Rental income tax return for 2025/26: what landlords can and cannot deduct

Written for the 2025/26 tax year, the return due by 31 January 2027. Checked against GOV.UK on 6 October 2026.

Landlords can deduct the running costs of a let property from their rent, as long as each cost is wholly and exclusively for the purposes of renting out the property. GOV.UK’s list includes repairs, insurance, letting agent fees and accountant’s fees. You cannot deduct improvements, and individual landlords cannot deduct mortgage interest on a let home: that gets basic rate tax relief instead. This guide goes through both lists. It comes from Wainwrights Accountants in Bromborough, Wirral. We work with clients across the UK.

Key figures for the 2025/26 rental income tax return

What expenses can landlords deduct from rental income?

Costs that are wholly and exclusively for the purposes of renting out the property. GOV.UK lists these, if you pay for them yourself:

• general maintenance and repairs to the property
• water rates, council tax, gas and electricity
• insurance, such as landlords’ policies for buildings, contents and public liability
• costs of services, including the wages of gardeners and cleaners
• letting agent fees and management fees
• legal fees for lets of a year or less, or for renewing a lease for less than 50 years
• accountant’s fees
• rents (if you’re sub-letting), ground rents and service charges
• direct costs such as phone calls, stationery and advertising for new tenants
• vehicle running costs, but only the proportion used for your rental business

What can landlords not deduct?

GOV.UK’s list of expenses you cannot claim a deduction for includes:

• enhancements or improvements to the property which are capital expenditure, unless they qualify for replacement of domestic items relief
• the full amount of your mortgage payment. The capital you repay is not an expense, and the interest on a let home is dealt with separately (see the next section)
• private telephone calls
• clothing
• personal expenses: any expense not incurred solely for your property rental business

Can you deduct mortgage interest?

Not from your rent, if you are an individual letting a residential property. GOV.UK says that from 6 April 2020, Income Tax relief on all residential property finance costs is restricted to the basic rate of Income Tax. It is given as a tax reduction, which GOV.UK says cannot be used to create a tax refund. So for a let home, you do not deduct mortgage interest from your rent. You get a reduction in your tax bill instead, worked out at the basic rate of Income Tax.

Is it a repair or an improvement?

A repair restores something to its original condition, and you can deduct it. An improvement that is capital expenditure cannot be deducted. GOV.UK says replacing a part of the property with the nearest modern equivalent is still a repair if the improvement is incidental to the repair, such as replacing a single-glazed window with a double-glazed window. GOV.UK’s examples of repairs:

• replacing roof tiles blown off by a storm
• replacing a broken-down boiler
• redecoration between tenants to restore the property to its original condition

Its examples of capital expenses that would not normally be allowable are adding an extension, installing a security system if there was not one before, and replacing a kitchen with one of a higher specification.

GOV.UK says you might be able to set them against Capital Gains Tax if you sell the property in the future.

Can you claim for furniture and appliances?

For replacing them, you may be able to. Replacement of domestic items relief covers items such as beds, carpets, curtains, fridges, crockery and cutlery in a let home. GOV.UK says you cannot claim it for the initial cost of buying domestic items, or if you are renting a room in your home.

Should you use the £1,000 property allowance instead?

You have to choose, because you cannot have both. GOV.UK says that if you claim the property allowance, you cannot claim a deduction for your expenses. It also says you cannot use the property allowance if you claim the tax reducer for finance costs such as mortgage interest on a residential property.

How can Wainwrights help with your rental income tax return?

We prepare your UK property tax return and your Self Assessment tax return from your records, and we go through your costs with you and tell you which ones HMRC allows. See landlord accounts.

Prices start from £20 a month + VAT (£24 including VAT) for a single owner with one property, and from £25 a month + VAT (£30 including VAT) for joint owners. Prices are indicative: our team confirms the scope and final price. Prices are subject to turnover not exceeding £150,000.

For the rules that changed after 5 April 2026, see our guide to landlord tax changes in 2026/27. To start, get a quote or book a free call.

What do landlords ask about expenses on the tax return?

I let two properties. Do I work out each one separately?

No. GOV.UK says to treat all receipts and expenses as one business even if you have more than one UK property.

What if my expenses are more than my rent?

You make a loss. GOV.UK says that normally you can only offset that loss against any profits that arise from the same rental business in future years.

What records should I keep?

GOV.UK’s list includes the dates you let the property, all rent you get, rent books, receipts, invoices, bank statements and your allowable expenses. You must keep your records for at least 5 years after the 31 January tax return deadline for each tax year.

Do I need to send a tax return for my rental income?

GOV.UK says you must report rental income on a Self Assessment tax return if it is more than £2,500 after allowable expenses, or more than £10,000 before them. Between £1,000 and £2,500 a year, it says to contact HMRC.

Property tax rules change from one tax year to the next, and what you can deduct depends on your own circumstances. This guide is general information, not personal advice. To talk yours through with an accountant in Bromborough, get a quote or book a free call.