Foreign Income 31 - Property expenses (rent, repairs, legal fees, cost of services provided)

Generally, you can claim the running costs of your letting business but you cannot claim, as property expenses, any capital costs such as expenses relating to the purchase or sale of, or improvements, additions and alterations to, land or property or the costs of purchasing machinery, furnishings or furniture. But you may be able to claim capital allowances or a renewals deduction.

Include all your allowable property expenses. Allowable expenses may include:

• rents, rates, insurance, ground rents, for example
• property repairs and maintenance
• legal, management and other professional fees
• interest and other finance charges
• costs of services provided, including wages
• other property expenses

You cannot deduct:

• for more than one year, expenses incurred in connection with the first letting or subletting of a property. These include legal expenses such as:
  • the cost of drawing up a lease
  • agents' and surveyors' fees
  • commission
• any costs of agreeing and paying a premium on renewal of a lease
• fees for planning permission or registration of title on property purchase
• renewals - renewals allowance fo the cost of replacing furniture or furnishings is no longer available

The following are capital allowances, so do not include:

• the cost of buying or selling
• improving or altering
• land or property
• equipment
• furnishings or furniture

Non-residential property

You can claim the costs of getting a loan or alternative finance to buy a non-residential property that you let, and the full amount of any interest on such a loan or alternative finance payments.

Residential property

For the 2020 to 2021 tax year, you cannot claim the costs of getting a loan, or alternative finance to buy a residential property that you let, nor any interest on such a loan or alternative finance payments.

For example, if you incurred £4,000 in interest on such a loan:

For more information on the residential property finance costs restriction, go to Tax relief for residential landlords: how it's worked out.

Further information can be found in UK property notes and Property Income Manual.