Landlord Allowable Expenses: The Complete England Checklist for Your 2025/26 Tax Return

Getting your landlord allowable expenses right is the single biggest lever you have over your property tax bill. Every pound you legitimately deduct from your rental income reduces the profit HMRC taxes, and many England landlords leave money on the table simply because they do not realise a cost qualifies, or they record it in the wrong place. This guide is a complete, plain-English checklist of what you can and cannot claim against rental income for the 2025/26 tax year (the Self Assessment return due by 31 January 2027), written for landlords letting residential property in England.

It is general information, not tax advice. The definitive source is HMRC’s Property Income Manual and the renting out your property guidance on GOV.UK.

The golden rule for landlord allowable expenses

To be deductible, an expense must be incurred wholly and exclusively for the purposes of your property rental business. That is the statutory test HMRC applies. If a cost has a private element, say a phone you also use personally, you can only claim the proportion that relates to the let, and you must be able to justify how you arrived at that split.

Two further distinctions matter and trip people up constantly:

• Revenue vs capital. Day-to-day running costs (revenue) are deductible against rental income. Costs that improve the property or buy a new asset (capital) are not, they go against Capital Gains Tax (CGT) when you eventually sell instead.
• Repairs vs improvements. Replacing a broken boiler with a similar modern equivalent is a repair (allowable). Adding an extension, converting a loft, or upgrading a standard kitchen to a high-specification one is an improvement (capital, not allowable as a running cost).

A useful mental test: are you restoring the property to its previous condition, or making it materially better than it was? Restoration is usually a repair; betterment is usually capital. HMRC accepts that using modern materials that happen to be an improvement on what is no longer available (for example, double glazing replacing single glazing) can still count as a repair, because there is no genuine like-for-like alternative on the market.

Your allowable expenses checklist

Use this as a working list when you reconcile the year. Keep every invoice, bank statement and receipt for at least the required retention period (see the record-keeping section below).

Property running costs

• Repairs and maintenance (decorating, fixing leaks, servicing the boiler, replacing broken fixtures with like-for-like)
• Buildings and contents insurance, plus rent guarantee or legal-expenses cover
• Ground rent, service charges and estate charges on leasehold property
• Council tax and utility bills for periods the property is empty between tenancies, or where you pay them under the terms of the tenancy
• Water rates and sewerage where you bear them
• Gardening, cleaning and waste removal between lets

Letting and management

• Letting agent and property management fees
• Tenant referencing and Right to Rent check costs
• Advertising and marketing for new tenants
• Accountancy fees for preparing the rental accounts
• Legal and professional fees on short leases (under a year) and on lease renewals or re-lets

Compliance and certificates

• Gas safety checks (CP12), Electrical Installation Condition Reports (EICR) and PAT testing
• Energy Performance Certificate where one is required to re-market the property
• HMO and selective licence fees (treated as revenue where they are renewable and recurring)
• Smoke alarms and carbon-monoxide detectors and their servicing

Travel and admin

• Mileage to and from the property for genuine management visits (45p per mile for the first 10,000 business miles in the year, 25p thereafter) or actual vehicle running costs, not both
• The business proportion of phone, mobile and broadband
• Stationery, postage and printing for the rental business
• Direct costs of running a home office used for managing the let

Smaller but valuable

• Bank charges and mortgage arrangement fees on the rental account (the arrangement fee is a finance cost, see the Section 24 note below)
• Subscriptions to landlord associations and trade bodies
• Software and digital tools used to manage the let and keep records

What you cannot claim

Mortgage interest is not a normal allowable expense any more

Since the phasing-in of Section 24 of the Finance (No. 2) Act 2015, individual landlords can no longer deduct mortgage and other finance interest from rental income as an ordinary expense. Instead you receive a basic-rate (20%) tax credit on your finance costs. For basic-rate taxpayers the effect is broadly neutral; for higher and additional-rate landlords it materially increases the tax due, because the rental income is taxed at your marginal rate (40% or 45%) while relief on the interest is capped at 20%.

Finance costs caught by Section 24 include mortgage interest, interest on loans to buy furnishings, and the incidental costs of obtaining that finance (such as mortgage arrangement fees). They are not entered in the usual expenses box, they generate a separate tax reducer.

This is important enough, and complicated enough, that we cover it in full in our guide to Section 24 and the mortgage interest tax relief cut, and we provide a finance costs worksheet for tracking mortgage interest so the figure that drives your tax credit is always accurate.

Repairs vs improvements: where the money is won or lost

This is the single most common point of confusion, and the one HMRC scrutinises most closely, because misclassifying a capital improvement as a revenue repair is a way to wrongly accelerate relief.

When you do undertake genuine capital work, keep the records anyway. Those costs add to the property’s base cost and reduce your Capital Gains Tax bill when you sell, so they are not lost, they are simply relieved against a different tax.

Replacement of domestic items relief

If you let a property furnished or part-furnished, you cannot deduct the initial cost of furnishing it, but you can claim replacement of domestic items relief when you replace items such as sofas, beds, carpets, curtains, white goods and crockery. The relief covers the cost of the replacement (on a like-for-like basis, so any genuine upgrade element is excluded), plus the cost of disposing of the old item, less anything you receive for it. The wear-and-tear allowance that used to apply to fully furnished lets was abolished years ago, this relief replaced it.

A worked example

Anita lets a two-bedroom flat in Leeds. For 2025/26 her figures are:

• Rental income received: £14,400 (£1,200 a month)
• Mortgage interest: £4,800
• Letting agent fees (10% + VAT): £1,728
• Buildings and landlord insurance: £420
• Gas safety check and boiler service: £140
• EICR (five-yearly, falling in this year): £180
• Repairs, replacing a broken washing machine with a similar model: £330
• Service charge and ground rent: £1,250
• Accountancy fee: £250
• Mileage (120 business miles at 45p): £54

Step 1, total the ordinary allowable expenses (everything except the mortgage interest):

£1,728 + £420 + £140 + £180 + £330 + £1,250 + £250 + £54 = £4,352

Step 2, calculate rental profit before the finance-cost adjustment:

£14,400 − £4,352 = £10,048

Step 3, apply the Section 24 treatment to the mortgage interest. The £4,800 is not deducted from profit. Instead it generates a 20% tax credit:

£4,800 × 20% = £960 tax reducer

Step 4, work out the tax. If Anita is a higher-rate (40%) taxpayer, tax on the £10,048 profit is £4,019.20, reduced by the £960 credit, leaving roughly £3,059 of tax on this property (before her personal allowance and other income are taken into account). Note how the mortgage interest only relieves at 20%, not her 40% marginal rate, that is the Section 24 squeeze in action. Had the old rules still applied, deducting the £4,800 in full at 40% would have saved her an extra £960.

If you want to model your own figures, our rent increase calculator helps you forecast the income side of the equation under the new once-a-year Section 13 rules.

The Renters’ Rights Act 2025 and your expenses

The Renters’ Rights Act 2025, in force from 1 May 2026, does not change the income tax rules on allowable expenses. But it does change the shape of some of your costs:

• All assured tenancies are now periodic, there are no fixed-term ASTs and no fixed-term renewals, so you may incur more frequent re-letting, advertising and referencing costs. These remain allowable as revenue expenses.
• Rent can only be increased once a year via a Section 13 notice (using the current prescribed form on GOV.UK), and rent-review clauses are banned. That affects how you forecast income against your fixed running costs.
• Pet-related obligations have changed: you must respond to a written pet request within 28 days (extendable by a further 7 with the tenant’s agreement), there is no deemed consent, and you cannot require the tenant to take out pet insurance, so do not budget for that as a recoverable cost.

If you are still working out whether your lettings activity is even taxable as a business, start with our overview of how to become a landlord in England. And if you are weighing personal versus corporate ownership, which changes how interest and profits are taxed entirely, read should you own rental property in a limited company.

Record-keeping: the part most landlords get wrong

HMRC can ask to see evidence for any figure on your Self Assessment return. Strong records are not optional:

1. Separate your finances. Use a dedicated bank account for rental income and costs. It makes the wholly-and-exclusively test easy to evidence.
2. Capture the receipt at the point of spend. A bank line alone rarely proves what a cost was for, or that it was for the let rather than your own home.
3. Tag revenue vs capital as you go. Sorting it in January, against a year of mixed transactions, is where errors and missed claims creep in.
4. Keep records for the required period. HMRC generally expects you to retain Self Assessment records for at least 22 months after the end of the tax year, but landlords are advised to keep property records for at least five years after the 31 January filing deadline, and longer for anything relevant to a future CGT calculation.
5. Watch the property allowance. If your gross rental income is £1,000 or less, you may be able to use the £1,000 property allowance instead of claiming actual expenses, but you cannot do both, so check which leaves you better off.
6. Mind Making Tax Digital. MTD for Income Tax is phasing in for landlords above set income thresholds, check the current MTD timetable on GOV.UK so you are ready for quarterly digital reporting when it applies to you.

Frequently asked questions

Can I claim the cost of furnishing my rental for the first time?

No. The initial cost of furniture, white goods and furnishings is not an allowable revenue expense, and the old wear-and-tear allowance was abolished. However, once items are in place you can claim replacement of domestic items relief when you later replace them on a like-for-like basis.

Is my own time managing the property an allowable expense?

No. You cannot pay yourself for your own labour and deduct it. Only costs you actually incur and pay to third parties, agents, contractors, accountants, count. You can, however, claim genuine mileage for management visits.

Can I deduct mortgage interest from my rental income?

Not as a straight expense. Since Section 24 fully bit, individual landlords get a 20% basic-rate tax credit on finance costs instead of deducting them from profit. Higher and additional-rate taxpayers feel this most. See our dedicated Section 24 guide for the full mechanics.

Are letting agent fees and tenant referencing costs allowable?

Yes. Agent management fees, tenant find/letting fees, referencing and Right to Rent check costs are all ordinary revenue expenses incurred wholly and exclusively for the rental business, so they are deductible in the year you incur them.

Can I claim council tax and utilities on an empty property?

Yes, where you genuinely bear those costs during a void period between tenancies, or where the tenancy makes you responsible for them. You cannot claim them for periods a tenant was contractually liable, nor for any private use.

Do HMO and selective licence fees count?

Generally yes, where the licence is renewable and recurring it is treated as a revenue cost and is allowable. If you are unsure whether your property even needs one, read our overview of HMO licensing in England.

Coming soon

Tenancy Pilot is launching soon, and one of its core features is a tax and finance suite with an income and expense tracker that categorises every transaction into the right HMRC box, repairs vs improvements, revenue vs capital, finance costs for your Section 24 credit, alongside 20+ landlord reports. The aim is that your allowable expenses are correct and audit-ready when the return is due, instead of reconstructed in a panic each January.

Join the waitlist to be first to use the expense-categorisation and reporting tools when we launch.

This article is general information for England landlords and is not legal, tax or financial advice. Tax rules change and your circumstances are individual. Always check the current guidance on GOV.UK and legislation.gov.uk, and consult a qualified accountant or solicitor before acting.

This is general information, not legal advice. Rules change and your circumstances may differ, always check GOV.UK and legislation.gov.uk, and consult a solicitor before acting.