Published 3 September 2026 by Prop-Pocket Team
UK landlords: classify rental costs and keep SA105 ready records to file Self Assessment correctly. Understand the £1,000 property allowance, Section 24,...
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Revenue costs incurred wholly and exclusively for letting a property reduce your taxable rental profit, and you must choose between the £1,000 property allowance and itemising actual expenses, never both. Get these three rules straight and most of your Self Assessment return falls into place.
TL;DR: - Allowable rental expenses include repairs, letting agent fees, insurance, and utility bills, but adding extensions is considered capital expenditure and not deductible. - Section 24 restricts mortgage interest relief for individual landlords, providing a tax reduction at the basic rate, which affects higher-rate taxpayers more significantly. - Using the property allowance is beneficial for landlords with rental income under £1,000 annually, but claiming actual expenses usually benefits those with genuine costs exceeding this threshold. - Proper record-keeping, including invoices, bank statements, and photos, is essential for defending expense claims and must be maintained for at least five years. - Furnished holiday lettings now fall under the same rules as standard residential lets after April 2025, with no more full capital allowances and only like-for-like replacements deductible.
The test HMRC applies to every claim is whether a cost was incurred "wholly and exclusively" for the purpose of letting the property. Pass that test, and it's revenue expenditure, deductible in the year you incur it. Fail it, and the cost is either capital (added to the property's base cost for Capital Gains Tax purposes later) or simply not allowable at all.
Here's the practical list most landlords will use every year:
The dividing line between revenue and capital trips up more landlords than any other part of this system. Repainting a room is revenue. Adding an extension is capital. Replacing broken roof slates with the same material is revenue; replacing a flat roof with a pitched one, which improves the asset, tips into capital territory. HMRC's own property income guidance uses almost exactly these examples, because the line genuinely is that fine.
A quick worked example: say you spend £600 on a boiler repair, £150 on a Gas Safety certificate, £1,200 on letting agent fees, and £400 on landlord insurance over the tax year. That's £2,350 in allowable revenue expenses, all of which reduces your rental profit before tax, and all of which you'll report in the expenses boxes on the SA105 supplementary pages.
Breakdown of landlord allowable expenses
Remember the alternative: if your gross rental income is under £1,000 for the year, you can apply the property allowance instead of itemising, which usually means no expense records to submit at all. Above that threshold, itemising nearly always wins once you have genuine repair or agent costs to claim, since £1,000 flat rarely beats real expenditure on an actively let property.
Pro Tip: Keep a simple spreadsheet or app tag for every cost the moment it happens, marked "repair" or "improvement" at the point of spending. Reconstructing that distinction eight months later from memory is where most landlords get it wrong.
Section 24 of the Finance (No. 2) Act 2015 removed individual landlords' ability to deduct residential mortgage interest as a normal business expense. Instead of reducing your taxable profit directly, finance costs now generate a tax reducer, credited against your final tax bill at the basic rate.
That "lowest of three" mechanism matters because it caps relief when profits or income are low, and any finance cost you can't relieve in one year carries forward to the next.
A worked comparison shows why higher-rate taxpayers feel this hardest. That gap, between what you're taxed on and what you actually keep, is the entire point of Section 24, and it's why Section 24 has changed the underlying economics for heavily mortgaged landlords more than any other single reform in the last decade.
Can Landlords Still Claim Mortgage Interest? Section 24 Explained (2025 Update)
Two further wrinkles worth flagging. Property income tax rates and the finance-cost reducer are subject to change, which may affect relief for leveraged landlords in future tax years. Limited companies are exempt from Section 24 and continue to deduct loan interest in full against profit before Corporation Tax. That's one reason some portfolio landlords incorporate, though the decision carries its own costs and isn't something to do without proper advice.
Rental income and expenses go on the SA105 property pages, and the boxes map fairly cleanly onto the categories above once you know where to look.
You need to register for Self Assessment and file if your gross rental income exceeds £1,000 in the tax year, unless you're claiming the property allowance and staying under that threshold, or letting a room in your main home under Rent a Room relief, which covers up to £7,500 of income from letting a furnished room.
Before you submit, run three checks: that mortgage interest sits in box 44 and nowhere else, that your expense totals in boxes 24 to 29 match your own records line for line, and that you haven't claimed the property allowance and itemised expenses in the same year. If you spot an error after filing, you can amend a Self Assessment return within the allowable amendment period, so a mistake caught early is rarely a serious problem.
Every claim rests on the same wholly-and-exclusively test, and the burden of proof sits with you, not HMRC. Contemporaneous records, kept at the time you incur a cost, carry far more weight in an enquiry than reconstructed paperwork.
Keep these as standard:
Apportionment matters when a cost is only partly for the rental business. If you drive to the property for a mix of tenant viewings and personal reasons on the same trip, you apportion the mileage; if you use one mobile phone for both personal calls and property management, you claim only the business-use percentage, and you need a reasonable basis for that split, not a guess. HMRC's own wholly-and-exclusively guidance treats a documented, consistent method as defensible even when the exact percentage is open to challenge.
Retain records for at least five years after the 31 January submission deadline for the relevant tax year. Non-resident landlords have an added layer: the Non-Resident Landlord (NRL) scheme requires letting agents or tenants to withhold basic-rate tax at source unless you've applied for approval to receive rent gross, so keep your NRL approval letter alongside your expense records. Prop-Pocket's expenses checklist is a useful reference point for landlords building this habit from scratch.
Replacement of domestic items relief lets you deduct the cost of replacing furniture, white goods, carpets and similar items provided for tenant use, but only on a like-for-like basis. Buying the first sofa for a newly let property is capital expenditure and isn't covered; replacing that same sofa three years later is a revenue expense you can claim in full.
Upgrades need apportionment. Replace a basic washing machine with an equivalent model and the whole cost is deductible. Replace it with a significantly better one, and you can only claim the cost of an equivalent-standard replacement, with the extra treated as capital improvement. Keep the original purchase receipt or a dated photo showing the old item's condition, plus the new receipt, so you can evidence both the like-for-like cost and the reason for any apportionment if HMRC asks.
Furnished holiday lettings (FHLs) sat outside the normal property income rules for years, with access to capital allowances on furniture, fixtures and equipment that standard residential lets couldn't claim, plus exclusion from the Section 24 finance-cost restriction. That special regime was abolished from April 2025, and FHL properties are now taxed under the same rules as other residential lets, including the Section 24 finance-cost reducer rather than a full interest deduction.
The practical effect is that if you previously ran a qualifying holiday let, you'll have lost the capital allowances you were claiming on items like kitchen equipment, hot tubs or replacement boilers as outright deductions. Those items now fall under the same replacement of domestic items relief that applies to standard lets, meaning like-for-like replacements are deductible and upgrades need apportioning, exactly as covered above.
If you still hold capital allowances pools from before the regime changed, transitional rules generally allow relief to continue for allowances already claimed on existing assets, though new purchases follow the standard residential rules going forward. This is an area where the transition detail genuinely matters, since getting it wrong either under-claims relief you're entitled to or over-claims allowances that no longer apply. Given the scale of the change, this is one area worth checking with an accountant rather than relying on general guidance alone.
Yes, and the distinction is the single biggest source of disputed claims. A repair restores a property to its previous condition and is deductible as a revenue expense in the year you pay for it. An improvement adds something that wasn't there before, or brings the property to a materially better standard than it had, and that cost is capital, added to your base cost for Capital Gains Tax when you eventually sell.
Straightforward examples help. Replacing a broken window with an equivalent pane is a repair. Replacing single glazing with double glazing throughout the property, because that's now the market standard for a similar retrofit, is usually still treated as a repair, since HMRC accepts that modern equivalent materials don't automatically make a job capital. Building a new conservatory, converting a loft, or extending the footprint of the property are capital improvements, full stop.
Where a single job mixes both elements, HMRC expects you to apportion the cost between the repair portion and the improvement portion, rather than claiming the whole thing one way or the other. Say a bathroom refit costs £4,000: £2,500 to replace failed tiling and a leaking bath (repair), and £1,500 to add a shower enclosure where there wasn't one before (improvement). You'd claim £2,500 as a revenue deduction and add £1,500 to the property's capital cost. Document the pre-work condition with photos and get an itemised invoice from the contractor showing the breakdown, because a single lump-sum invoice with no detail is the hardest thing to defend if HMRC queries it later.
Capital allowances on qualifying plant and machinery used in a rental business, distinct from the domestic items relief covered earlier, can sometimes apply to fixtures like office furniture used in a dedicated business area of a property, though this is a narrower category than most residential landlords will encounter.
Joint owners generally split rental profit, and therefore allowable expenses, in line with their ownership share, and each person declares their share on their own Self Assessment return, even for a property they own jointly. For married couples and civil partners who own a property as joint tenants, HMRC's default assumption is a 50/50 split, regardless of who actually paid which bills, unless you've submitted a Form 17 election to HMRC declaring a different split that matches your actual beneficial ownership shares.
This matters more than it sounds, because Section 24's reducer calculation runs separately for each owner based on their share of both profit and finance costs. A couple where one partner is a higher-rate taxpayer and the other has no other income can sometimes improve their combined position by aligning their ownership split with a genuine change in beneficial interest, though this needs a proper legal transfer, not just a verbal agreement, and has its own Stamp Duty and Capital Gains Tax implications to weigh up first.
If you're managing a jointly owned property day to day but a co-owner isn't involved in the paperwork, it's worth agreeing upfront who retains the master file of receipts and certificates, since HMRC can query either owner independently.
A mixed-use property, one with a residential flat above a shop, or a home with an annexe let separately, needs its costs split between the letting business and any other use before you claim anything. Only the portion of a cost that relates to the let part of the property is deductible against rental income.
Where a cost is entirely specific to the rented portion, such as repainting the let flat, it's fully deductible with no apportionment needed. Where a cost covers the whole building, such as a new roof or shared buildings insurance, you apportion by a reasonable method: floor area is the most common and most defensible basis, though a split based on rental value can work where floor area alone would be misleading.
Keep a note of the apportionment method you used and the floor-area figures behind it, because "reasonable and consistent" is the standard HMRC applies, and a documented calculation beats an unexplained round number every time.
Travel costs directly connected to managing a let property are deductible, covering trips to carry out repairs, meet tenants, conduct inspections, or visit letting agents. You can claim actual costs (fuel, parking, public transport fares) or use HMRC's simplified mileage rates if you're a sole trader landlord using your own vehicle, currently 45p per mile for the first 10,000 business miles in a tax year and 25p per mile after that.
The wholly-and-exclusively test applies here just as it does everywhere else, which is where landlords most often trip up. A trip made purely to check on the property or hand over keys is fully deductible. A trip where you visit the rental property and also run personal errands in the same town needs apportioning, and a trip to a holiday cottage you also use privately for part of the year needs even more careful splitting between business and private use.
Keep a simple mileage log: date, purpose, start and end points, and miles travelled, for every journey you claim. A single spreadsheet row per trip is enough, but it needs to exist at the time, not be reconstructed from memory during tax return season. If you manage several properties across a wider area, travel between properties on the same working day is generally allowable in full, since you're moving between business locations rather than commuting to a single site.
The landlords who get into trouble with HMRC almost never have dishonest intentions. They simply lose the paper trail: a receipt binned six months on, a repair invoice that doesn't separate the capital element from the repair, mortgage interest quietly claimed in the wrong box because nobody explained Section 24 properly. A standardised process, the same tagging habit applied to every cost from day one, closes nearly all of that gap before it opens.
— Harv
Prop-Pocket is the practical alternative to a shoebox of receipts and a year-end scramble. Where a spreadsheet only holds numbers you remember to type in, Prop-Pocket captures the receipt, tags it as repair, replacement or improvement, links it to the right property and tenancy, and keeps the evidence stored alongside it, ready to export when Self Assessment season arrives.
As an all-in-one property management platform, Prop-Pocket also handles the wider workload around your deductions: tenant records, rent and arrears tracking, repair logging, compliance certificates like EICR and Gas Safety, and document storage in one dashboard, rather than scattered across email threads and paper files. You can start managing a property with Prop-Pocket without an initial financial commitment to see whether the workflow fits how you already work. If you're ready to stop reconstructing your expense records from memory every January, explore the Prop-Pocket landlord software automations that capture receipts and repair costs as they happen, and see how much of this article's checklist runs itself from there.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
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