Sort the year's costs
Finance costs
Letting and running costs
Repairs and replacements
Professional fees and travel
Allowance, joint owners and records
The test every expense has to pass
HMRC allows a cost against rent if it's wholly and exclusively for renting out the property. Running costs pass. Capital spending, such as buying the property or improving it beyond wear-and-tear repairs, doesn't, though it may reduce a gain when you sell.
Finance costs are a third category. Individual landlords can't deduct residential mortgage interest. Instead, HMRC gives a tax reduction at the basic rate.
Related
What else will you need?
- SA105SA105 UK property pagesSA105 is the UK property section of the Self Assessment return.
- TemplateLandlord income and expenses trackerA landlord income and expenses tracker records every rent receipt and cost through the tax year, so the property pages of your tax return take minutes.Excel
- ChecklistScottish landlord tax packLandlords with property in Scotland should record who owns each property, keep mortgage interest apart from other costs (it gives a basic-rate tax credit, not a deduction), keep receipts for allowable expenses, check their Scottish Income Tax band, budget for LBTT and the Additional Dwelling Supplement before buying, hold a council licence before taking short-term let bookings, and check whether Making Tax Digital for Income Tax applies to their rent.
- ChecklistSelf Assessment documents checklistBefore you file a Self Assessment return, gather your UTR and National Insurance number, your Government Gateway sign-in, any P60, P45 or P11D, your business and rental income and expense records, interest and dividend statements, details of anything you sold that may have made a gain, and records of pension contributions and Gift Aid.PDF
Rather we did it?
Countify can handle this for you, for a fixed fee agreed upfront.
Questions
Frequently asked questions.
Can I claim the cost of new furniture?
Replacing an existing item like for like is claimable under replacement of domestic items relief. The cost of furnishing a property for the first time is not.
Should I use the property allowance or claim expenses?
You can't do both for the same income. If your expenses are higher than the £1,000 allowance, claiming them usually gives the larger deduction.
Is a new kitchen a repair?
Only if it restores what was there. Replacing a worn kitchen with a similar one is a repair; upgrading it is an improvement and is not deductible against rent.
Checked against GOV.UK on · Reviewed by Kamran Ishaq FCCA, Founder & CEO, on .
Sources: Renting out your property: paying tax (opens in a new tab) (HM Revenue & Customs); Work out your rental income when you let property (opens in a new tab) (HM Revenue & Customs); Changes to tax relief for residential landlords: how it's worked out (opens in a new tab) (HM Revenue & Customs); Tax-free allowances on property and trading income (opens in a new tab) (HM Revenue & Customs); Income Tax: declaration of beneficial interests in joint property and income (Form 17) (opens in a new tab) (HM Revenue & Customs); Business records if you're self-employed: how long to keep them (opens in a new tab) (HM Revenue & Customs).