Tax relief on investment properties

“If I’m buying a buy-to-let property that needs about £4,000 putting into it to make it rentable, can I get tax relief before renting it out? Things like new double glazing to replace broken windows, new kitchen units/floor, plastering in areas where there has been a leak?

High demand for rental accommodation has provided a boost to the buy to letsector, with a growing number of people buying property to let as a form of investment.

Renting a home in the UK is subject to a number of taxes, such as income tax, regardless of how many properties you own.

Here is a rundown on tax relief when renting a property:

Income tax on buy-to-let properties

Any rental income is subject to tax which you must declare as part of your Self Assessment tax return. The tax on the rental income will be charged in relation to your income tax banding (20% for basic rate taxpayers, 40% for higher rate, and 50% for additional rate).

As a landlord you can scale down the tax you have to pay by deducting specific “allowable expenses” from your taxable rental income.

Allowable expenses include:

• Interest on buy-to-let mortgage payments.

Remember that it is only the interest, not any capital you repay, that is tax deductable.

• Maintenance costs.

Structural repairs to a rental property, such as repainting or repairing a broken window, are allowable tax expenses. It is important to remember that any actual improvements to a property, such as building a conservatory, will not be seen as tax deductable.

• Letting agency fees.

If you let your property via a letting agent, up to 15% of the monthly rental income will be charged as a fee to the agent. Letting agent’s costs on your tax return are an allowable tax expense.

• Buildings and contents insurance premiums.

Any buildings and contents insurance premiums on the rental property can be claimed back.

• Council Tax.

If it is you, and not the tenant, who pays the council tax then you can claim this as an allowable tax expense.

• Utility bills.

As with council tax, if it is you who pays the water, gas or electrical bill, then you can claim this back as a tax expense.

An accountant will be able to help you to make the most of your allowable deductions so that you don’t pay more tax than you have to. Accountant fees are tax deductable too!

Speak to HM Revenue & Customs, or visit for more information on tax and how it affects you as a landlord.

Article courtesy of

RentPro property management software for letting agents and landlords.

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