What Expenses Can I Claim as a Landlord?
Being a landlord involves various costs, but the good news is that many of these expenses can be claimed to reduce your taxable rental income. In the UK, the government allows landlords to deduct allowable expenses when calculating their tax liability, making it crucial to understand what qualifies.
What Are Allowable Expenses?
Allowable expenses are costs incurred "wholly and exclusively" for the purpose of renting out your property. These expenses must be directly related to managing, maintaining, or letting the property.
Common Expenses Landlords Can Claim
-
Mortgage Interest
- While the full deduction for mortgage interest has been replaced with a 20% tax relief, you can still claim this allowance if you have a buy-to-let mortgage.
-
Property Repairs and Maintenance
- Expenses for necessary repairs, such as fixing a broken boiler or repairing a roof, are claimable. However, improvements (e.g., adding an extension) are not deductible as they are considered capital expenses.
-
Letting Agent Fees
- Costs for property management or tenant-finding services provided by letting agents are deductible.
-
Legal and Professional Fees
- Legal expenses for drawing up tenancy agreements, eviction processes, or professional accounting advice can be claimed.
- Note: Legal costs for property purchases are not allowable.
-
Utility Bills
- If you pay for utilities like gas, electricity, or water as part of your rental agreement, these are claimable.
-
Insurance
- Premiums for landlord-specific insurance policies, including buildings, contents, and rental protection insurance, are allowable.
-
Council Tax
- If you are responsible for paying council tax on a vacant property, it can be claimed as an expense.
-
Ground Rent and Service Charges
- Leasehold-related costs, including ground rent and service charges for flats, can be claimed.
-
Advertising Costs
- Expenses for marketing your property, such as online listings or newspaper ads, are deductible.
-
Travel Costs
- If you need to travel for property management purposes (e.g., inspections, meetings with tenants), mileage or public transport costs can be claimed.
-
Other Costs
- Stationery and Postage: Expenses for correspondence or record-keeping.
- Property Inventory Costs: Fees for creating a property inventory at the start or end of a tenancy.
Non-Allowable Expenses
Certain costs cannot be deducted from your rental income, including:
- Capital Expenditures: Costs that enhance the property, such as adding a conservatory or converting a loft.
- Personal Costs: Any expenses not related to the rental business, like personal utility bills.
- Fines or Penalties: Parking tickets or late payment penalties are not deductible.
How to Claim These Expenses
-
Maintain Detailed Records:
- Keep receipts, invoices, and bank statements for all expenses related to your rental property.
-
Use a Reliable Tax Software or Accountant:
- Employing a professional can ensure all allowable expenses are correctly claimed, and compliance with tax regulations is maintained.
-
File Through Self-Assessment:
- Use the HMRC self-assessment system to report rental income and claim your allowable expenses.
Fraser Bond Can Help
Managing property finances can be challenging, but Fraser Bond is here to help landlords maximize their returns. We offer:
- Expert Property Advice: Guidance on managing rental properties efficiently.
- Tax Efficiency Tips: Ensuring you claim all allowable expenses to reduce your tax burden.
- Property Management Services: Let us handle the complexities of letting and maintaining your property.
Conclusion
Understanding and claiming allowable expenses is key to maximizing your rental income as a landlord. By staying informed and organized, you can reduce your tax liability and improve your property investment’s profitability.
For professional advice and assistance, contact Fraser Bond today. We’re here to support landlords at every step of their property journey.
