Rental Expenses – What is Allowed?


With the introduction of making tax digital (MTD) in upcoming years, Accountants Windsor realise that HMRC intend to include most landlords in rental businesses in this scheme as they view this group of entrepreneur’s high risk and error prone when it comes to claiming proper expenses, reliefs and eventual taxable rentals.

This has been partly due to lack of understanding and application of tax rules owing to their complex nature and lack of proper advice.

Capital VS Revenue

Most landlords tend to take the view that any expenditure they have incurred is simply tax allowable and reduce their tax bill proportionately.

This is especially true when it comes to distinguish between the Revenue and capital expenditures.

Capital expenditure mainly relate to make significant improvement in a property like a new extension or making long term structural changes or any repairs which are not incidental and have long term benefit. All such expenses are not allowed for purpose of calculating taxable rentals. Instead they are pooled separately and allowed against future capital gains from the property in question.

There is a fine line between the two types of expenses and without proper understanding and advice form accountants in slough it is higher chance of making a wrong claim.

For example: A simple re-decoration, painting, repairs to a buy to let property may be claimed as revenue expenditure against your gross rentals, however slough accountants stress that if the same property was bought at a significantly lower price owing to it’s deteriorated condition requiring extensive work to be carried out before it is let, then all those expenses will be treated as capital expenditure and hence not allowed in calculation of normal taxable rentals.

Same principal would apply to any non-incidental improvements where for example a £500 boiler is needs replacing is changed with a new one costing £800 or a normal door costing £50 is replaced with a special one costing £400 even though the original replacement would have sufficed for repairs.

Capital Allowance (WDA) / Annual Investment Allowance (AIA)

These are only available on non-residential lettings on the purchase of fixture, plant & equipment etc. Introduced in 2008 AIA allows commercial landlord (rental business) to write off 100% of the qualifying capital items against the same period rental income. Windsor accountants learn that currently there is an annual limit of £200,000 on this.

All capital items above £200,000 threshold will be awarded relief by allowing a normal writing down allowance (WDA). This can be either at 8% or at rather higher rate of 18% depending on the type of expenditure.

Accountants in Ascot provide example of AIA eligible expenditure as:

Cooker/Boiler                    Electric/Water/Heating Systems                Alarms/Lifts                        Equipment Dishwasher/Washing machine                   Fridge/Freezer                  Wash basin/sink/shower/bath tub Furniture/carpet/curtains


Before we look at the other allowable rental revenue expenses, one must keep in mind that these expenses should be incurred wholly and exclusively for rental income generation only.

Mortgage Interest & Finance Charges

Until the tax year 2016/17, the landlords could offset the interest element of any mortgage against their rental income as accountants in Marlow practised. From tax year 2017/18 residential properties landlords will not be able to make a full 100% claim. A 1/4th reducing charge will come in force instead ending at an eventual 0% charge in 2020/21. Commercial properties are out of bound as far the application of this rule is concerned. This new rule effectively means that only 75% of the mortgage interest will be allowed in 2017/18, 50% in 2018/19, 25% in 2019/20. From 2020/21 any mortgage interest payment will only attract tax relief at 20% basic rate tax.

For example: an interest payment of say £5,000 will get £5,000 x 20%=£1,000 relief in total.

Only 40% higher rate tax payers will get the brunt of it whilst things remain the same for the basic rate tax payers.

Repairs & Maintenance

As discussed above in detail by accountants in Maidenhead, only revenue expenses are allowed under repair and maintenance head.

Furnished holiday lettings can also claim 10% wear and tear allowance over and above.

Accountants in Ascot suggests that following items may be claimed under repairs & maintenance:

  • Burst pipes
  • Repair to gas or water leaks
  • Electrical or other equipment faults
  • Replacement of broken window/door/tiles
  • Gardening costs
  • Repaint/Re-decorate to original specification.
  • Replacement of boiler/radiator/bath/fixture & fittings.

Property Management, Legal & Accountancy Fess

Apart form the fees paid at property purchase point all other costs may be claimed.


This include Property, Contents, Building insurance

Rent, Ground Rates, Council Tax

All claimable if they relate to the said property.

Freelance Wages

This includes costs to cover regular services e.g. cleaning, paid at a fixed rate to a self-employed person.


Any travelling costs relating to the property issues or tenant’s interaction/complaint can be claimed with bit of caution – do not over do it by claiming unreasonable amounts compared to rental volume.

General Admin

Any reasonable amount is allowed to cover printing, postage, stationery, telecoms, etc.

Use Of Home

A rather simple approach is to charge based on the number of hours worked for using private facilities as suggested by HMRC. E.g. 25-50 monthly hours = £10, 50-100 monthly hours=£18 and 101 onwards hours = £26 per month.

Furniture & Furnishing Replacement

Any costs in providing such items for tenant’s use are tax allowable e.g. TV, Beds, Dining table, Sofa etc.

How Can Accounttax Help You?

Helping business and professionals, accountants in slough as small business accountants and tax advisors have a strong idea of the needs and services you require. With our experience and the insight, which accountants in Windsor have gained over the years ensures professionalism with your best interests in mind.

Accountants Windsor can also stay on top of any legislation changes that may happen throughout the year. Ultimately, this will help accountants slough to understand your specific area weather it’s IT Contractors or CIS Contractors, Property landlords or Property developers, Doctors or solicitors, Small business or a limited company, which will then let accountants in Marlow to give you the best possible service that is tailored to you and your business’ needs.

We offer a range of accountancy services local to Windsor, Ascot and maidenhead can help you keep your business successful. Some of these services include:

  • Managing your accounts
  • Offering advice on tax planning and reducing your tax bill
  • Providing payroll and bookkeeping services
  • Helping you with VAT and Digital tax (MTD).
  • Completing and submitting your tax returns on your behalf

Accountants in maidenhead will support you and your business, by doing so you can rest and stop worrying about the business. You can trust our professionals to take care of your business for you. Now you can focus on being exceptional entrepreneur.

Contact Us Today

We pride ourselves on providing excellent services in Thames valley including slough, Marlow and Bracknell areas to businesses and professional clients who are keen to improve their business model. Working with us can ensure that you are well prepared for the future of your business with full control and confidence.

For more information on how we can support you and your practice, call us today on 01753 299 993.

Any reader interested in discussing this topic further can telephone Accounttax on 01753 299 993 in our Windsor office or on 01753 299 993 in our Slough office. You can also email

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The above information is provided for general guidance only without the taking any liability, written or implied, on the part of this firm, its officers and staff. It may not cover your specific business or personal situations, so you should avoid relying on it. It is important that you seek appropriate professional advice where you can provide the full facts of the case and all related documents. This firm or its officers cannot be held responsible for the consequences of any action or the consequences of determining not to act.

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