interest relief will then be given at the property basic rate of 22% instead of 20%.

Pre-letting and void period costs

When a property business starts, revenue costs incurred up to seven years before the first letting are treated as if they were incurred on the day the business starts. They must be costs that would have been allowable once the business was running. This means an otherwise deductible repair doesn’t fail simply because it was paid for before the first tenant moved in. Capital is still capital, however, and the condition-at-purchase test still applies.

The seven-year rule only matters when a business actually starts. An individual’s UK lettings form one property business. A landlord with two flats who buys a third isn’t starting a new business. Revenue costs on the third flat before its first tenant are deductible in the normal way. Overseas property is a separate business with its own start date. HMRC’s position, set out at PIM2505, is that the date a property business begins is a question of fact.

Void periods between tenancies stay deductible while the property is genuinely available to let. That covers council tax, utilities, insurance, agent fees and interest. If the landlord moves in, lets a relative live there free, or leaves the property empty ahead of a sale, the costs for that period drop out. In some cases the business has stopped altogether.

Travel, home office and professional fees

Travel. Journeys made wholly for the letting business are allowable. That includes inspections, meeting contractors and showing prospective tenants. Unincorporated landlords can use simplified mileage rates because Finance Act 2018 extended those rules to property businesses from 6 April 2017, as confirmed in HMRC’s Property Income Manual at PIM2220.

The mileage rate depends on the tax year. For 2025/26 returns it is still 45p a mile for the first 10,000 business miles. For 2026/27 it rises to 55p, with retrospective effect from 6 April 2026, while miles above 10,000 stay at 25p. This matters for quarterly MTD updates already filed at 45p. Once a landlord chooses the mileage method for a vehicle, they must stick with it for as long as they use that vehicle. Also check who is actually making the visits. Where a letting agent carries out all inspections and maintenance, HMRC may argue the landlord’s own journeys weren’t needed and refuse the mileage claim.

Use of home. A landlord who manages a portfolio from home can claim a reasonable share of actual running costs, split by rooms and hours. The flat-rate use-of-home figures in the simplified expenses rules are written for traders, not property businesses. Avoid setting aside a room used only for the business, because that can reduce private residence relief when the home is sold.

Professional fees. Agent, referencing, inventory and accountancy fees are revenue. So are legal costs for arrears and evictions. HMRC’s guidance also allows legal fees for lets of a year or less, or for renewing a lease of under 50 years. Legal and survey costs for buying or selling the property are capital, and so are planning fees for an extension. Broker and arrangement fees belong with finance costs.

Records that support the claim

“Keep good records” is advice everyone gives, so it’s worth being specific about what a defensible claim looks like.

For repairs, it means an itemised invoice and before-and-after photographs, plus a reason the work was needed, such as a tenant complaint, an agent’s report or a failed safety check. For kitchens and bathrooms, add a short note comparing the old and new specification, written at the time rather than during an enquiry. For replacement relief, keep the receipt and a note of what the new item replaced. For finance costs, keep the lender’s annual interest statement and a record of capital introduced. For travel, keep a mileage log.

Records must be kept for at least five years after the 31 January filing deadline, which means until January 2032 for 2025/26. Keep records of capital improvements until the property is sold, because they reduce the gain.

Making Tax Digital raises the stakes, because classification now happens during the year. MTD for Income Tax became mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000. It extends to income over £30,000 from April 2027 and over £20,000 from April 2028. The next quarterly update is due on 7 November.

Putting it into practice

Landlord files are rarely difficult because of the law. They’re difficult because of the number of invoices, the judgement calls inside them, and the fact that they all arrive between November and January. Put every cost through the three gates, check the repairs figure against the purchase date, and track finance costs from year to year. That covers most of what HMRC challenges.

For practices, this is exactly the kind of work that moves well to an outsourced team. The analysis is repeatable, exceptions can be flagged rather than decided, and the client only sees the reviewed result. You can see how we support property clients on our Real Estate & Property page, read our SA105 guide [link to be added when the post is live] for box-by-box preparation notes, or see how our self assessment outsourcing fits into your review process.

Frequently Asked Questions

General

What expenses can landlords claim against rental income in the UK?

Landlords can claim costs incurred wholly and exclusively for the letting that are revenue rather than capital. HMRC’s list includes repairs and maintenance, water rates, council tax and utilities the landlord pays, landlord insurance, gardeners and cleaners, letting agent and accountancy fees, ground rents and service charges, advertising, and the business share of vehicle costs. Residential mortgage interest is handled separately through a tax credit.

What can’t a landlord claim?

A landlord can’t claim capital costs, private costs or their own time. HMRC excludes capital improvements unless they qualify for replacement of domestic items relief, and it excludes the capital part of mortgage payments. Buying the property, stamp duty, conveyancing and extensions are also capital. The value of the landlord’s own labour is never deductible. Landlord forums regularly make this point about DIY work: mileage can be claimed, but time cannot.

Should I claim the £1,000 property allowance or my actual expenses?

Claim whichever gives the lower taxable profit, because you can’t have both. If you claim the property income allowance, you can’t deduct any allowable expenses or claim other allowances. Actual expenses are better where costs exceed £1,000 or where you want to create a loss to carry forward. Income above £1,000 must be reported to HMRC. A Self Assessment return is required if it’s over £2,500 after allowable expenses or £10,000 before them.

Can I claim council tax, utilities, ground rent and service charges?

Yes, when the landlord pays them. Council tax and utilities during void periods are allowable if the property is available to let. Ground rent and service charges on leasehold flats are allowable. If a large capital works element is clearly identified in the service charge accounts, look at that part separately. Costs the tenant is contractually responsible for aren’t the landlord’s to claim.

Can I claim unpaid rent as an expense?

It depends on the accounting basis. Most individual landlords use the cash basis by default, and under the cash basis rent that was never received was never taxed, so there is nothing to deduct. Under the accruals basis, rent that has been invoiced and is genuinely irrecoverable can be written off. Legal costs of chasing arrears or evicting a tenant are allowable either way.

How are expenses split between joint owners?

For spouses and civil partners, income and expenses are split 50:50 by default. A different split is possible if they own the property in unequal shares and submit Form 17. Other joint owners can agree a profit split that differs from their ownership shares, as long as it’s genuinely agreed and documented. Relief goes to the person who actually bears the cost. HMRC’s forum has confirmed that where one spouse pays the mortgage alone, the other can’t claim relief on those payments.

Do limited company landlords follow the same rules?

Mostly, with one big difference. The repairs and capital rules are the same, and replacement of domestic items relief is open to both individuals and companies running a property business that lets a dwelling. The difference is interest: companies paying corporation tax can deduct interest on property loans as an expense, which individual landlords cannot. Companies aren’t within MTD for Income Tax.

Repairs and improvements

Is a new kitchen or bathroom tax deductible?

It is deductible if it replaces an existing kitchen or bathroom with one of a broadly similar standard. It is capital if the work significantly improves, extends or adds something new. HMRC treats the refurbishment of an existing kitchen as a repair of the building, but moving from a basic rental kitchen to a high-specification one crosses the line. A new kitchen fitted in a property that couldn’t be let without one is capital, however similar the specification.

If I upgrade, can I still claim what a like-for-like replacement would have cost?

Usually not. This is one of the most common misunderstandings online. HMRC’s view is that where a change of materials produces a significant improvement, the whole cost is capital, including redecoration done afterwards. What you can claim is genuinely separate repair work done at the same time, if it is shown separately on the invoice. Replacement of domestic items relief works differently: there, only the upgrade element is disallowed.

Is replacing the whole roof a repair?

Normally, yes. The asset is the house and the roof is part of it, so replacing the whole roof covering restores the house rather than improving it. HMRC’s own example treats a completely renewed roof as a repair because it only returns the roof to its original condition. The position changes if the roof is altered, for example raised to create a loft room, or if it was part of work to make a newly bought wreck lettable.

Is double glazing a repair or an improvement?

Replacing old single-glazed windows with double glazing is treated as a repair. HMRC gives this as its example of a change due to advances in technology where the asset’s function and character stay broadly the same. Adding windows where there were none, or enlarging openings, is capital.

Is a new boiler an allowable expense?

Yes, if it replaces a failed or worn-out boiler with its modern equivalent. A boiler is a fixture, so it goes through the repairs rules, not replacement of domestic items relief. Adding central heating to a property that never had it is capital. Replacing a gas boiler with a heat pump is a genuine grey area. The function is the same, but the job usually includes capital elements such as new radiators, a cylinder or insulation, so get the invoice itemised.

Are EPC upgrades like insulation, solar panels or a heat pump deductible?

Generally not against rent. Improvements made to raise a property’s EPC rating are generally treated as capital expenditure rather than repairs. The Landlord’s Energy Saving Allowance, which used to cover items such as loft and cavity wall insulation, ended in 2015 and hasn’t been replaced. Replacing an existing item with a more efficient modern equivalent, such as a failed boiler, can still be a repair. The capital parts reduce the gain on sale.

Can I claim repairs on a property I’ve just bought?

Yes, if the property was in a lettable state and the price wasn’t reduced because of its condition. You’ll see claims online that no work before the first tenant is ever allowable, but that isn’t HMRC’s position. Its manual says buying a property shortly before repairs doesn’t on its own make them capital. The work becomes capital where the property wasn’t fit to let, or where the price was substantially reduced for dilapidation.

Is damp proofing a repair?

Treating damp in an existing structure is a repair. The SA105 notes list damp treatment alongside painting and roof repairs as examples. Installing a damp-proof course where none existed, or tanking a cellar to make it habitable, is more likely an improvement. Keep the surveyor’s report explaining what was wrong and what was done.

Can I claim improvement costs anywhere?

Yes, when the property is sold. Capital improvements that are still reflected in the property at the time of sale are added to its base cost and reduce the capital gain. That’s why invoices for extensions, conversions and upgrades should be kept until the property is sold, not just for five years.

Furnishings and replacements

Can I claim for furnishing a new rental property?

No. Replacement of domestic items relief only applies when an existing item is replaced. The first set of furniture, carpets and appliances for a newly let property gets no income tax relief. For residential lets it doesn’t qualify for capital allowances either. Later replacements of those items do qualify.

Does replacement relief apply to unfurnished lets?

Yes. It isn’t limited by how the property is furnished. It applies to furnished, part-furnished and unfurnished lets whenever an existing item is replaced. Most unfurnished lets still include carpets, curtains and a cooker, and replacing those qualifies.

Can I claim for replacing furniture that came with the property when I bought it?

This is a common forum question. One practitioner on AccountingWEB asked about exactly this, where the original furnishings were included in the purchase price and not separately identified. The conditions for the relief look at whether an old item was provided for tenants’ use and has now been replaced. They don’t require the landlord to have bought the original separately. So replacing a worn sofa that came with the flat generally qualifies. Adding items that weren’t there before does not.

Are carpets, blinds and integrated appliances domestic items?

Carpets, curtains, blinds and freestanding appliances are domestic items. HMRC’s own examples include beds, sofas, curtains, carpets, fridges, crockery and cutlery. Integrated appliances and fitted units are fixtures, so replacing them falls under the repairs rules. In practice the replacement is usually deductible either way; the difference matters mainly for first-time furnishing.

Mortgage interest and finance costs

Can I deduct mortgage interest from rental income?

Not as an expense if you’re an individual letting residential property. You get a tax credit at the basic rate on the interest instead. Only the interest counts, never the capital part of the payment. Interest on commercial property is still deducted in full. Former holiday lets moved into the restriction from 2025/26.

Where do mortgage arrangement and broker fees go?

They are finance costs, so they get the same basic rate tax credit as interest. They don’t go in the professional fees box. This causes real confusion. One landlord researching a large arrangement fee found conflicting information, including on HMRC’s own community forum. Putting these fees in professional fees gives a full deduction and gets around the restriction, which HMRC does look for.

What happens to finance costs I couldn’t use this year?

They carry forward to later years, so keep a record. HMRC’s forum has explained that there is no box for recording the unused amount in the current year. The landlord keeps a record and enters it as brought-forward finance costs on the following year’s return. These amounts are often lost when a landlord changes accountant, so check prior-year computations when you take on a new client.

Can I claim interest if I remortgaged to release equity?

Often, yes. The test is whether total borrowing exceeds the capital the landlord has put into the letting business, which is broadly the property’s value when it was first let. Borrowing up to that figure qualifies even if the money was spent privately. Interest on borrowing above it generally doesn’t, unless that money was used in the property business.

What changes for landlords in April 2027?

Property income gets its own tax rates. Rental profits will be taxed at 22%, 42% and 47%, two percentage points above the rates on employment, trading and pension income. The personal allowance will be set against those other types of income first. Finance cost relief will rise to the 22% property basic rate. Scottish and Welsh taxpayers should check how the devolved rates interact with the change.

Pre-letting and void periods

Can I claim costs from before the property was let? What is the seven-year rule?

Yes, within limits. Revenue costs incurred in the seven years before a property business starts are treated as incurred on the first day of the business, provided they would have been allowable at that point. This covers items such as insurance, safety certificates, advertising and genuine repairs. It doesn’t cover capital work to make a newly bought property lettable. If you already let other UK property, a new property joins your existing business, and its pre-letting costs are deducted in the normal way.

Can I claim expenses while the property is empty?

Yes, if it is genuinely available to let. Marketing at a realistic rent, keeping it insured and dealing with repairs all support that. Costs stop being allowable while you or your family live there, or if it’s held empty for a sale. After a long gap with no intention to let again, the business may have ceased.

Travel, home and professional fees

Can landlords claim mileage, and at what rate?

Yes, for journeys made wholly for the letting business. Use 45p a mile for 2025/26. From 6 April 2026 the rate is 55p for the first 10,000 miles and 25p after that. Trips to view properties you are thinking of buying aren’t allowable, and neither are visits combined with personal errands. Keep a log showing the date, the property and the reason for each trip.

Can I claim for working from home as a landlord?

Yes, a reasonable share of household running costs, such as heating, lighting and broadband, worked out on rooms and hours. The flat monthly amounts in the simplified expenses rules are written for self-employed traders, so work the claim out from actual costs. Keep claims in proportion to the size of the portfolio. Avoid using a room exclusively for the business, because of the risk to private residence relief when you sell the home.

Are letting agent, accountancy and legal fees allowable?

Most are. Agent, management, tenant-find, referencing and inventory fees are allowable, and so are accountancy fees for the rental accounts and return. Legal costs of arrears recovery, evictions and routine tenancy work are allowable too. HMRC specifically allows legal fees for lets of a year or less, or for renewing a lease of under 50 years. Legal costs for buying, selling or granting a long lease are capital. Extra accountancy fees from an HMRC enquiry are allowable unless the enquiry finds careless or deliberate errors.

Are gas safety certificates, EICRs and smoke alarms allowable?

Safety certificates, electrical checks and inspections are revenue costs of letting. Replacing existing smoke or carbon monoxide alarms is a repair. Fitting alarms for the first time is technically an addition to the property, although the amounts are usually small. A hard-wired alarm system installed as part of a rewire follows the treatment of the rewire as a whole.

Records, HMRC and MTD

How long must landlords keep records?

At least five years after the 31 January filing deadline, which means until January 2032 for 2025/26. You’ll see “six years” quoted online; that figure comes from other rules. Keep records of capital improvements until the property is sold, because they reduce the gain. HMRC can look further back than five years if it finds errors, so fuller records protect you.

Can I claim expenses I forgot in earlier years?

Yes. You can amend a return up to 12 months after its 31 January filing deadline. After that, overpayment relief is available for up to four years after the end of the tax year concerned, subject to conditions. Forgotten repairs, replacement items and unused finance costs are the most common things to pick up this way.

How far back can HMRC go if it disagrees with my claims?

That depends on the landlord’s behaviour. Careless errors extend HMRC’s window to six years, and deliberate non-compliance can go back 20 years. The normal limit for innocent errors is four years. This is why a repeated misclassification, such as treating every kitchen as a repair, can affect several years at once.

What happens if HMRC disallows an expense?

You pay the extra tax plus interest, and possibly a penalty based on your behaviour and on whether you told HMRC first. The difference is large. Voluntary disclosures under the Let Property Campaign averaged penalty rates under 5% in 2025/26. Where HMRC opened the enquiry itself, penalties ran at 18% to 21%. If a claim looks wrong, correcting it before HMRC asks is almost always cheaper.

Do I need Making Tax Digital software to claim expenses?

Only if you’re within MTD for Income Tax. In that case, expenses are recorded digitally and summarised in quarterly updates, with adjustments made before the final declaration. No penalty points apply for late quarterly updates during 2026/27, but penalties still apply to late returns and late payments. Classifying repairs and capital as invoices arrive avoids a heavy January.

Preparing landlord files this self assessment season?

We prepare SA105 schedules, repairs and capital analyses, finance cost computations and MTD quarterly updates for UK accountancy practices. Every file is ready for your review. Start with a free trial. No commitment required.

Start Free Trial · Talk to Our Team

Sources and further reading

• HMRC Property Income Manual, PIM2030: repairs, is it capital?
• HMRC Property Income Manual, PIM2020: repairs
• HMRC Property Income Manual, PIM3210: replacement of domestic items
• HMRC Business Income Manual, BIM46915: repairs and improvements
• GOV.UK: working out your rental income
• GOV.UK: renting out a property, paying tax
• GOV.UK: increasing mileage rates (tax information and impact note)
• GOV.UK: first Making Tax Digital quarterly update

This article is general guidance on UK property income rules as at September 2026. It is not advice on any individual’s circumstances.