When calculating your taxable rental income, you are allowed to deduct certain expenses from your rental income to arrive at your taxable profit. Here are some examples of allowable expenses against rental income:
Mortgage interest: You can deduct the interest you pay on a mortgage to buy or improve the rental property.
Council tax and utility bills: You can deduct the cost of council tax, gas, electricity, water and other utility bills paid by you, the landlord.
Repairs and maintenance: You can deduct the cost of repairs and maintenance to keep the property in good condition, such as fixing a leaking roof or replacing a broken window.
Insurance: You can deduct the cost of insuring the rental property, such as building and contents insurance.
Letting agent fees: You can deduct the cost of fees paid to a letting agent to manage the rental property.
Legal and professional fees: You can deduct the cost of legal and professional fees incurred in relation to the rental property, such as the cost of hiring a solicitor to draw up a tenancy agreement.
Advertising: You can deduct the cost of advertising for tenants, such as placing ads in local newspapers or online.
It's important to note that you cannot deduct the cost of improvements or capital expenditure, such as a new kitchen or bathroom. However, you may be able to claim capital allowances on certain items, such as furniture or equipment, if they meet certain criteria.
It's a good idea to keep accurate records and receipts to support your rental income and expenses, as HM Revenue and Customs (HMRC) may ask to see evidence of your income and deductions. If you're unsure about which expenses you can claim or need help with your tax return, you may want to consider consulting a tax professional or accountant.
