What expenses can be claimed in a property rental business?

Expenses fall into two categories, Capital Expenses and Revenue Expenses which are directly related to the lettings business.

One way of distinguishing between the two types of expense is to ask how long does the benefit of the expense last?

If the expense is, for example, the cost of adding a bedroom to the property then this would be considered a capital improvement. Any tangible improvement to the asset is considered a capital improvement and therefore not an allowable expense for the purpose of Income Tax. However, decorating a property is considered a revenue expense as every property would need to be redecorated at some point. These expenses can be claimed for the purposes of Income Tax.
 
Here is a list of allowable Expenses:

• Advertising expenses for tenants
• Agents’ fees for property management, including finding and vetting tenants
• Gardening, cleaning and waste disposal
•  Council Tax and Ground Rent
•  Insurance for Building, Contents and Loss of Rent
• Accountancy fees, though this would be the charges to prepare the rental account and not the cost of calculating and filling a tax return
• Cost of collecting rent/enforcing debts and bad debt where the rent due from the tenant is taxable, however it is not being paid or not recovered
• Cost of services provided to tenants, such as where the landlord pays for gas, electricity, water council tax, internet or annual service charges on a flat
• Mortgage interest and charges for buying, extending or improving a property but not the capital repayment, if any
• Motor and travelling costs of running the property business, such as travelling from one’s home to the let properties, to meet agents, or tenants
• Printing, postage and stationery costs related to running the property business
• Renewals basis and maintenance, the cost of replacing or repairing integral fixtures and fittings to the building such as sinks, baths, boilers or kitchen units can be claimed, whether or not a Wear and Tear Allowance has been claimed. The initial cost or any improvement element on a replacement item is not deductible. There should not be a significant improvement to these fixtures but rather a replacement of the fixture
• Wear and Tear Allowance, 10% of the gross rent received in respect of fully furnished properties, where Capital Allowance is not claimed (for changes to Wear and Tear Allowance please click here)

For further information please contact us on [email protected].