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Landlord expenses: What you can claim and how to do it
Landlords can claim for many reasonable expenses against their rental income in order to reduce the tax they pay. This guide explains the process and explores top statistics on the amount of expenses paid in the UK.
As a landlord, whether you rent just one property or a whole portfolio, the costs can really add up. One important way to save money is to work out what can be claimed as ‘landlord allowable expenses,’ which are then deducted from the profit your tax is calculated on.
What expenses can I claim as a landlord?
There are a variety of expenses which are deemed ‘allowable’ in the process of renting out a property, that you may be able to claim against, including:
Maintenance and repairs
Replacement of furniture, so long as it is like-for-like
Landlords’ insurance, including buildings, liability, and contents
Letting agents’ fees
Costs related to finding a new tenant, including phone calls and advertisements
Ground rent (the rent paid by a leaseholder to the freeholder of the land
If you have a buy-to-let mortgage on your property which you increase, you may be able to consider interest on the additional loan as a revenue expense, allowing you to claim it against your income tax. This is only as long as you are using a limited company, as individual landlords no longer benefit from this, and the additional loan is solely for the purposes of your letting business.
What expenses can I not claim as a landlord?
You cannot claim on ‘capital expenses,’ which are any improvements made to the property which will be used for a long period of time, including:
If you add something new to the property
If you alter or upgrade anything existing in the property
Some examples of these capital expenses are property extensions, replacing a kitchen or bathroom to a higher specification, and installing gates or security measures not already in place.
How to claim landlord expenses
You must keep an accurate record of all the rent you receive and the expenses incurred (including receipts).
Your expenses are claimed against your rental income tax.
To determine how much tax you must pay, you should:
Calculate your profit by deducting all of your landlord allowable expenses from your rental income
Calculate your tax band by adding your profit to all other streams of income you may have (i.e. your job and/or pension)
Deduct your buy-to-let tax relief, if eligible (20% tax relief against your mortgage interest payments)
For more advice and guidance, head to our comprehensive landlord hub.
UK landlord expense claim statistics
Total declared rental property expenses by landlords over time
The total annual rental property expenses declared by individuals and partnerships increased by £0.98 billion between 2017/18 and 2021/22 (the latest available tax year). This represents an increase of 4.37%.
A breakdown of the total allowable rental property expenses declared by unincorporated individuals and partnerships in the latest available tax years (£ billions)
| Tax entity | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 |
|---|---|---|---|---|---|
| Individuals | 19.36 | 19.77 | 20.05 | 19.12 | 20.39 |
| Partnerships | 3.08 | 3.24 | 3.45 | 3.04 | 3.03 |
| Total | 22.44 | 23.01 | 23.5 | 22.16 | 23.42 |
(Source: HMRC / GOV.UK)
Individual landlords increased their expense claims by 5.32% between 2017/18 and 2021/22, from £19.36 billion to £20.39 billion (+£1.03 billion). Expenses claimed by this group peaked in 2019/20 at £20.05 billion.
Expenses claimed by landlord partnerships decreased over the five-year period, from £3.08 billion to £3.03 billion, a decrease of 1.62%. As with individual landlords, expenses claimed by this group reached their peak in 2019/20 at £3.45 billion.
Average UK rental property expenses claimed by landlords over time
While individual landlords represent the most expenses claimed, in terms of average expenses claimed per tax entity, landlord partnerships far outspend their individual counterparts.
A breakdown of the average allowable rental property expenses declared by unincorporated individuals and partnerships in the latest five available tax years
| Tax entity | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 |
|---|---|---|---|---|---|
| Individuals | 7,800 | 7,900 | 8,100 | 7,700 | 8,200 |
| Partnerships | 139,800 | 141,000 | 145,000 | 127,300 | 127,000 |
| Total | 9,000 | 9,100 | 9,300 | 8,900 | 9,400 |
(Source: HMRC / GOV.UK)
Despite a drop of 9.16% between 2017/18 and 2021/22, landlord partnerships still claim average rental property allowable expenses of £127,000 per year.
Meanwhile, the average expenses claimed by individual landlords have increased by 5.13%, from £7,800 to £8,200 a year.
Most common expenses claimed by landlords
The most common expenses claimed by landlords are against rent, rates and insurance, and against repairs and maintenance, with both expense types claimed by two-thirds (66%) of individual and partnership landlords.
A breakdown of allowable rental property expenses declared by unincorporated individuals and partnerships, broken down by expense type, in 2021/22
| Expense type | No. declaring (millions) | Percentage of landlords declaring | Total declared (£ billion) |
|---|---|---|---|
| Rent, rates & insurance | 1.88 | 66 | 2.91 |
| Repairs & maintenance | 1.87 | 66 | 5.5 |
| Finance costs | 1.26 | 45 | 6.85 |
| Legal, management & professional fees | 1.73 | 61 | 3.4 |
| Services, including wages | 0.45 | 16 | 1.23 |
| Other allowable expenses | 1.14 | 40 | 3.54 |
| Total | 2.5 | 89 | 23.42 |
(Source: HMRC / GOV.UK)
In terms of money, the most is claimed against finance costs, with 45% of landlords' claims totalling £6.85 billion.
Services, including wages, is the least claimed expense, with just 16% of landlords making a claim in this area and the total declared reaching £1.23 billion.
Number of landlords declaring rental property expenses by UK region
In 2021/22, 2501 individual and partnership landlords claimed rental property allowable expenses in the UK, a negligible increase of 0.16% over 2017/18 (2497).
A breakdown of the number of unincorporated individuals and partnerships declaring allowable rental property expenses, broken down by geographical region, in the latest five available tax years
| Region | 2021/22 |
|---|---|
| North East | 57 |
| North West | 191 |
| Yorkshire and The Humber | 153 |
| East Midlands | 155 |
| West Midlands | 172 |
| East of England | 261 |
| London | 430 |
| South East | 426 |
| South West | 263 |
| Wales | 91 |
| Scotland | 137 |
| Northern Ireland | 59 |
| Channel Islands | 2 |
| Isle of Man | 1 |
| Unknown | 103 |
(Source: HMRC / GOV.UK)
The majority of these landlords were located in London (430) and the South East (426). The tax year 2021/22 was the first year where the number of landlords claiming expenses in London surpassed the number of those claiming expenses in the South East.
Interested in becoming a private landlord? Learn more about becoming a buy-to-let landlord.
UK landlord income statistics
Number of landlords in the UK
In 2021/22, there were 2.82 million individual and partnership landlords (those claiming property income) in the UK, an increase of 3.3% from 2017/18 (2.73 million).
A breakdown of the number of unincorporated individuals and partnerships declaring UK property income in the latest five available tax years (millions)
| Tax entity | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 |
|---|---|---|---|---|---|
| Individuals | 2.7 | 2.74 | 2.77 | 2.77 | 2.79 |
| Partnerships | 0.03 | 0.03 | 0.03 | 0.03 | 0.03 |
| Total | 2.73 | 2.77 | 2.8 | 2.8 | 2.82 |
(Source: HMRC and GOV.UK)
The number of partnership landlords in the UK remained consistently around the 30,000 mark.
Meanwhile, the number of individual landlords increased by 90,000.
Total UK property income declared
The 2.82 million individual and partnership landlords in the UK in 2021/22 declared a combined £48.86 billion in property income. This is an increase of £4.33 billion, equivalent to 9.72%.
A breakdown of total UK property income declared by unincorporated individuals and partnerships in the latest five available tax years (£ billions)
| Tax entity | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 |
|---|---|---|---|---|---|
| Individuals | 38.92 | 40.06 | 40.94 | 40.51 | 42.69 |
| Partnerships | 5.61 | 6.03 | 6.51 | 5.86 | 6.17 |
| Total | 44.53 | 46.09 | 47.45 | 46.37 | 48.86 |
(Source: HMRC and GOV.UK)
The income of partnership landlords increased the most, from £5.61 billion to £6.17 billion, which is an increase of 9.98%.
Meanwhile, the total income declared by individual landlords increased only slightly less, at 9.69% (from £38.92 billion to £42.69 billion).
How much do landlords make?
The average property income of both individuals and partnership landlords increased by £1,000 between 2017/18 and 2021/22, equivalent to 6.13% (from £16,300 to £17,300).
A breakdown of the average UK property income declared by unincorporated individuals and partnerships in the latest five available tax years
| Tax entity | 2017/18 | 2018/19 | 2019/20 | 2020/21 | 2021/22 |
|---|---|---|---|---|---|
| Individuals | 14,400 | 14,600 | 14,800 | 14,600 | 15,300 |
| Partnerships | 185,600 | 194,500 | 206,500 | 186,300 | 196,800 |
| Total | 16,300 | 16,600 | 16,900 | 16,600 | 17,300 |
(Source: HMRC and GOV.UK)
The average property income declared by partnership landlords only increased by 6.03% (from £185,600 to £196,800), while the average declared by individual landlords increased by slightly more at 6.25% (from £14,400 to £15,300).
FAQs
Can you claim VAT on rental property allowable expenses?
As letting residential accommodation is VAT exempt, you in turn cannot reclaim VAT on expenses, including repair costs or agents’ fees.
Is landlord legal expenses cover worth it?
You may find yourself in a position where you need to take legal action against your tenant(s), usually in the case of rent arrears. Buy-to-let landlord insurance can provide a set amount to cover the legal expenses incurred here.
How much tax does a landlord pay on rental income?
The tax paid on your rental income is dependent on the profit made, as well as any other income sources you may have (such as a full-time job), and any tax relief you are entitled to.
To calculate how much tax you must pay on your rental income you need to calculate your profit, determine which tax band you fall into based on your income from the property and your job and/or pension, and deduct your buy-to-let tax relief.
Can a landlord make a profit on electricity? Can a landlord profit from utilities?
No, according to Consumer Rights, landlords cannot charge tenants more than the energy or water provider charges them.
Landlords must pass on any assistance they receive on their energy bills to the tenant.
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