Submitting tax returns is part and parcel of being a landlord and, unfortunately, there’s no way of avoiding it. Even if you have an accountant, you’re still responsible for tracking expenses and submitting evidence.
You can reduce the tax you pay by claiming all allowable expenses. These can be complex to track, but there are ways to make managing your tax return as a landlord easier, from utilising technology (like property management software) to understanding the rules carefully.
In this article, we explain the tax deductions every landlord should know (and the key things to know about them), and explain how proptech can ensure compliance and help minimise the tax you pay.
Brief overview: How is rental income taxed in the UK?
In short, landlords typically pay income tax on the profit from rental properties. The profit is the amount left after you’ve deducted any allowable expenses from your total income.
For example, if you earn £20,000 from rental income in a year, but your allowable expenses are £5,000, you pay income tax on the remaining £15,000.
In reality, it’s a little more complex than the above. There are rules on the expenses you’re allowed to deduct, the allowances you have, and what’s classed as “income” when you’re a landlord.
What are the key tax deductions available to landlords?
Generally, deductible tax expenses for landlords include the following:
- Mortgage interest
- Letting agent fees
- Maintenance & repairs
- Insurance premiums
- Property management software subscriptions
- Council tax & utilities
- Accountancy fees
- Travel expenses
- Ground rents & service charges
But remember, strict rules apply, and it’s important to learn the ins and outs before becoming a landlord, or before you file your first tax return.
Landlords are expected to submit self-assessment tax returns to the best of their knowledge, and fines can be issued if you get it wrong (and if you don’t correct your mistakes quickly).
Read more about each deductible landlord expense below, and make sure you check the latest government guidelines in more detail before submitting tax returns.
Mortgage interest
Seasoned landlords will remember a time before Section 24, when you could deduct all mortgage expenses from your income – but this is no longer the case in 2025.
In 2025, landlords cannot deduct mortgage interest from their income as an expense. They can, however, get a tax credit based on 20% of the total mortgage interest payments made for the year.
For example, if you pay £5,000 in mortgage interest in year one, you can get a tax credit of £1,000.
The tax credit is claimed retrospectively. This means you pay tax on the full amount, and then claim back the 20% tax credit for mortgage interest.
Letting agent fees
Landlords can deduct letting agent fees from their total income for tax return purposes. This includes the costs of tenant-find only services, rent collection services, and full property management services.
These fees charged by letting agents are usually a flat fee, or calculated as a percentage of the monthly rental income. Read more about landlords working with a letting agent.
Property management software subscriptions
To lower expenses and avoid working with a letting agent, many landlords are choosing to manage properties themselves, using a property management software (like Rentila) to ensure compliance.
The costs of using property management software is a deductible expense on landlord tax returns. This means if a landlord pays £10 per month for a property management software, the total cost for the year is £120.
This amount can then be deducted from the total annual income, meaning landlords pay less tax.
Maintenance & repairs
Under Section 11 of the Landlord and Tenant Act 1985, landlords must maintain and repair a property according to certain standards – from fixing electrics to ensuring the fittings are in working order.
Landlords can claim back the costs of repairs and maintenance performed on the property, however, there are exceptions and caveats.
You can’t always claim back the total costs of all maintenance/repair expenses, and you can’t claim against the costs of general improvements.
Here are some examples of what you can and can’t claim:
- The costs of fixing gutters, repairing brickwork, or replacing a broken lock can be deducted from the total annual income as an expense.
- The costs of replacing an appliance like-for-like can be deducted, but only if the replacement item is not considered an upgrade.
- The labour costs of hiring a plumber to repair a broken boiler or fix a broken toilet can be claimed.
- The costs of converting a loft into a bedroom, renovating a kitchen, or refurbishing a bathroom with new, high-end appliances may be considered an improvement and cannot be deducted.
Insurance premiums
As a landlord, it’s good to have insurance – from protecting yourself against natural disasters to covering you for the hefty legal costs that can accompany compensation claims for tenant injuries on the property.
The most common types of landlord insurance include landlord insurance, rent guarantee insurance, contents insurance, buildings insurance, and buy-to-let insurance.
These costs are almost always deductible from your total income, which means they’re an allowable expense on your tax return as a landlord.
Council tax & utilities
Council tax and utility bills can either be paid by the tenant or the landlord. When these costs are funded by the tenant, a landlord cannot claim the costs as an expense on their tax bill.
However, if the landlord pays these bills (like in an HMO or all-inclusive rental property), the costs of these bills and utilities can be deducted from the total income.
Accountancy fees or professional services
Many landlords employ an accountant to manage their tax returns. Fees generally range between £200-£300 per property you own, depending on the accountant and if you’re a single, joint, or company owner.
These fees can be deducted from your total income on your tax return, as they are considered an allowable expense.
Travel expenses for property visits
Few landlords own properties within walking distance of their home, which means they have to travel to undertake necessary visits or inspections.
These expenses can usually be deducted from your total income in your tax return, including a proportion of the petrol costs (known as mileage), car parking fees, and the costs of any train or bus tickets purchased.
Check current mileage rates before submitting a tax return. As of 2025, the rates are 24p per mile for motorcycles, 45p for cars and goods vehicles on the first 10,000 miles, and 25p after 10,000 miles.
Parking fines or speeding tickets cannot be deducted as an expense. Landlords also cannot claim deductions if the vehicle running costs are being claimed separately under capital allowances.
Ground rents and service charges
In leasehold properties, landlords have to pay ground rent and service charges to the management company/leaseholder. This is usually the case if the rental property is situated in a block of flats or is a maisonette.
These costs are deductible expenses.
Tracking rental expenses: How can software help landlords claim tax expenses?
More and more landlords are turning to DIY management methods to lower expenses, while maximising technology to track expenses and save real cash when it comes to annual tax returns.
Using property management software is one of the best ways to manage expenses, track expenditure, keep proper records (for when HMRC asks questions), and provide automated reports to help manage finances.
Specifically, a property management software (like Rentila) can help you:
- Automatic expense tracking and categorisation – Track expenses automatically, with integrated systems that add and categorise your business expenses as you spend them
- Storing receipts and important documents – Upload receipts for any items you buy (including email receipts or scanned paper receipts) and any important documents to evidence expenditure
- Produce instant tax summary reports – Suitable for sharing with accountants, financial advisors, mortgage advisors, and other professionals
Open a free account today to start using Rentila, or take a tour to discover how our property management software can support your business.
FAQs
Do landlords pay less tax as a limited company?
It varies. For some landlords, becoming a corporation can reduce the tax you pay and maximise the expenses you can claim.
For example, you’ll be subject to corporation tax rates rather than income tax rates (which can be lower), and you may not have to pay Capital Gains Tax when you sell the property in the future.
However, it isn’t always favourable. For example, becoming a limited company can lead to higher mortgage interest rates, higher administrative costs, and more complex legal responsibilities.
You’ll need to work out the expected impact on your financial situation (in the short and long term) to determine whether it’s worth it for you.
How can landlords reduce tax on rental income?
Tracking your expenditure very carefully is crucial for landlords who want to reduce the tax they pay. Consider using a property management software to keep records and receipts of all expenses as evidence of your spending.
As a landlord, you can also explore the following to reduce the tax you pay:
- Make sure you claim your personal allowance
- Apply for a tax credit on mortgage interest payments
- Claim tax relief on domestic items
- Deduct all allowable expenses
- Research becoming a limited company
What’s classed as “income” as a landlord?
It isn’t just your monthly rental income that’s classed as “income” when filing your tax return as a landlord. It also includes any income you receive for additional tenant-related services you offer (like cleaning services or energy bills), and if you keep any money from the tenancy deposit.
Things to remember: Tax deductions for landlords & how software can help
- Landlords are responsible for ensuring their tax return is accurate and that only allowable expenses are deducted from annual income
- Using a property management software to store evidence and track expenses can help landlords submit accurate tax returns and respond professionally to HMRC challenges
- “Income” includes everything the landlord receives from a tenant, including rent, utility payments, and money kept from deposits
- Landlords can deduct expenses like mileage, insurance premiums, software subscriptions, maintenance bills, letting agent fees, and accountancy charges from their annual income to reduce tax
- Becoming a corporation can reduce the tax landlords pay, but it varies and it’s important to analyse the benefits carefully to ensure it works in your favour financially
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