If you are a landlord or thinking of becoming one, then an understanding of rental income deductions that you can claim is essential. But not all expenses are deductible against rental income and it is important to know the difference. For more guidance on any of these expenses download our free property tax guide.
Below is a brief list of 35 Buy-to-Let costs you can claim if you incur them.
| Accountancy Fees Administration Expenses |
| Advertising |
| Breakdown Cover |
| Business Use of Home |
| Capital Expenses |
| Capital Gains Tax |
| Council Tax |
| Deposit Protection Scheme |
| Electrical Certificate / EPC |
| Finder’s Fee |
| Freehold Property |
| Gas Certificate |
| Ground Rent |
| Leasehold |
| Legal Fees |
| Letting Agent Fees |
| Losses |
| Mileage |
| Mortgage – Interest Only |
| Mortgage Arrangement Fee |
| Mortgage Broker Fees |
| Other Expenses |
| Other Services Provided |
| Power Costs |
| Property Income Allowance |
| Property Insurance |
| Rates |
| Rent a Room Allowance |
| Marketing Expenses, including editing videos |
| Repairs and Maintenance |
| Replacement Items |
| Service Charges |
| Travel Expenses |
| Valuation Fees |
A list of all the topics covered in further detail in this guide can be found below. If you click on any of these links, you’ll be taken to the relevant section which explains each of these expense types in more detail.
Interest and other finance charges
Legal, management and accountancy fees
The general rule is that the expenditure must be expended wholly and exclusively for the Rental Income business. The rules are exactly the same as for a trading business. For rental properties the main expenses are:
The interest accrued and any arrangement fees on any loan taken out to purchase the property are claimable for commercial property and furnished holiday lettings. This also applies to residential properties up until 5th April 2017. If it is a repayment mortgage, then it is only the interest element which can be claimed, not the total repayments. If you have a separate bank account for the property business then any bank charges can also be claimed.
From 6th April 2020, interest will not be an allowable expense in computing the profits of the rental business, but will instead attract tax relief at 20%. Basic rate (20%) taxpayers should see no change to their liabilities. However, if you pay tax at a higher rate, you will be affected.
Commercial properties and Furnished Holiday lettings are not affected by the proposals.
Repair work carried out on the property can be claimed provided that it is not a capital improvement. If you lived in the property prior to letting it, then work carried out before the property is let is seen as maintenance of the property as a result of private use rather than for rental purposes. Do not forget to include the gas safety certificate cost if applicable.
You cannot claim any legal fees in connection with the purchase of the property or any fees for the initial lease if it is for more than one year. Any legal fees in connection with the renewal of a lease, a short hold tenancy of less than 1 year, eviction of clients, rent collection or management fees and accountancy are all claimable.
It is important that you insure the property and the premium for the buildings and/or contents can be claimed. Life assurance premiums are not claimable.
You may pay ground rent if the property is a flat. The tenant normally pays the rates or council tax, but if you suffer any costs or there are any void periods where you pay these costs, these can be claimed.
If you pay any service charges or for any other services in connection with the letting e.g. electricity in common areas, these should be claimed. If the property is a furnished holiday letting then it is likely that you will pay for electricity, gas, water, television licence, telephone and other services.
Do you travel to the property to carry out maintenance or deal with issues with the tenants? If so you should claim the cost of travelling. In the case of your own vehicle, you can either simply claim a mileage rate which is normally 45p per mile or you can claim the actual expenditure incurred but you will then have to keep all your motoring receipts. It does have to be reasonable – if you live in London and spend a week on holiday in Cornwall, popping in for ten minutes to check that the holiday home next door was OK would not make the journey a business trip!
If you need to advertise for tenants, then this expense can be claimed.
These can include postage, stationery, telephone calls and other administration expenses. The rules for claiming use of home as office have changed from 6th April 2013. Either a complex calculation has to be made justifying the charge or the following can be claimed depending on the hours worked in an office.
It is unlikely that a charge for using your home as an office can be justified unless you are managing a number of properties yourself.
The licence fee for Houses of Multiple Occupation (HMO) is claimable for example. Any other expenses incurred wholly and exclusively for the property business can be claimed.
For a full list of what you can and cannot claim download our free Property Tax Guide or ask us for our landlord spreadsheet which includes a list of all of the 35 buy to let costs with a detailed explanation of each cost.
If you enjoyed this article on buy-to-let costs you need to claim, then why not read our post on residence nil rate band 2021/22 or buying property through a limited company next?
Thandi Nicholls Ltd
Creative Industries Centre
Glaisher Drive
Wolverhampton
West Midlands
WV10 9TG
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