Make sure you take full advantage of deductible costs when filling in your landlord self assessment tax return. Allowable expenses for tax deduction include anything you spent money on which was related to the day-to-day running of your buy-to-let property.
Allowable expenses and tax allowances
Letting agent fees Any money you spend on advertising, either with a high street agent or an online agent such as Upad, can be deducted.
Legal fees You can claim legal fees for lets of a year or less, as long as the fees are of a revenue nature and relate to your rental business (not the purchase of property, for example, which is capital expenditure). This also applies to renewing a lease that is for less than 50 years.
Accountants' fees Accountancy expenses from preparing rental business accounts and agreeing taxation liabilities can be deducted.
Insurance This includes buildings and contents insurance, as well as landlord insurance.
Maintenance and repairs You can claim for property repairs or maintenance during or between tenancies. Be aware, you cannot claim for improving the property; it must be like for like.
Utility bills Expenses related to gas, water, electricity and broadband are all allowable deductions.
Charges Charges related to ground rent, cleaning, gardening or service charges payable to a freeholder can be deducted, along with council tax.
Direct costs You can also claim for any direct costs you incur related to your letting of the property including phone calls, stationary and mileage.
Changes to landlord taxation and mortgage interest relief
Wear and tear allowance If a property is rented furnished, HMRC allows you to offset 10% of your net income each year, regardless of whether you replaced any items. From 2016, this will only be allowed if you actually replace furniture.
Mortgage interest Currently mortgage interest is a deductible expense from your net rental income, but from 2016, over a 4 year phased period, this interest relief will be restricted to the basic tax rate.