Buy-to-Let Tax: What You Can (and Can’t) Claim Anymore – UK Guide 2025/26

If you own a rental property, you’ve probably wondered exactly what expenses you can claim against your rental income. And if you’ve been a landlord for a while, you’ve definitely noticed the rules have changed.

Let me explain what you can still claim, what you can’t, and how to make sure you’re not paying more tax than you need to – or claiming things that’ll get you in trouble with HMRC.

The Big Change: Section 24

Before we get into the detail, you need to understand the single biggest change to buy-to-let tax in recent years.

Until April 2020, you could deduct your mortgage interest from your rental income before calculating tax. If you had £15,000 rental income and £8,000 mortgage interest, you paid tax on £7,000 profit (minus other expenses).

Now? You can’t deduct mortgage interest at all when calculating your profit. Instead, you get a 20% tax credit after you’ve worked out your tax bill.

This is called Section 24, and it fundamentally changed what landlords pay in tax – especially higher-rate taxpayers.

Example:

Rental income: £15,000

Mortgage interest: £8,000

Other expenses: £2,000

Old system (pre-2020):

Profit: £15,000 – £8,000 – £2,000 = £5,000

Tax at 40%: £2,000

New system (2020 onwards):

Profit: £15,000 – £2,000 = £13,000 (can’t deduct mortgage interest)

Tax at 40%: £5,200

Less 20% tax credit on £8,000 mortgage interest: -£1,600

Final tax: £3,600

Same property, same income, but £1,600 more tax.

This is why so many landlords have moved to limited companies – companies can still deduct mortgage interest as a business expense.

What You Can Still Claim

Let me break down exactly what expenses you can deduct from your rental income for tax purposes.

Property maintenance and repairs

You can claim the cost of keeping the property in good repair:

• Fixing a broken boiler

• Replacing damaged windows

• Repairing a leaking roof

• Repainting interior walls

• Fixing damaged flooring

• Plumbing repairs

• Electrical repairs

Important: Repairs are different from improvements. You can’t claim for adding a conservatory or converting a garage – those are capital improvements, not repairs.

Rule of thumb: If you’re putting it back to how it was, it’s a repair (claimable). If you’re making it better than it was, it’s an improvement (not claimable).

Property management fees

If you use a letting agent, their fees are fully deductible:

• Monthly management fees

• Tenant find fees

• Inventory fees

• Rent collection charges

• Property inspection costs

Insurance

All insurance related to the rental property is claimable:

• Buildings insurance

• Contents insurance (if you’re providing furnished property)

• Landlord insurance

• Public liability insurance

• Rent guarantee insurance

Legal and professional fees

You can claim:

• Accountancy fees for preparing your rental accounts and tax return

• Legal fees for tenancy agreements (but NOT for buying the property)

• Fees for evicting tenants

• Debt collection fees

• Professional association memberships related to property letting

Utilities and services

If you pay for utilities between tenancies or provide them as part of the tenancy:

• Council tax (when property is empty between lets)

• Water rates

• Electricity

• Gas

• Internet (if provided to tenants)

Ground rent and service charges

If you own a leasehold property:

• Annual ground rent

• Service charges

• Building management fees

These are fully deductible.

Replacement of domestic items

Since April 2016, you can claim the cost of replacing (but not initially buying) furnishings:

• Furniture (beds, sofas, tables, chairs)

• Curtains and blinds

• Carpets and flooring

• White goods (fridges, washing machines, ovens)

• Crockery and cutlery

• Bedding and linens

Important: You can only claim the replacement cost, not the initial purchase. And you can’t claim if you’re upgrading – only like-for-like replacement.

Travel costs

You can claim mileage for property-related journeys:

• Visiting the property for inspections

• Traveling to meet tenants

• Going to collect rent (if you do that)

• Visiting suppliers for materials

Current HMRC mileage rate: 45p per mile for first 10,000 miles, 25p thereafter.

You can’t claim your commute to your main place of work, even if that’s a rental property office.

Advertising for tenants

• Rightmove/Zoopla listings

• Local newspaper ads

• Online advertising

• Signboards

All fully claimable.

Other allowable expenses

• Phone bills (portion related to rental business)

• Stationery and office costs

• Bank charges for rental account

• Credit card fees for property purchases

• Cleaning between tenancies

• Gardening and grounds maintenance

What You Can’t Claim Anymore (or Never Could)

Mortgage interest (for personal landlords)

This is the big one. You can’t deduct mortgage interest when calculating your profit. You only get a 20% tax credit after you’ve calculated your tax bill.

If you’re a higher-rate (40%) or additional-rate (45%) taxpayer, this hurts. You’re effectively getting 20% relief instead of 40% or 45%.

Note: Limited companies CAN still deduct mortgage interest. This is why incorporation has become popular.

Furniture costs (initial purchase)

You can’t claim the cost of furnishing a property for the first time. You can only claim replacements.

So if you buy a brand new rental property and spend £5,000 furnishing it, that’s not deductible. But when you replace that £500 sofa in three years, the replacement IS deductible.

Capital improvements

Anything that improves the property beyond its original state isn’t deductible:

• Extensions

• Loft conversions

• New conservatory

• Upgrading single glazing to double glazing (improvement, not repair)

• Installing central heating where there was none

• Adding a new bathroom (rather than replacing fixtures)

These costs may reduce your capital gains tax when you sell, but they don’t reduce your rental income tax.

Your own labor

If you do repairs yourself, you can claim the cost of materials but not your time. You can’t pay yourself a wage for painting the property or fixing the fence.

Mortgage capital repayments

Only the interest portion of your mortgage is relevant (and even that’s only a 20% credit now). The capital repayment part has never been deductible.

Legal fees for purchasing the property

When you buy a property, the legal fees, survey costs, and stamp duty are capital costs. They’re not deductible from rental income (though they may reduce capital gains tax when you sell).

Pre-letting expenses

You can’t claim expenses before the property is available to let. If you buy a property and spend six months renovating before it’s rentable, those costs aren’t deductible against rental income.

Depreciation

Unlike businesses, you can’t claim depreciation on the property or its furnishings. You claim actual replacement costs when items are replaced, not accounting depreciation.

The Replacement Domestic Items Relief – How It Actually Works

This confuses a lot of landlords, so let me clarify.

Before April 2016: There was a “Wear and Tear Allowance” of 10% of rent for furnished properties. You claimed it automatically whether you spent anything or not.

From April 2016 onwards: That’s gone. Instead, you claim actual costs of replacing domestic items.

What this means:

You buy a £400 sofa to replace a broken one. You can claim £400.

You buy a £600 fridge-freezer to replace a broken £400 one. You can only claim £400 (the like-for-like replacement cost), not the £600 upgrade.

You install a dishwasher where there wasn’t one before. You can’t claim anything – that’s an addition, not a replacement.

What counts as a domestic item:

Moveable furniture and furnishings. Things that aren’t permanently fixed to the property.

What doesn’t count:

Fitted kitchens, bathroom suites, boilers, radiators. These are part of the property itself, not domestic items.

If you’re replacing a bathroom suite, that’s a repair (if like-for-like) or an improvement (if upgrading). It’s not covered by replacement domestic items relief.

How to Track Your Expenses Properly

HMRC doesn’t need receipts with your tax return, but they can ask for them later. If you can’t prove an expense, they’ll disallow it and charge you the tax plus interest and potentially penalties.

Keep everything:

• Receipts for all expenses

• Invoices from tradespeople

• Bank statements showing payments

• Mileage logs for property-related travel

• Photos of repairs (before and after)

How long to keep records:

Legally, you must keep records for at least 5 years after the 31 January tax return deadline.

So for the 2025/26 tax year (return due 31 January 2027), keep records until at least 31 January 2032.

Digital records:

With Making Tax Digital coming in, you’ll need to keep digital records anyway from:

• 6 April 2026 if your rental income exceeds £50,000

• 6 April 2027 if your rental income exceeds £30,000

• 6 April 2028 if your rental income exceeds £20,000

Start going digital now – take photos of receipts, use accounting software, keep everything in cloud storage.

Common Mistakes Landlords Make

Claiming improvements as repairs

Installing better windows than before? That’s an improvement. Replacing like-for-like broken windows? That’s a repair.

HMRC looks at this closely. If in doubt, err on the side of caution.

Not understanding the mortgage interest change

Many landlords still think they can deduct mortgage interest like they used to. They can’t. It’s a 20% credit, not a deduction.

This catches people out particularly if they’re higher-rate taxpayers who assume they’re getting 40% relief.

Claiming personal use

If you use the property yourself (holiday home you also rent out, live in it part-time), you need to apportion expenses between personal and rental use.

You can’t claim 100% of costs if you’re using it 30% of the time personally.

Missing legitimate claims

The opposite problem: not claiming things you’re entitled to. Mileage, portion of home office costs (if you manage multiple properties), professional subscriptions.

Make sure you’re claiming everything you legitimately can.

No proper records

“I definitely spent about £2,000 on repairs” doesn’t cut it. No receipts = no claim if HMRC investigate.

Special Cases

Furnished Holiday Lets (FHLs)

As of 6 April 2025, the special tax regime for FHLs was abolished. They’re now treated the same as standard residential lettings for tax purposes.

This means:

• You face the same Section 24 mortgage interest restrictions (20% credit, not full deduction)

• You can’t claim capital allowances on furniture and equipment anymore

• You can only claim replacement domestic items relief like standard landlords

Rent-a-room relief

If you’re renting out a room in your own home, you can earn up to £7,500 tax-free (2025/26) under the rent-a-room scheme.

If you earn more than that, you can either:

• Pay tax on the amount over £7,500, or

• Pay tax on your actual profit (income minus expenses)

Choose whichever gives you the lower tax bill.

Commercial property

Different rules entirely. If you let commercial property (offices, shops, warehouses), you CAN still deduct mortgage interest in full. Section 24 doesn’t apply to commercial property.

What About Limited Companies?

If you own rental property through a limited company, almost everything I’ve said above changes.

Companies CAN:

• Deduct full mortgage interest as a business expense

• Claim capital allowances on some items

• Offset legitimate business expenses

But:

• You pay corporation tax (19-25%) on profits

• Then dividend tax (33.75% for higher-rate taxpayers) when you extract money

• More admin, higher accounting costs

For higher-rate taxpayers with significant mortgages, limited companies often save tax overall. But not always – it depends on your specific circumstances.

The Bottom Line

What you can claim has changed significantly since 2016-2020. The mortgage interest restriction (Section 24) is the biggest change, particularly painful for higher-rate taxpayers.

Make sure you’re:

• Claiming all legitimate expenses (repairs, management fees, insurance, utilities, replacements)

• Not claiming things you can’t (improvements, initial furnishings, mortgage capital)

• Keeping proper records for everything

• Understanding that mortgage interest is now a 20% credit, not a full deduction

• Considering whether your structure (personal vs company) still makes sense

The rules are complex, they’ve changed recently, and they’ll probably change again. If you’re not sure whether something’s claimable, ask before you put it on your tax return.

Getting it wrong either way costs you – either in overpaid tax or in penalties when HMRC investigate.

Frequently Asked Questions

Can I claim mortgage interest on my rental property?

Not as a deduction, no. You get a 20% tax credit on mortgage interest, but you can’t deduct it from your rental income when calculating profit. This changed in April 2020 under Section 24. If you’re a higher-rate taxpayer (40% or 45%), this significantly increases your tax bill compared to the old system.

What’s the difference between a repair and an improvement?

A repair restores something to its original condition (claimable). An improvement makes it better than it was (not claimable against rental income). Replacing broken roof tiles is a repair. Adding a whole new extension is an improvement. Grey areas exist – like replacing single glazing with double glazing, which HMRC usually treats as an improvement.

Can I claim for furnishing my rental property?

Not the initial furnishing, no. You can only claim the cost of replacing domestic items (furniture, appliances, curtains, carpets) that wear out. And you can only claim like-for-like replacement cost, not upgrades. The old 10% Wear and Tear Allowance ended in April 2016.

What travel can I claim for my rental property?

Mileage for property-related journeys at 45p per mile (first 10,000 miles). This includes visiting the property for inspections, meeting tenants, collecting rent, visiting suppliers. You can’t claim commuting to your main place of work, even if that involves property management.

Do I need to keep receipts for everything I claim?

Yes. HMRC can ask for evidence of any expense you’ve claimed, potentially up to 6 years later. No receipt = no proof = claim disallowed plus potential penalties. Keep physical receipts, digital copies, invoices, bank statements – anything that proves the expense.

Can I claim accountancy fees for my rental property tax return?

Yes, accountancy fees for preparing your property tax return and rental accounts are fully deductible. This is a legitimate business expense.

What happens with Making Tax Digital for my rental property?

From 6 April 2026 (if gross rental income exceeds £50,000), you’ll need to keep digital records and submit quarterly updates to HMRC. This means using MTD-compatible software to track income and expenses. Additional accounting costs typically £900-1,200 plus VAT/year.

Can I claim for time I spend managing the property myself?

No. You can’t pay yourself a wage or claim for your own time. You can claim actual costs (materials, professional fees, mileage) but not the value of your own labor.

Are legal fees for evicting a tenant tax-deductible?

Yes. Legal fees related to running the rental business (evictions, tenancy agreements, rent collection) are claimable. Legal fees for purchasing the property are not – those are capital costs.

Can I claim buildings insurance and contents insurance?

Yes, both are fully deductible. Any insurance related to the rental property (buildings, contents, landlord insurance, rent guarantee, public liability) is an allowable expense.

Need help with your rental property tax? Property tax is what we do. We can review what you’re claiming, make sure you’re not missing legitimate expenses, and ensure you’re structured in the most tax-efficient way for your situation.