As a landlord, understanding which expenses you can deduct from your rental income is crucial for minimising your tax liability. This comprehensive guide covers all allowable deductions for the 2025/26 tax year.
Mortgage Interest and Finance Costs
Since April 2020, mortgage interest is no longer deducted from rental income. Instead, you receive a 20% tax credit based on your finance costs. This applies to:
- Mortgage interest payments
- Interest on loans to purchase furnishings
- Fees incurred when taking out or repaying mortgages
Repairs and Maintenance
You can deduct the full cost of repairs and maintenance that keep your property in good working order:
- Fixing broken appliances
- Repairing structural damage
- Decorating and painting
- Maintaining gardens and grounds
Important: Improvements and renovations that add value are not deductible — these are capital expenses.
Property Management Fees
All costs associated with managing your rental property are deductible:
- Letting agent fees
- Property management company fees
- Advertising for tenants
- Tenant reference checks
Utility Bills and Services
If you pay utility bills for your rental property, these are fully deductible:
- Council tax (if you pay it)
- Water rates
- Gas and electricity (if not paid by tenants)
- Building insurance
- Ground rent and service charges
Professional Fees
Expenses for professional services related to your rental business:
- Accountant fees
- Legal fees for rental agreements
- Tax advisor consultations
- Software subscriptions (like Fylix)
Travel Expenses
You can claim mileage or actual costs for travel related to your rental property:
- Property inspections
- Meeting tenants or contractors
- Collecting rent (if done in person)
- Travelling to suppliers for materials
Use HMRC's approved mileage rate: 45p per mile for the first 10,000 miles, then 25p per mile thereafter.
Other Allowable Expenses
- Phone and internet costs (proportionate to rental use)
- Stationery and office supplies
- Bank charges for rental accounts
- Insurance premiums
- Inventory replacement (replacement of domestic items)
"Many landlords miss out on legitimate deductions simply because they don't track expenses properly. Digital tools make it easy to capture every deductible expense throughout the year." — Sarah Mitchell, Property Tax Specialist
What You Cannot Deduct
Be aware of expenses that are NOT deductible:
- Mortgage capital repayments
- Improvements and renovations
- Initial costs of furnishing a property
- Personal expenses
Record-Keeping Tips
To claim these deductions, you must keep proper records:
- Keep all receipts and invoices
- Use accounting software to categorise expenses
- Maintain a mileage log for travel claims
- Photograph any major repairs or maintenance work
- Store records for at least 6 years
Fylix automatically categorises your expenses and generates reports for your tax return, making it easy to maximise your deductions while staying compliant.