Landlord Allowable Expenses: What UK Landlords Can Claim
A plain guide to allowable expenses for UK landlords — repairs vs improvements, letting agent fees, insurance, the finance-cost rules, and what you can't claim — plus how expenses feed MTD quarterly updates.
The short answer
Landlords can deduct costs incurred wholly and exclusively for letting — letting agent and management fees, repairs and maintenance (not improvements), landlord insurance, ground rent and service charges, and other running costs. Mortgage interest isn't a normal deduction; instead you get a 20% basic-rate tax credit under the finance-cost rules. Improvements are capital, not expenses.
Claiming the right expenses keeps your rental tax bill fair. Here's what UK landlords can and can't deduct — and the repairs-versus-improvements line that catches people out.
Allowable running costs
Costs incurred wholly and exclusively for letting are allowable:
| Category | Examples |
|---|---|
| Management | Letting agent and management fees |
| Maintenance | Repairs, servicing, gardening, cleaning between tenants |
| Insurance | Landlord/buildings/contents, rent guarantee |
| Property charges | Ground rent, service charges, some utilities and council tax you pay |
| Professional | Accountancy for the rental business, some legal fees |
| Other | Advertising for tenants, phone/admin for the lettings |
Repairs vs improvements
This is the big one:
- Repair — restores the property to its previous condition (a like-for-like boiler, repainting, fixing a roof). Allowable expense.
- Improvement — makes the property better or bigger (an extension, a new kitchen to a higher spec, double glazing where there was none). Capital — claimed against Capital Gains Tax when you sell, not as a rental expense.
The line can be fine; keep evidence and, where in doubt, get advice.
Mortgage interest: the finance-cost rules
You can't deduct mortgage interest as a normal expense. Instead you get a basic-rate (20%) tax credit on your finance costs. For higher-rate taxpayers this is less generous than a full deduction — our Section 24 guide explains the impact.
What you can't claim
- Capital repayments of the mortgage.
- Improvements (capital, not expense).
- Your own time or private costs.
- Costs relating to a period the property was used privately.
Under MTD
Record each cost digitally against your property business and include the totals in your cumulative quarterly updates. Finance-cost relief and other annual adjustments are applied at the final declaration stage, not each quarter.
Key takeaways
- Claim agent fees, repairs, insurance, property charges and running costs.
- Repairs are allowable; improvements are capital — know the difference.
- Mortgage interest gets a 20% credit, not a full deduction.
- Record costs digitally per property; finance-cost relief applies at year-end.
This article is general information, not tax advice. Check HMRC's property income guidance at gov.uk or speak to your accountant.
Frequently asked questions
What expenses can landlords claim?
Letting agent and management fees, repairs and maintenance, landlord insurance, ground rent and service charges, utilities and council tax you pay, accountancy for the rental business, and other day-to-day running costs incurred wholly for letting.
Can I claim my mortgage payments?
Not the capital repayment, and interest isn't a straight deduction. Instead you get a basic-rate (20%) tax credit on your finance costs under the Section 24 rules. See our Section 24 guide for how it works.
What's the difference between a repair and an improvement?
A repair restores something to its original condition (like replacing a broken boiler with a similar one) and is an allowable expense. An improvement betters the property (like adding an extension or upgrading to a higher standard) and is capital, claimed against Capital Gains Tax when you sell, not as an expense.
How do rental expenses work under MTD?
You record each cost digitally against your property business and include the totals in your cumulative quarterly updates. Finance-cost relief is applied at the year-end final declaration stage.
Related reading
MTD for Landlords with Multiple Properties
How Making Tax Digital works if you own several rental properties — why they combine into one property business, how quarterly updates work across a portfolio, and record-keeping tips for landlords.
Jointly Owned Property and MTD: How to Report Your Share
How landlords report jointly owned property under Making Tax Digital — splitting income and expenses, married couples and the 50/50 default, Form 17, and keeping records for your share only.
Section 24: How Mortgage Interest Relief Works for Landlords
A plain-English explanation of Section 24 — why landlords can no longer deduct mortgage interest in full, how the 20% finance-cost tax credit works, who it hits hardest, and how it appears under MTD.