Month: October 2024

Landlords can claim certain allowable expenses from their rental property income when calculating their taxable profits and can reduce their tax bill.

All the exepnses other than the capital expenditures (for improvements to the property) are allowable expenses, as long as they are incurred ‘wholly, exclusively and necessarily’ for the the rental ‘business’ purposes.

Some examples of allowable expenses:

1. 1. Property Management Fees: Fees paid to property management companies for managing the rental property.
   2. Repairs and Maintenance: Costs for repairs to keep the property in a good condition (e.g., plumbing, painting).
   3. Insurance: Premiums for buildings and contents insurance, as well as landlord liability insurance.
   4. Utilities: If you pay for water, gas, electricity, or council tax, these costs can be deducted.
   5. Legal Fees: Costs for legal advice related to rental agreements and evictions.
   6. Advertising Costs: Expenses incurred for advertising the property to attract tenants.
   7. Accountancy Fees: Fees for professional accounting services related to your rental income.
   8. Travel Expenses: Costs related to travel for managing the property, such as visiting the property for maintenance or inspections.
   9. Cleaning and Gardening: Costs for cleaning services or gardening if they are part of maintaining the property.
   10. Wear and Tear Allowance: Previously allowed for furnished properties; now replaced with the actual costs of replacing furnishings.
   11. Mortgage Interest: Loan Interest on money borrowed to purchase or improve the property*

It is important to keep records and receipts for all expenses claimed.

If you let only part of the property and also live yourself in the same property, you must apportion expenses.

* Restrictions on Relief for Mortgage Interest: Since April 2020, tax relief on residential property finance costs has changed. Instead of deducting the interest directly from rental income, landlords receive a basic rate tax credit of their finance costs. This applies to individuals and some partnerships.

For specific guidance tailored to your situation, contact us today.