Claiming for your expenses lowers your tax bills and is an easy way to be tax efficient.
If you stay overnight somewhere for the purpose of your business, for example when viewing properties or visiting agents/tenants, you can claim for the cost of hotels and B&Bs nearby.
It's important to remember that there must be no personal benefit to any claim, such as providing residence for family members. It must be "necessary, wholly and exclusively for the purpose of the business". So unfortunately a family jolly to Cornwall is not allowable! 😔
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.
You can claim for:
advertising in newspapers or directories
bulk mail advertising
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.
An annual event such as a Christmas party can be claimed provided:
It is an annual event, such as a Christmas party or summer BBQ
It is open to all employees
The cost per head does not exceed £150 (including VAT)
If £150 per head is exceeded then tax must be paid on the whole amount, not just the amount that exceeds the £150. It's not an allowance so it can't just be claimed, without an event having happened, and it can't be offset against the cost of more expensive events.
You can provide more than one annual event during the tax year provided the combined cost of the events does not exceed £150 per head. The event isn't just limited to the cost of the entertainment, it can include the cost of accommodation, travel etc.
The partners of directors/shareholders/employees may be invited, again provided the same is offered to everyone in the company. Where a partner attends they also receive a £150 allowance – that’s £300 in total per couple.
An asset is something of value that is owned by your business such as a laptop or business phone. The laptop/phone in its own right is owned by the business and has value plus it is used in the day to day activities of the business.
You can claim for:
bank, overdraft and credit card charges
alternative finance payments, for example, Islamic finance
Provided the book/magazine is necessary to conduct the activities of the business, the item can be claimed for e.g. a guide to property investment book.
If, however, a book or magazine is of benefit personally or is to develop a new skill, the item will not be tax deductible. If this is the case, it will be classed as a benefit in kind on your P11D and will result in additional tax and NI liabilities. In these circumstances, it is probably best to pay for the item personally.
If your broadband contract's in your company name, invoiced to and paid by your company then the full cost can be claimed, even if there is a small amount of personal use.
If the broadband is billed personally and the contract isn't in your company name, then only the portion of business use can be claimed. This must be worked out and evidence provided if requested by HMRC.
Car parking can be claimed for qualifying business journeys e.g. to view a potential property purchase.
You can claim the cost of either of the following:
necessary protective clothing to conduct duties such as safety footwear or glasses
work uniform worn whilst carrying out your business e.g. a branded jumper
Business set up costs can be claimed as expenses. Any expenses that are paid for using personal funds should be documented and claimed for when the company starts trading.
For corporation tax purposes the expense must be no more than 7 years and for VAT purposes no more than 6 months before you started trading.
You can claim expenses for:
computer software your business uses for less than 2 years
computer software if your business makes regular payments to renew the licence (even if you use it for more than 2 years)
If you are using your own vehicle to travel on business and have congestion charges that need reimbursing, then you must include this on your P11D. You don’t have to deduct or pay any National Insurance or tax. However, if you are using a company car you can claim for these in the usual way.
Provided the training is work-related to upgrade a current skill and not to develop a new one, the cost of the training can be claimed for. You can also claim for costs associated with the training, such as books or additional travel costs incurred.
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, these fees 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.
Your company pays less Corporation Tax when it gives the following to charity:
equipment or trading stock (items it makes or sells)
land, property or shares in another company (shares in your own company don’t qualify)
employees (on secondment)
You can claim tax relief by deducting the value of your donations from your total business profits before you pay tax.
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.
You can claim expenses for repairs and maintenance of business equipment.
If you regularly use a computer in your day to day activities then the cost of an eye test can be claimed.
In most instances, glasses and contact lenses can't be claimed as a business expense. Even if you require glasses to use a computer to fulfil your company activities, chances are that you probably use them outside of the work environment too, e.g. for reading, therefore they can't be claimed for.
If, however, a prescription is required for glasses that are solely to use a computer for business purposes and they are not used elsewhere, then this is allowable provided you have evidence to support it. Other examples would be welding or safety glasses.
You can claim business costs for:
hire purchase interest
alternative finance payments, for example Islamic finance
You can claim business costs for:
interest on bank and business loans
alternative finance payments, for example, Islamic finance
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 lifetime membership.
While it's 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.
Mileage claims can be made for business related travel only e.g. travelling to one of your investment properties to perform a repair.
The advantage of using HMRC's mileage rates is that they are based not just on the cost of fuel, but also costs such as insurance, road tax and maintenance, therefore it saves you having to keep details of your actual motoring expenses.
Mileage rates are used to work out the amount that can be paid free of tax under the AMAPs legislation. The current rates for use of a personal vehicle are:
First 10,000 miles
As with all expenses, HMRC expects you to be able to provide evidence to support mileage claims, e.g. a mileage log which is included in the Provestor software. If you do not maintain a log and cannot provide it to HMRC if requested, then Income Tax and National Insurance will be due on the mileage payments.
If you need a mobile phone for your business, the simplest way to claim is to purchase it through your company and have the contract in your company’s name. This way, even if there is a small amount of personal use, the purchase and contract costs can be claimed.
If the contract is in your name and not the company, then only the calls made related to the business may be claimed. An itemised bill will allow these calls to be identified. If the contract has inclusive minutes and only the inclusive minutes are used in a billing period including business calls, then no claim can be made. HMRC are likely to take the view that no additional expenses in making business calls have incurred and therefore a claim is not allowable.
If you opt to use a mortgage to finance your investments, any fees paid to a broker to arrange the mortgage can be claimed.
The interest element of your mortgage payments can be recorded as a fully tax deductible expense and can be deducted from your company 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.
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.
You can claim expenses for:
rent for business premises
business and water rates
If your company is to make employer contributions direct into a pension scheme, these will be tax deductible. You should always seek financial advice from an Independent Financial Advisor to determine what is the best strategy for you, be it personal or company pension contributions.
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 gain made when selling the property.
Should your property require any routine maintenance during the course of a tenancy, generally the costs can be claimed. This includes the costs of repairing any damage or general wear and tear e.g 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.
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.
You can however claim the costs of any fees paid to a solicitor to review tenancy agreements or similar legal documents.
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.
If you are staying away from home then the cost of accommodation, breakfast, lunch and evening meals can be claimed provided the costs are not excessive. Meals do not have to be purchased from a restaurant, therefore, a pre-packed sandwich from a supermarket would be an acceptable alternative. You cannot claim for ingredients to make a meal yourself.
Trivial benefits are tax-free gifts given to staff. These are tax allowable so long as:
Each gift doesn’t exceed £50 in cost
The gift isn’t cash or a cash voucher
It isn't a reward for performance
It isn't in the terms of an individual’s contract
If these four conditions aren’t met then the gift becomes taxable.
Gifts can also be provided to directors but, in addition to the £50 per gift threshold, the total value of all gifts in a tax year can’t exceed £300.
To claim for use of home as office expenses, as a director/employee of a limited company, you must conduct your business mostly from home.
HMRC allow a flat rate claim of £6 per week without the need for keeping receipts but it is possible to calculate and claim more for home expenses.
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.
The guidance on what are allowable expenses is complex and needs to be considered based on individual circumstances. Provestor cannot be held responsible for the tax status of any expense claims made. The information provided on this page is for the guidance only.