Landlord expense categories for HMRC

HMRC has specific rules about which expenses a landlord can deduct from rental income. Getting the categories right matters — overstating expenses risks a correction from HMRC, and understating them means you pay more tax than necessary. This guide covers the main categories for residential landlords in England. Reviewed May 2026.

The general rule

An expense is allowable if it is incurred wholly and exclusively for the purposes of the rental business. Personal expenses, one-off capital improvements, and the capital repayment element of a mortgage are not allowable.

The main allowable expense categories

Finance charges

The interest on a mortgage or loan used to purchase or improve a rental property is an allowable expense (subject to the residential finance cost restriction for higher and additional rate taxpayers — this affects how the relief is given, not whether the interest qualifies).

Note: The capital repayment part of your mortgage is not an allowable expense. Only the interest element qualifies.

Repairs and maintenance

Costs of keeping the property in the same condition it was when you let it — fixing a broken boiler, repainting, replacing a like-for-like appliance, repairing guttering, and similar ongoing maintenance.

Improvements that enhance the property beyond its original state are capital expenditure and are not allowable under repairs and maintenance.

Insurance

Buildings insurance, contents insurance for furnished properties, public liability insurance, and landlord-specific insurance policies.

Letting agent fees and property management

Fees paid to a letting agent for finding tenants, collecting rent, managing the property, or renewing tenancies. Also management fees if you use a property management company.

Ground rent and service charges

Ground rent paid to a freeholder and service charges on leasehold properties. Only the charges you actually pay (not any sinking fund contributions that have not been called) are typically allowable.

Legal, management and professional fees

Solicitor fees for tenancy agreements, accountant fees relating to your rental business, and similar professional costs. Legal costs relating to the purchase of a property are capital expenditure and not allowable here.

Utility costs

Gas, electricity, and water if you pay them as part of the tenancy arrangement. If the tenant pays their own utilities, you cannot claim these.

Other allowable costs

• Council tax (if you pay it during void periods or as part of the tenancy)
• Advertising costs for finding tenants
• Cleaning costs between lets
• Stationery, postage, and similar incidental costs

What is not allowable

• Mortgage capital repayments
• Your own time and labour
• Personal expenses or private use costs
• Capital improvements or renovations that enhance the property value
• Costs relating to purchasing the property

How categories work in TenancyVault

When you log an expense in TenancyVault or assign a category during bank statement review, you see plain-English names — “Repairs & maintenance”, “Insurance”, “Letting agent fees”. TenancyVault maps these to the correct HMRC property income category codes for your quarterly submission. You do not need to know the technical HMRC category identifiers.

If a transaction does not fit a standard category, you can leave it in a review category and assign it before submitting.

Common mistakes

• Claiming mortgage capital as an expense — only the interest element is allowable
• Claiming personal expenses — phone bills, home office costs, and similar mixed-use expenses need careful apportioning and often cannot be claimed at all
• Claiming capital improvements under repairs — replacing a kitchen with a superior model is an improvement, not a repair
• Missing finance cost restrictions — residential landlords cannot claim full mortgage interest deductions if they are higher or additional rate taxpayers; the relief is given as a tax credit instead

Not legal or tax advice. Expense rules can be complex — consult a qualified accountant or tax adviser for guidance on your specific situation.