What are the Allowable Expenses for Private Residential Landlords

When it comes to managing your finances as a landlord, there are several important aspects to consider, including expenses, your self-assessment, SA109 forms, and whether or not to use an online tax software.

Understanding these key elements can help you navigate the complexities of the tax system and ensure that you are maximising your deductions while remaining compliant with the law.

21 Allowable Expenses for Landlords

Here is the list of some of the most common deductions that landlords can use to reduce their overall tax bill:

1. Window Replacement

The expense of repairing a broken window is usually the responsibility of the renter. However, window replacement can be claimed as an admissible expense if the damage was not their fault (for example, due to vandalism).

2. Collapsed Boiler

When a renter informs you that their boiler is broken or unplugged entirely, it's not exactly good news. Like-for-like replacement costs and repairs are completely permitted.

Note: Only like-for-like replacements are eligible for reimbursement; the value cannot be higher. For instance, if you install a shower that costs twice as much as the market value of the shower you removed, you may only deduct half of the expenditures from your permitted expenses.

3. Maintenance of Brickwork

Expenses for stone cleaning, brick repair and repointing on your rental property are also permitted. If you want to perform it yourself, you can deduct the cost of renting the necessary equipment.

4. Leakage of Gas or Water

While gas leaks can occur at any time of the year, burst pipes often occur during the winter. Both of these repair expenses and those related to electrical issues in your home are covered.

5. Guttering and Roof Slates/Tiles

Strong winds have the potential to seriously harm a building's roof, especially an older one. These repairs are also eligible for reimbursement by landlords.

Note: Although HMRC may request to view your maintenance and repair cost invoices as proof, you are not required to provide these with your tax return.

6. Updated Bathroom

It is perfectly OK to replace a shower, bathtub, washbasin, or toilet—as long as you replace "like for like." This also applies to replacing taps, cabinets, sinks, and other kitchen fixtures.

7. Treating Damp

The three varieties of damp that are frequently seen in buildings are penetrating damp, which occurs when water leaks into a structure via a wall, roof, or ceiling; rising damp, which occurs when water rises up into a property from the ground; and condensation damp, which is caused by inadequate ventilation. Expenses related to treating penetrating damp, rising damp, or condensation damp can be claimed.

8. Renovation

It is advised to perform this at least every five years, however, depending on your needs, you could choose to do it in between leases. Redecorating is acceptable since it falls under the category of property maintenance rather than improvement.

9. Service Charges and Ground Rents

Ground rents and service fees may add up for landlords in some cases, especially for rental buildings. Ground rentals often fall within the range of £250 to £700 annually, while service fees may surpass £2,000 annually. Thankfully, both are an acceptable tax deduction.

10. Gardening and Cleaning Fees

Regular gardening expenses and end-of-tenancy cleaning costs are legitimate expenses that can be claimed as deductions.

11. Charging Agent Deposits

If you use a leasing agent, you can deduct tenant-finder charges and monthly administration fees from your rental income.

12. Certain Legal Costs

You are not allowed to deduct legal costs incurred while renting out your home for the first time or for a period longer than a year. However, costs for stays of a year or less are allowed. It is also permissible to deduct regular legal and professional expenses for the renewal of a lease that is less than 50 years old.

13. Insurance

Getting landlord insurance gives you peace of mind to safeguard your rental property, yourself, and your renters. While landlord insurance is typically required by mortgage lenders, standard house insurance plans are not intended for rental property. Landlords can deduct fees related to property appraisal for insurance reasons.

14. Utilities

Although renters are often in charge of these, there may be gas, electricity, and water bills that need to be paid when a property is unoccupied. All of them are legitimate costs which can be deducted.

15. Taxation of Council

The majority of the time, tenants are in charge of paying any applicable council taxes on a property. Nonetheless, there may be situations in which a landlord is required to pay Council Tax—a legitimate expenditure to deduct.

16. Advertising For New Renters

You can write off the cost of your offline or online advertisements for new renters in your local newspaper.

17. Costs of Vehicles and Fuel

It can be necessary for you to travel in your van, automobile, or motorcycle in order to manage your property. You may deduct the part of your car and fuel expenses that are linked to your rental property. Additionally, parking is claimable; however, parking and speeding penalties are not!

18. Disposal Costs

You can deduct acceptable expenses to offset the cost of hiring someone to come remove an outdated bed, wardrobe, or electrical device from your home.

19. Accounting Fees

Fees paid to accountants for tax guidance and assistance with financial records are deductible expenses.

20. Phone Calls

Whether you use your landline or cell phone, you may have a lot of calls to make if you handle the tenant selection and management process on your own. One may deduct the share connected to the landlord from their permissible expenses.

21. Landlord Association Subscriptions

UK landlords are represented by a number of regional and national groups, which you may join to get several advantages. Your subscriptions are deductible as a legitimate cost.

Final Thoughts

As a private residential landlord, understanding and claiming allowable expenses is crucial for minimising your tax liability and maximising your rental income. UK self-assessments are complicated, especially for landlords claiming acceptable costs. An online tax software like Taxd can help you maximise deductions and comply with tax laws.

Remember, the SA109 form is crucial to claiming private residential landlord fees. You can lower your taxable income by correctly completing this form and adding supporting paperwork to support your expenditure claims.

FAQs

1. What are some allowable expenses for private residential landlords?

There are many allowable expenses for landlords, including repairs and maintenance, gardening and cleaning fees, agent fees, legal costs, insurance, utilities, council tax, and advertising for new tenants.

2. How can I claim allowable expenses?

You can claim allowable expenses by keeping a record of your receipts and invoices, and then completing the SA109 form when you file your tax return.

3. What is the SA109 form?

The SA109 form is used to claim allowable expenses as a private residential landlord. By accurately completing this form and attaching supporting documentation, you can substantiate your expense claims and reduce your taxable income.