Local Accountants Blog – Claiming expenses for property rental?

As a landlord, the lower the taxable profit from your property rental business, the less tax you will pay.

As allowable expenses are deducted from rental income to arrive at the profit figure, it is important that you do not overlook any expenses which you have incurred, and which can be deducted when working out your taxable profits.

​What is deductible?

The general rule is expenses can be deducted in calculating the profits of your property rental business if they are incurred wholly and exclusively for the purposes of that business.

Revenue expenses can be deducted regardless of whether you prepare accounts on the cash basis or the accruals basis.

However, if you prepare accounts on the cash basis, you can also deduct many capital expenses (the main exceptions being the cost of cars and the property itself).

If accounts are prepared on the accruals basis, there is no deduction for capital expenditure when calculating profits (although relief may be available otherwise depending on the nature of the expenditure).

Expenses checklist

The following is a checklist of common expenses.

This can be used to check that you have not forgotten to deduct any when working out your taxable profit.

Remember to keep records of all expenses that you incur so they do not get overlooked.

Common expenses:

  • general maintenance and repairs to the property (but not improvements);
  • water rates;
  • council tax;
  • gas and electricity;
  • insurance (such as landlord’s insurance for buildings and landlord’s contents);
  • cleaning costs;
  • gardening costs;
  • letting agents’ fees;
  • property management fees;
  • legal fees for lets of less than a year or for renewing a lease of less than 50 years’
  • accountant’s fees;
  • office costs, such as stationery, paper, printing and postage;
  • advertising costs;
  • phone calls; and
  • rent where the property is sub-let.

Points to watch

If you use vehicles for your business, you can use simplified expenses to work out what you can deduct. This is based on a mileage rate of 45p for the first 10,000 business miles in the year and 25p per mile for any further business miles.

If you have incurred finance costs, such as mortgage interest relief, these cannot be deducted in working out profits. Instead, relief for 20% of the costs is deducted from the tax that you pay.

Trueman Brown Chartered Accountants: Your Partner in Tax Compliance

Navigating the intricate web of HMRC regulations can be overwhelming for taxpayers. Trueman Brown Chartered Accountants serve as invaluable allies, offering expert guidance to ensure compliance with tax regulations and bringing your tax affairs up-to-date.

Trueman Brown provides comprehensive services tailored to meet the specific needs of landlords:

  • Tax Compliance Assistance: Meticulously analyzing financial records to ensure accurate reporting of rental income and expenses in compliance with HMRC guidelines.
  • Deadline Management: Adeptly managing submission deadlines to prevent penalties or interest charges resulting from missed deadlines.
  • Optimizing Tax Efficiency: Exploring legal avenues to maximize tax efficiency for landlords, ensuring they benefit from available deductions and reliefs while staying compliant.

In conclusion, HMRC’s vigilant methods in monitoring taxpayer’s income underscore the importance of accurate and timely reporting. Trueman Brown Chartered Accountants stand as reliable partners, guiding landlords through the complexities of tax compliance and empowering them to bring their tax affairs up-to-date while maximizing financial efficiency and avoiding the repercussions of non-disclosure.

Contact Us