Hello again, property enthusiasts! As your resident Chartered Accountant, I often see landlords leaving money on the table—or worse, trying to claim for a “business trip” that looks suspiciously like a family holiday to the Algarve.
In the 2025/26 tax year, with the cost of living still biting and interest rates keeping us on our toes, maximizing your allowable expenses is the smartest way to protect your rental profits.
The golden rule from HMRC is that an expense must be “wholly and exclusively” for your property business. Let’s break down what that actually looks like in the real world.
This is the #1 area where landlords get into hot water.
Repairs (Revenue Expenses): These are deductible from your rental income immediately. They restore the property to its original state.
Improvements (Capital Expenditure): These are not deductible from your annual income tax. Instead, you keep the receipts to offset against Capital Gains Tax when you eventually sell the property.
The Repair: You replace three broken cabinet doors with similar ones. Verdict: Allowable expense.
The Improvement: You rip out a functional 1990s kitchen and install a granite-topped luxury suite with an island. Verdict: Capital expenditure (save the receipt for the sale!).
If you let a furnished or part-furnished property, you can claim Replacement of Domestic Items Relief. This covers:
Beds and sofas
Curtains and carpets
Fridges, washing machines, and kettles
The Catch: You can only claim for a “like-for-like” replacement. If you replace a basic £300 washing machine with a £1,200 smart washer that folds the clothes for you, you can only claim the cost of a basic equivalent!
You can claim for travel to your rental property for inspections, repairs, or meeting tenants.
The HMRC Approved Rates: For 2025/26, these remain at 45p per mile for the first 10,000 miles and 25p thereafter.
The Warning: You cannot claim for the commute from your house to your “office” if that office is the rental property itself.
Do you spend hours at your kitchen table managing tenancies, vetting tenants, and chasing arrears? You can claim a portion of your home bills.
The Easy Way: Use HMRC’s “Simplified Expenses” flat rate if you work more than 25 hours a month on your business.
The Pro Way: Calculate the actual proportion of your heating, lighting, and broadband based on the number of rooms in your house and time spent working. (Ask me for a spreadsheet template for this!)
HMRC essentially views these as the cost of doing business properly. These are generally 100% deductible:
Letting Agent Fees: Management, finders’ fees, and inventory costs.
Accountancy Fees: My fees for preparing your rental accounts and MTD filings.
Legal Fees: For renewing a lease (less than 7 years) or dealing with evictions. Note: Legal fees for buying the property are Capital Expenditure.
Insurance: Specialist Landlord Insurance and Public Liability.
| Expense Item | Deductible from Income? | Note |
| Gas Safety Certificate | Yes | Mandatory safety costs are 100% deductible. |
| Mortgage Principal | NO | You only ever get relief on the interest. |
| New Extension | No | This is Capital Expenditure. |
| Advertising for Tenants | Yes | Fully allowable. |
| New Boiler | Usually Yes | HMRC generally accepts a new boiler as a repair of the heating system. |
With Making Tax Digital starting in April 2026 for those earning over £50k, keeping these receipts organized isn’t just a “good idea”—it’s about to become a legal requirement for digital submission. Start categorizing your “Repairs” vs “Improvements” now so your 2026 transition is a breeze.
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Godwin Pinto ACA (ICAI) is the founder of AccTek and a member of ICPA, with 20+ years of experience in accounting and tax for contractors, startups and SMEs. Previously at PwC.
Last updated: 5 July 2026
AccTek is a member firm of the Institute of Certified Practising Accountants (ICPA). Our accountants have a wide range of qualifications and accreditations from trusted professional bodies such as the AAT, ICPA, and ACCA.
