Claiming business expenses lowers your tax bills and is an easy way to be tax efficient.
Whether you’re advertising your property on Rightmove or Zoopla or through the local newspaper, the costs of marketing your property to potential tenants can be claimed through the business.
If you are using a letting agency to manage your rental properties you can claim the cost of any commission or fees paid to the agency as a business expense.
If these fees are being deducted from the rental income you receive each month you will need to make sure you record them on your invoices in the Provestor software.
Should your tenants ever fall into arrears with their rent payments, any legal fees incurred in the recovery of these debts can be claimed as a business expense.
Landlords are required to protect their tenants deposits within 30 days of receiving it, you will need to ensure that you are registered with one of the government backed schemes.
If you opt for an ‘Insured’ protection scheme then the fees that you will be paying to protect your tenant’s deposits can be recorded as a business expense.
HMRC allow a deduction for the replacement (not initial purchase) of certain domestic items as long as a number of conditions are met.
You can find more information regarding what does and doesn’t qualify for the replacement of domestic items relief here.
As a landlord you are legally required to have an EPC certificate to market your property to prospective tenants. EPC certificates are valid for 10 years and typically cost around £50 to £100.
You are also required by law to have an annual gas safety check carried out by a Gas Safe registered engineer on any properties that you let.
The costs of both of these expenses can be claimed through the business.
If you are a member of the National Landlords Association, then your annual membership fees can be claimed through the business.
HMRC allows a deduction for professional fees and subscriptions if:
you are registered as a member of the organisation because it’s necessary for your work and,
HMRC has approved the organisation
HMRC approved organisations can be found here.
You cannot claim fees and subscriptions paid to an organisation that HMRC hasn’t approved or if the subscription is a life membership.
Whilst it is not a legal requirement for a landlord to take out landlord insurance, if you are using a mortgage to finance your investment most lenders will only provide you with a loan on the condition that you take out a landlord insurance policy.
These policies as well as other policies such as rent protection insurance can be claimed for as long as they are required by your company to conduct its duties.
The legal and professional fees incurred in renewing a lease of less than 50 years can be recorded as a tax deductible expense.
Any costs incurred in obtaining a new lease or a renewal exceeding 50 years are treated as capital expenditure and are only deductible when calculating any potential gain when selling the property.
If you opt to use a mortgage to finance your investments, any fees paid to a broker to arrange the mortgage can be claimed.
Any interest element of your mortgage payments can be recorded as a fully tax deductible expense and can be deducted from your profits. The capital repayment is not an allowable expense.
If you have taken out an interest only mortgage then the full amount of your monthly mortgage payment can be recorded as a tax deductible expense.
Whilst the government began to restrict how finance costs such as mortgage interest can be deducted from rental profits in April 2017, this restriction does not apply to property owned through a limited company and therefore the full amount of any finance costs can be claimed as a business expense.
You can claim for the day to day costs incurred in the course of running your property business such as:
You can also claim for the cost of items such as tablets and laptops if they are purchases ‘wholly and exclusively’ for the purpose of your property business.
Any costs that are directly attributable to the purchase of a property such as searches, stamp duty, survey fees and solicitors fees are treated as capital expenditure and are not deductible from profits as an expense.
These costs can only be deducted from any potential profit made when selling the property.
Should your property require any routine maintenance during the course of a tenancy then generally the costs can be claimed. This includes the costs of putting right any damage or general wear and tear and an example would be repainting and decorating a property at the end of a tenancy.
You can also claim for the general upkeep costs incurred throughout a tenancy such as gardening and cleaning.
If you have invested in a leasehold property you can claim the costs of any service charges and ground rent payments as a business expense.
Generally speaking any solicitor fees that are incurred in the course of purchasing a property are treated as capital expenditure and cannot be deducted from your company’s profits as an expense.
You can claim as an expense the costs of any fees paid to a solicitor to review tenancy agreements or similar legal documents
The cost of any property investment courses you attend to maintain your existing skills as a landlord can be claimed back through the business.
If you visit a tenant, agent or view a potential property to invest in, you can claim the cost of travel in your own personal vehicle. You can also claim for the cost of any public transport you use to make any business trips.
Should your tenants move out, leaving your property empty for a time, you’ll need to pay any council tax or utility bills that they would normally pay.
Fortunately, you can claim these costs against your annual rental income. If you offer council tax or utilities as part of your rental agreement, you can claim these back too.