Landords

Any profit made from letting a property is subject to UK income tax, whether the landlord is
resident in the UK or not, and must be reported in a Self Assessment Return. However, certain
deductions are allowable.

These allowable deductions include the cost of:

• Mortgage interest on loans used to purchase the rented property or to fund improvements
  your agent’s letting and management fees
• Repair and maintenance of the property and contents (but not the cost of improvements)
• Ground rent and maintenance charges on leasehold property
• Water and sewerage rates unless charged to tenants
• A wear and tear allowance applicable to furnished property only, equal to 10 percent of the gross rent received (less council tax and water rates) or you can deduct the cost of replacement from the rental income in the relevant tax year
• If you pay someone to assist with the work involved in letting your properties, the cost is allowable if you can prove that they are paid at local commercial rates and they report the income in their own tax return
• Council tax whilst the property is vacant
• Accountant’s fees
• Legal expenses (but not those relating to the purchase or sale of the property)
• Stamp duty on tenancy agreements
• Building and contents insurance and any insurance claim fees
• VAT on all charges where applicable

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