What tax relief can I claim on my rental property?

This article is for general information purposes and is not intended to provide tax, accounting, financial, or legal advice. You should seek advice from an accountant or professional financial adviser.

Key takeaways

• Landlords can no longer claim full mortgage-interest tax relief, but can still claim a tax reduction based on 20% of their qualifying finance costs

• Landlords can deduct allowable expenses, such as maintenance and repair costs, from their rental income when calculating their taxable rental profit

• Tax rules for landlords can be complicated, so it’s a good idea to seek professional tax advice, especially if you are unsure which expenses or finance costs you can claim

What tax relief can I claim on my buy-to-let property?

There are two main types of tax relief for individual landlords:

• A 20% tax credit on your qualifying buy-to-let mortgage interest payments and other finance costs.

• Allowable expenses: these are expenses you can deduct from your rental income when you work out your taxable rental profit. Just note, these must have been incurred wholly and exclusively for the purposes of renting out the property

Why can I no longer claim full mortgage tax relief and finance costs on my buy-to-let property?

The Government phased out the old system of mortgage interest tax relief between April 2017 and April 2020. Since April 6, 2020, landlords have no longer been able to deduct mortgage interest and other qualifying finance costs from their rental income when working out their taxable profit.

Under the old system: You could deduct all qualifying buy-to-let mortgage interest and other finance costs from your rental income before calculating your taxable profit from your taxable income.

Now: You can now only claim 20% tax relief on your mortgage interest payment. This is irrespective of whether you are a basic rate, higher rate, or additional rate taxpayer.

Although this has simplified the tax process by offering a flat rate, the changes have made buy-to-let less advantageous for those in the higher – or additional rate – tax brackets than before. Under the previous system, higher and additional rate taxpayers enjoyed relief of 40% or 45% respectively. This has chipped away at returns landlords can make from their rental properties.

This change is sometimes referred to as the Section 24 tax change (under Section 24 of the Finance Act 2015).

It doesn’t apply to you if you’re a UK resident company.

How do I claim the 20% tax relief on my mortgage interest?

To claim the 20% tax relief on your buy-to-let mortgage interest and other qualifying finance costs, you need to complete a self-assessment tax return.

You will need to enter your total finance costs (e.g. mortgage interest and certain related finance costs in the “Residential property finance costs" section (usually Box 44 on the SA105 form).

HMRC will then calculate and apply a 20% tax credit to reduce your final tax bill. If you have unused finance costs in a particular tax year it should be possible to carry this forward to a later tax year.

If you are unsure how to calculate or claim the relief, you should seek advice from a professional financial adviser, tax adviser or accountant about the process.

Note that if your income from property is £50,000 or more, you will need to have signed up for
Making Tax Digital from April 2026.

What allowable expenses can I claim on my buy-to-let property?

According to guidance from the HMRC, you can claim the following expenses on your rental property, provided they are incurred wholly and exclusively for the purposes of your property rental business:

• General maintenance and property repairs

• Water rates, council tax, gas and electricity (if you pay these, rather than the tenant)

• Landlord insurance for buildings and contents

• Public liability insurance

• Cost of services, such as gardening and cleaning

• Letting agent fees and management fees

• Legal fees for renewing a lease for less than 50 years

• Accountant’s fees

• Rent (if you’re sub-letting), ground rent 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). This includes using HMRC-approved mileage rate deductions for qualifying business journeys

What expenses can’t I claim on my buy-to-let property?

HMRC says that you cannot claim for:

• Improvements that enhance the property beyond its original condition; you can only claim for general repairs. You should keep records of capital expenses such as adding an extension as you might be able to set them against Capital Gains Tax if you sell the property in the future

• Private telephone calls. But you can claim the cost of calls relating to your property rental business

• Clothing, such as a suit to wear to a meeting relating to your property rental business. HMRC says this is because you are wearing the suit partly for your rental business and partly to keep you warm

• Personal expenses. You can’t claim for any expense that was not incurred solely for your property rental business

How can I reduce my landlord costs?

There are several ways landlords can reduce the costs associated with their properties:

• Switch to a cheaper buy-to-let mortgage deal. It’s usually best to do this when your current deal comes to an end otherwise the charges you may incur for paying off a fixed-rate deal early could outweigh the savings made by switching

• Compare landlord insurance. Shopping around could help you find a policy that offers the cover you need at a lower price

• Change energy providers. If energy bills are included in the rent – which may be the case if the property is a house in multiple occupation (HMO) – it might be possible to save money by switching to a cheaper gas or electricity deal

• Move properties into a limited company structure. This means you pay corporation tax on rental profits instead of personal income tax. However, transferring an existing property into a company can have tax implications and comes with other costs, so you should take professional tax advice before doing so.

What is landlord insurance?

Landlord insurance is a form of home insurance designed for people who rent out a property. Depending on the policy, it can cover:

• Buildings insurance

• Buildings and contents insurance combined – if you provide furniture or other items as part of a furnished property

It can offer protection against risks such as:

• Property damage

• Legal liabilities, such as claims for injury or damage involving tenants

• Loss of rental income

• The legal costs associated with tenancy disputes or evicting tenants, if this is included in the policy

How can I find a better landlord insurance deal?

To find a better landlord insurance deal, compare landlord insurance quotes from multiple providers.

You may also be able to bring costs down by adjusting your excess or payment terms – as well as entrusting you’re only paying for cover you need.

Don’t want more tasks on your to-do list? Short on time? MoneySuperMarket can do the work for you, comparing quotes from a range of providers in one place, saving you time and money. Let us help you find a policy that suits your needs and budget.

How does the Renters’ Rights Act (RRA) affect landlords?

The Renters’ Rights Act (RRA), which took effect in May 2026, introduces a host of important changes for landlords and tenants. To find out more about these changes, read our guide:
How does the Renters’ Rights Act affect you?