Expenses you can set-off against rental income

The expenses you claim against your property income will need to follow the usual HMRC ruling that the costs must be incurred wholly and exclusively for the purpose of renting out the property.

An example set out on the Gov.uk website illustrates the point:

If you buy a new vacuum cleaner for your own home, and also use it to clean your rental property between tenants, you can’t claim the cost of the vacuum cleaner as an expense against your rental income.

However, you could claim the cost of any cleaning products you bought specifically for cleaning the rental property.

Where costs are incurred partly for your rental business and partly for some other purpose you may be able to claim a proportion of that cost if that part can be separately identified as being incurred wholly and exclusively for the purposes of the property rental business.

Expenses you can and can’t claim are summarised below.

Expenses you can claim include:

  • Mortgage interest – a proportion of this cost is now limited to basic rate Income Tax relief,
  • General maintenance and repairs to the property, but not improvements (such as replacing a laminate kitchen worktop with a granite worktop)
  • Water rates, council tax, gas and electricity
  • Insurance, such as landlords’ policies for buildings, contents and public liability
  • Costs of services, including the wages of gardeners and cleaners
  • Letting agent fees and management fees
  • Legal fees for lets of a year or less, or for renewing a lease for less than 50 years
  • Accountant’s fees
  • Rents (if you’re sub-letting), ground rents and service charges
  • Direct costs such as phone calls, stationery and advertising for new tenants
  • Vehicle running costs (only the proportion used for your rental business) including mileage rate deductions for business motoring costs

Expenses you can’t claim a deduction for include:

  • The full amount of your mortgage payment – only the interest element of your mortgage payment can be offset against your income,
  • Private telephone calls – you can only claim for the cost of calls relating to your property rental business,
  • Clothing – for example if you bought a suit to wear to a meeting relating to your property rental business, you can’t claim for the cost as wearing the suit is partly for your rental business and partly to keep you warm – no identifiable part is for your property rental business,
  • Personal expenses – you can’t claim for any expense that was not incurred solely for your property rental business.
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