What expenses are landlords able to claim back on?

There are two types of expenses for landlords which are: business expenditure and capital expenditure.  By the end of this blog you will have a clear understanding of which types of spending fall into which expenditure category and you will also know which can be claimed back on.

Rental Running Costs

The running costs of letting a property are called rental expenses or expenditure.  These are the costs that must be paid to be able to earn rental profits.  In order to be able to justify spending it is of utmost importance to keep any records as proof.

Vehicle Running Costs

Did you know that if a landlord uses their own vehicle for business journeys they can claim the cost of this?

As long as a record is kept of any travel including the date, destination, purpose and mileage done this can claimed back.  This will be at a fixed rate as stated by the Government.  For information on allowances visit https://www.gov.uk/government/publications/rates-and-allowances-travel-mileage-

If a record of receipts for fuel, repairs and servicing is kept, actual running costs can be claimed for too.  Clearly not all costs of the vehicle can be claimed back, as you can only claim for costs that are due to business use.

You cannot claim for both mileage and running costs therefore landlords will need to make a decision between the two.  In most cases whichever is picked will have to used until the vehicle is changed.

Staffing Costs

If a landlord decides they need staff to oversee the smooth-running of their tenancies they will be able to claim the cost of wages and National Insurance as allowable expenditure.   This does not include any money taken from the business for personal use, this would be classed as a private expense and is not allowable.

Rent and Rates

Council rates, water rates, light, heat and power are some of the many things landlords are able to claim for from the property they let.  Did you know that ground rent is also claimable?  As long as all utility bills and any invoices on record to back up the claim.

Repairs

Maintenance and repairs are claimable expenses however improvements are not.  This means that if you as a landlord decided to refurbish the kitchen in your property to increase value, you would not be able to claim this.  This also includes buying a property in a decrepit state for an extremely decreased price and having to undertake works in order for it to be fit for renting.  This is likely to be classed as improvements and not repairs.  This would fall under capital expenditure.

Legal and Professional Fees

Did you know that although HMRC says landlords do not necessarily need an accountant to monitor their rental accounts, the cost of using one is an allowable expense?  This also includes architects, solicitors and managing agents.

Office Costs

Any stationery, computer, internet, telephone and postage charges can all be claimed back.  However when claiming for telephone calls if the landlord uses the same phone for both business and personal they will need to ensure they make a record of the business calls as they are unable to claim for personal calls.  Itemised bills can be a great way to work out how much line rental they can claim on.  This is this same for internet connection.

Capital Expenditure

Items such as vehicles, computers or buildings are classed as capital expenditure.  These are longstanding items and differ in the way that other items are claimed for.  In most cases landlords can claim a percentage of the value of a capital expenditure and this percentage is called a capital allowance.  For furniture in a rental property landlords are unable to claim as capital allowance however they are able to claim for wear and tear allowance.