Landlord allowable expenses and Section 24 (UK)

Allowable expenses for landlords

Costs count if they are wholly and only for the letting. The usual ones are:

• General maintenance and repairs to the property
• Water rates, council tax, gas and electricity, if you pay them
• Buildings, contents and public liability insurance
• Letting agent and management fees
• Services you pay for, such as a gardener or cleaner
• Ground rent and service charges
• Accountant's fees, and legal fees for lets of a year or less
• Direct costs such as phone calls, stationery and advertising for tenants
• The business share of travel to the property, including at the mileage rate

You cannot claim the capital part of mortgage repayments, private phone calls, clothing or personal spending.

Repairs or improvements?

A repair puts something back the way it was, and is an expense. An improvement adds something new or better, and is a capital cost you cannot take off the rent.

Keep records of capital costs anyway: they can reduce the Capital Gains Tax when you sell.

Replacing furniture and appliances

For a let house or flat, you can claim the cost of replacing furniture, furnishings, appliances and kitchenware, such as a sofa, bed, fridge or carpets, less anything you got for the old item. You cannot claim the first purchase, only replacements. If the new item is an upgrade, such as a sofa bed for a sofa, claim only what a like-for-like replacement would have cost, though a modern equivalent such as a more efficient fridge counts in full.

Section 24: mortgage interest and the 20% credit

"Section 24" is the common name for the rule that restricts tax relief on finance costs for individual landlords letting homes. It has applied in full since 2020/21 and still applies in 2025/26 and 2026/27. It covers mortgage interest, interest on loans to buy furnishings, overdraft interest, and fees for arranging the loans. Limited companies are not affected.

Instead of taking finance costs off the rent, you get a tax reduction of 20% of the lowest of:

1. your finance costs for the year (plus any carried forward),
2. your property profits for the year, and
3. your income above the Personal Allowance, not counting savings and dividend income.

The credit cannot create a refund. If it is limited by the second or third figure, the unused part carries forward to the next year.

Worked example

Sam earns a salary over £50,270, so is a higher-rate taxpayer in England, and lets one flat in 2026/27: rent £12,000, other allowable costs £2,000 and mortgage interest £6,000.

If interest could still be taken off the rent, the profit would be £4,000 and the tax £1,600. Section 24 costs Sam £1,200 a year. A basic-rate taxpayer with the same flat pays £2,000 less the £1,200 credit, so £800: the same as before. But because the interest is no longer deducted, the higher profit can push a basic-rate landlord's income over the higher-rate threshold, and then Section 24 starts to cost them too.

The £1,000 property allowance

Each person gets a £1,000 property allowance a tax year. If your rental income before costs is £1,000 or less, you do not need to tell HMRC about it. Between £1,000 and £2,500, contact HMRC; above £2,500, you need to register for Self Assessment.

If your income is over £1,000, you can take £1,000 off it instead of claiming your actual costs, which suits people letting a driveway or storage space with almost no costs. You cannot use the allowance if you claim finance cost relief on a residential let, and it does not cover income under the Rent a Room scheme, which has its own £7,500 tax-free limit (£3,750 if the income is shared) for letting a room in your own home.

Joint owners

• Married couples and civil partners who live together are usually taxed 50:50 on joint property, whatever their shares. If you actually own it in unequal shares, you can be taxed on those shares by sending HMRC a declaration of beneficial interests.
• Other joint owners are usually taxed on their share of ownership, unless they agree a different split of the profits.
• Each joint owner gets their own £1,000 property allowance against their share of the rent, and adds their share to any property they own alone.

Making Tax Digital for landlords

Making Tax Digital for Income Tax means keeping digital records and sending HMRC quarterly updates through compatible software. Whether you must join depends on your qualifying income: your rent and self-employed takings added together, before expenses. For jointly owned property, count only your share.

For example, £32,000 of rent and £21,000 of self-employed takings in 2024/25 makes £53,000, so you should have started from 6 April 2026. HMRC uses your tax returns to decide, and some people can apply for an exemption.

When you sell

Selling a let property at a gain usually means Capital Gains Tax: for 2026/27, 18% on gains within your basic-rate band and 24% above, after a £3,000 tax-free allowance. For UK residential property you must report and pay within 60 days of completion. The Capital Gains Tax Calculator works out the tax and the 60-day date, and the Buy-to-Let Deal Analyser compares owning in your own name with a limited company before you buy.

Sources

Every rate and rule on this page was checked on GOV.UK on 8 November 2026.

• Income Tax when you rent out a property: working out your rental income
• Changes to tax relief for residential landlords: how it's worked out
• Tax-free allowances on property and trading income
• Rent a room in your home
• Check if you're eligible for Making Tax Digital for Income Tax
• Work out your qualifying income for Making Tax Digital for Income Tax
• Income Tax rates and allowances, 2026/27
• Capital Gains Tax rates, 2026/27
• Report and pay Capital Gains Tax on UK property

Planning tool, not tax advice. This guide explains the general GOV.UK rules in plain English. Your own position can differ: check GOV.UK, ask HMRC, or speak to an accountant if you are unsure.