The basic rule: was the cost for the rental business?

The starting point is simple. To be claimed against rental income, the expense must normally be wholly and exclusively for the purposes of renting out the property.

In plain English, that means the cost should relate to running, maintaining, managing or legally letting the property.

So, for example, if you pay for a gas safety certificate, that clearly relates to the rental property. If you pay for repairs to a leaking roof, that is connected to maintaining the property. If you pay your letting agent to manage the tenancy, collect rent or arrange inspections, that is part of running the rental.

But if the cost is personal, partly private, or not directly connected to the rental business, it may not be allowable — or only a proportion may be allowable.

That distinction is where many owners get caught out.

They assume, “I spent money on the property, so it must reduce my tax.”

Unfortunately, it is not always that simple.

Repairs and maintenance

Repairs and maintenance are usually one of the largest areas of expenditure for owners.

If a boiler breaks and needs repairing, if roof tiles need replacing, if faulty electrics need fixing, if a leak needs sorting, or if the property needs redecorating between Residents, these costs may normally be treated as part of maintaining the rental property.

This is one of the reasons proper maintenance records are so important. If you have an invoice from a contractor that clearly explains what was done, when it was done and which property it related to, that is far more useful than a vague bank payment months later with no supporting detail.

But there is a very important warning here.

Repairs and improvements are not the same thing.

A repair usually restores something to its previous condition. An improvement makes the property better than it was before.

For example, replacing a broken standard bathroom suite with a similar standard bathroom suite may be treated differently from installing a high-end luxury bathroom that significantly increases the property’s value.

Replacing worn kitchen units on a broadly like-for-like basis may be different from redesigning and upgrading the entire kitchen to a much higher specification.

HMRC’s guidance is clear that allowable expenses do not include capital expenditure, such as buying a property or renovating it beyond normal repairs for wear and tear.

This is where owners need to be careful. A cost may still matter for tax purposes, but it may be treated differently — for example, as capital expenditure potentially relevant when the property is sold, rather than as an expense deducted from rental income in the year it was paid.

Your accountant should always guide you on this.

Letting agent and management fees

Letting agent fees and property management fees are usually one of the clearer areas.

These may include costs connected with finding a Resident, setting up the tenancy, collecting rent, managing repairs, carrying out inspections, arranging compliance, keeping records and dealing with tenancy administration.

At Maxine Lester, we often say that good management does two things. It protects the property while the tenancy is running, and it protects the Owner’s position if something goes wrong.

That protection is not only about dealing with repairs or rent collection. It is also about creating a clear paper trail.

When an owner manages everything themselves, they may be perfectly capable of arranging a repair or speaking to a resident. The issue is often whether they have kept the evidence in the right place, recorded the decision properly, served documents correctly and maintained a reliable audit trail.

That becomes even more important as compliance requirements increase and local authority enforcement becomes more active.

Professional fees

Professional fees can also be relevant.

Accountancy fees for preparing rental accounts may normally be part of the running costs of the rental business. Some legal fees connected with the letting of the property may also be relevant, but not every legal cost is treated in the same way.

For example, legal fees linked to drawing up or renewing a short tenancy agreement may be treated differently from legal fees connected with buying the property, selling the property or dealing with a major capital issue.

This is why it is dangerous to assume every solicitor’s bill, surveyor’s fee or professional invoice can automatically be deducted from rental income.

Some may be allowable. Some may not. Some may need to be treated in a different way.

Again, the right answer depends on the detail.

Insurance

Insurance is another common area where owners may be able to claim.

This could include buildings insurance, contents insurance for items provided with the property, public liability cover, rent guarantee insurance or other landlord-specific policies linked to the rental.

The key point is that the insurance must relate to the rental business.

It is also worth remembering that insurance is not just a tax issue. It is a risk issue.

Owners should check that their policy actually covers the way the property is being let. For example, some policies may have conditions around the type of tenancy, whether the property is furnished, whether the property is empty, how often inspections must take place, or whether certain Resident arrangements are excluded.

The cheapest policy is not always the safest policy.

A good insurance policy should support the reality of how the property is being used, not just look acceptable in a file.

Mortgage interest and finance costs

Mortgage costs are one of the areas where Owners most commonly misunderstand the rules.

For individual residential landlords, mortgage interest is no longer simply deducted from rental income in the way it once was. HMRC confirms that Income Tax relief on residential property finance costs is restricted to the basic rate of Income Tax, and this has been fully in place since 6 April 2020.

This can make a significant difference, especially for higher-rate taxpayers.

It is also important to understand that the capital repayment element of a repayment mortgage is not the same as mortgage interest. If you are paying down the loan itself, that is not normally treated as a rental expense in the same way.

Finance costs can be a complex area, particularly if you are refinancing, buying through a limited company, transferring ownership, or holding multiple properties.

This is absolutely an area where owners should speak to their accountant before making decisions.

What looks like a sensible property decision on the surface can have a very different tax outcome once finance costs, ownership structure and income tax position are considered properly.

Service charges, ground rent, council tax and utilities

Owners may also be able to claim costs such as service charges, ground rent, council tax, water rates, gas and electricity — but only where the owner is responsible for paying them as part of the rental business.

This often applies during void periods, where the property is empty between Residents and the owner is responsible for bills.

It may also apply where the tenancy is structured in such a way that certain utilities or services are included in the rent.

The important thing is to keep clear records and make sure the cost is properly linked to the rental property.

A council tax bill for a void period is very different from a personal household bill. A service charge demand for a leasehold rental flat is different from a private expense. Your accountant will need to see the distinction clearly.

Replacement of domestic items

Replacement of domestic items relief is another area owners need to understand.

Broadly, this may apply when money is spent replacing certain domestic items in a residential rental property. HMRC gives examples such as beds, sofas, curtains, carpets, fridges, crockery and cutlery.

The important word is “replacement”.

HMRC’s property guidance explains that this relief applies to the replacement, not the initial purchase, of certain domestic items.

For example, if a washing machine breaks and you replace it with another washing machine of a similar standard, that may be relevant. If a sofa is worn out and replaced, that may also fall into this area.

But if you are furnishing the property for the first time, or significantly upgrading items beyond a reasonable replacement, the position may be different.

This is why your records should explain what was replaced.

A receipt saying “appliance” is not nearly as helpful as a record showing that the old fridge-freezer at the rental property was replaced with a new equivalent fridge-freezer on a particular date.

That level of clarity makes life much easier for your accountant and gives you a stronger audit trail.

Advertising and marketing costs

Advertising and marketing costs connected to finding a resident may also be part of the rental business.

This could include online advertising, property photography, listing fees, brochures, floorplans or other marketing costs linked to letting the property.

Again, the principle is whether the cost was incurred for the rental business.

A professional advert to find a Resident is very different from general personal marketing or unrelated business promotion.

At Maxine Lester, we see marketing as part of protecting the owner’s overall return. Strong marketing helps attract the right resident, reduce void periods and position the property properly in the local market.

The cheapest marketing route is not always the best one if it leads to the wrong match, poor referencing or a longer void.

Safety and compliance costs

Safety and compliance costs are a major part of running a rental property properly.

Gas safety certificates, electrical inspection reports, EPCs, smoke alarm checks, carbon monoxide alarm checks, legionella risk assessments and other safety-related costs may all be part of managing a compliant rental property.

These records are important for more than tax.

They also protect your position as an owner.

If there is a complaint, a dispute, an enforcement enquiry or a possession issue, being able to prove what was done, when it was done and who carried it out can be critical.

This is where we see a real difference between a property that is simply “being rented out” and a property that is being professionally managed.

The work itself matters, but the evidence matters too.

For example, it is not enough to think, “I’m sure the certificate was done.” You need to know where it is, when it expires, whether it was served correctly where required, and whether the record is complete.

Good compliance is not just about avoiding penalties. It is about peace of mind.

Travel and office costs

Some travel costs may be relevant where the travel is genuinely connected to the rental business.

For example, visiting the property for an inspection, meeting a contractor, dealing with a maintenance issue or attending to a rental-related matter may all be relevant.

But personal travel cannot simply be dressed up as a property cost.

If a trip has both personal and rental purposes, you need to be careful. Your accountant can advise whether any part of the cost can be claimed and how it should be recorded.

Office costs may also sometimes be relevant. This could include stationery, postage, phone use, software, bookkeeping tools or a reasonable proportion of home office costs where appropriate.

The important point is apportionment.

If something is used partly for personal reasons and partly for rental business reasons, you cannot normally treat the whole cost as a rental expense without looking at the private element.

What can owners not usually claim?

There are some common areas where owners make mistakes.

You cannot usually claim the capital repayment element of your mortgage as a rental expense.

You cannot claim your own time as if you were paying yourself wages.

You cannot claim private expenses.

You cannot simply treat major improvements as normal repairs.

You cannot assume that every cost connected to buying, selling or improving the property is deductible from rental income.

This is where professional advice really matters.

Tax rules do not always follow what feels logical. An owner may understandably think, “I spent £12,000 on the property, so surely I can claim it.”

But the tax treatment depends on what the money was spent on, why it was spent, whether it was a repair or an improvement, and how it relates to the rental business.

The £1,000 property allowance

Some Owners may have heard of the property allowance.

The first £1,000 of income from property rental may be tax-free as the property allowance. However, if you claim the property allowance, you cannot also deduct your actual expenses for that income.

For some very small-scale Owners, this may be useful.

For many owners with proper rental costs — repairs, insurance, agent fees, compliance costs, service charges and mortgage finance considerations — claiming actual expenses may be more appropriate.

This is another area to discuss with your accountant.

The right answer depends on your figures.

Why record keeping is now more important than ever

The biggest message for Owners is this: do not wait until January.

For those now within Making Tax Digital, the first quarterly update is due by 7 August 2026. That means the records for the first part of the tax year need to be accurate, organised and ready far earlier than many Owners may be used to.

This means owners need better systems.

• Keep invoices.
• Keep receipts.
• Keep certificates.
• Keep statements.
• Keep copies of professional advice.
• Keep records of what each cost relates to.
• Keep everything connected to the right property.

If you own more than one rental property, this becomes even more important. One pot of mixed receipts, unclear payments and missing invoices is not a system. It is a problem waiting to happen.

This is why your rental property needs to be treated like a business throughout the year — not just when your accountant asks for the paperwork.

The Maxine Lester approach

At Maxine Lester, we believe owners should have Expert, Honourable and Personal support when renting out their property.

That means we do not look at property management as simply collecting rent and arranging the odd repair. We see it as protecting the owner, supporting the resident, keeping the property compliant and making sure the right records are in place.

We cannot replace your accountant. We would never pretend to give specialist tax advice.

But we can make the property side of the process far more organised.

In 2023, we upgraded our CRM system specifically so we could help our customers prepare for Making Tax Digital. We knew that Owners would need better records, clearer statements and easier access to the information their accountant would need.

Now, where we collect the rent for you, we have the ability to download your owner statements in a format that can support HMRC reporting. This means we can make the job easier for your accountant — and if you are still completing your own tax return, it can make life much easier for you too.

A well-managed property should have clear records, proper compliance, reliable maintenance history, documented inspections and a professional audit trail.

That does not just help with tax.

It helps with risk, enforcement, possession, insurance and long-term planning.

The best owners do not simply think about rent coming in.

They think like a business.

And when a rental property is treated like a business, the owner is usually in a much stronger position.

This is one of the ways our approach is different. We do not simply react when a problem appears. We look ahead, invest in the systems our Owners need, and help take away the stress that often comes with managing property, paperwork and compliance.

If you would like to find out more about this time-saving option, just call the Maxine Lester team. We will be happy to talk you through how it works and whether it could help you.

Final thought

So, what can owners claim against tax?

The answer depends on the type of cost, the reason for the cost, the records available and the owner’s own tax position.

Repairs, management fees, insurance, professional fees, compliance costs, service charges, replacement domestic items and some office or travel costs may all be relevant.
But the detail matters.

Repairs are not the same as improvements. Mortgage interest is not treated in the way it once was for individual residential landlords. First-time furnishing is not the same as replacing domestic items. Private costs are not rental costs. And poor record keeping can make even legitimate expenses harder to support.

So, speak to your accountant. Check what applies to your property. And make sure your rental business is being managed properly throughout the year — not just when the tax return deadline appears.

With Making Tax Digital now live for the first group of affected owners, this matters more than ever. If you are within the rules, your first quarterly update is due by 7 August 2026, and the quality of your records between now and then really matters.

At Maxine Lester, we help Owners keep their rental property organised, compliant and professionally managed, giving them peace of mind that things are being properly looked after.

And because we upgraded our CRM system in 2023 to support Owners with Making Tax Digital, we can also make your rental records easier to manage where we collect your rent.

For more updates on rental property, compliance and legislation, subscribe to Maxine Lester TV.

And if you would like to find out more about our time-saving statement option, or you would like help making your rental property easier to manage, call the Maxine Lester team today.