Personal Use and Mixed Expenses

To claim an expense against your rental income, it must be incurred wholly and exclusively for your property business. If you buy something that's used partly for your rental business and partly for personal reasons, you can only claim the business portion.

This guide explains HMRC's wholly and exclusively test, how to calculate the allowable portion of mixed expenses, and how to record them correctly in Provestor.

HMRC's wholly and exclusively rule

HMRC allows you to deduct expenses from rental income only if they're incurred wholly and exclusively for the purposes of your property business.

What this means:

  • Wholly and exclusively — The expense must be entirely for your rental business
  • Mixed use — Where only part of an expense is for business, you can claim that part as long as it's identifiable and reasonable
  • No business element — If an expense has no identifiable business portion, you cannot claim anything

The test focuses on purpose, not just outcome. You need to show the expense was incurred for business reasons, even if there's incidental personal benefit.

See HMRC's guidance on wholly and exclusively expenses for the official definition.

Common scenarios with personal use

Property used personally for part of the year

If you use a rental property personally for part of the year, you can only claim expenses for the period it's commercially let.

Equipment used for business and personal purposes

Items like laptops, mobile phones, or vehicles used partly for your property business and partly for personal use need to be apportioned. You claim the portion that relates to business use.

Utilities and services for mixed-use properties

If you live in part of a property and let the rest, apportion costs like insurance, utilities, or repairs based on floor space or reasonable usage estimates.

Vehicles

Car expenses for property-related travel (inspecting properties, visiting suppliers) can be claimed, but only the business portion. HMRC provides mileage rates as an alternative to claiming actual vehicle costs. See Travel costs and mileage for detailed guidance.

How to calculate the business portion

When an expense has both business and personal elements, you need a reasonable method to split it.

Time-based apportionment

Used when an asset or property is used for different purposes over time.

  • Example: Property let for 10 months and used personally for 2 months = 10/12 allowable

Usage-based apportionment

Used when an item is used for both purposes throughout the year.

  • Example: Laptop or mobile phone used 60% for business, 40% personal = 60% allowable

HMRC expects reasonable and consistent methods

You don't need exact calculations, but your method should:

  • Be based on objective evidence
  • Be applied consistently year on year
  • Not inflate the business portion unreasonably

See HMRC's case studies on claiming part expenses for worked examples.

Provestor's approach to mixed expenses

HMRC allows two approaches for handling mixed expenses:

  1. Record the full amount each quarter, then make a year-end adjustment — Traditional Self Assessment uses "private use adjustment" boxes for this
  2. Record only the allowable portion in each quarterly update — No year-end adjustment needed

Provestor uses the second approach. When you record a mixed expense, you enter the personal use amount, and Provestor automatically excludes it from your quarterly updates and tax calculations.

Why this approach:

  • More accurate in-year tax calculations — Your quarterly updates reflect only allowable expenses, so estimated tax is correct
  • No year-end adjustments — You don't need to remember to make corrections later
  • Cleaner quarterly submissions — HMRC sees only the allowable portion from the start
  • No additional effort — You calculate the split when recording the expense, not at year-end

How to record mixed expenses in Provestor

When you add an expense with personal use, follow these steps:

Step 1: Add the transaction

Add the expense as normal (manual entry or imported from bank statement). Enter the full gross amount you paid.

See Capturing expenses for details on adding transactions.

Step 2: Categorise the expense

Select the appropriate expense category (for example, "Other allowable property expenses" for a laptop, "Travel costs" for vehicle expenses).

Link the expense to the relevant property.

Step 3: Enter the personal use amount

In the advanced options section, enter the Personal use amount field.

How it works:

  • Enter the £ amount used personally (not a percentage)
  • Provestor automatically calculates the allowable portion (gross amount minus personal use)
  • Only the allowable portion is included in your quarterly updates and tax return

Example 1: Laptop

You buy a £1,000 laptop used 40% for personal tasks and 60% for managing your rental properties.

  1. Add the expense with amount: £1,000
  2. Categorise as "Other allowable property expenses"
  3. Enter personal use amount: £400 (40% of £1,000)
  4. Provestor submits £600 to HMRC

Example 2: Mobile phone bill

You pay £50 per month for a mobile phone. You estimate 20% of use relate to your property business.

  1. Add the expense with amount: £50
  2. Categorise as "Other allowable property expenses"
  3. Enter personal use amount: £40 (80% personal use)
  4. Provestor submits £10 to HMRC

Example 3: Property insurance covering multiple properties

You have a single insurance policy covering both your rental property (£200,000 value) and your main residence (£300,000 value). Annual premium: £500.

  1. Add the expense with amount: £500
  2. Categorise as "Rent, rates, insurance and ground rents"
  3. Calculate business portion: £200,000 / £500,000 = 40% business = £200 allowable
  4. Enter personal use amount: £300 (60% personal)
  5. Provestor submits £200 to HMRC

See Capturing expenses for the complete workflow.

Common mistakes to avoid

Claiming 100% of mixed expenses

If an expense has personal use and you claim the full amount, HMRC will disallow it during a compliance check. Always split mixed expenses using a reasonable method.

Not keeping records to justify apportionment

HMRC may ask to see how you calculated the business portion. Keep evidence like:

  • Usage logs or diaries (for equipment)
  • Occupancy records (for properties)
  • Mileage logs (for vehicles)

Using arbitrary percentages without basis

Claiming "50% business use" without supporting evidence won't satisfy HMRC. Base your calculation on objective data.

Forgetting to adjust for partial year use

If you only started letting a property partway through the year, apportion annual costs (insurance, ground rent) for the period the property was let.

HMRC compliance and enquiries

HMRC's compliance checks often focus on mixed expenses because they're a common area for over-claiming.

What HMRC expects to see:

  • Clear method for calculating the business portion
  • Objective evidence supporting your split (not guesswork)
  • Consistent application year on year
  • Reasonable results (not inflated business percentages)

Common enquiry triggers:

  • High percentage of business use for items typically used personally (for example, claiming 90% business use on a personal mobile phone)
  • Business use claims for assets with no clear connection to the property business

How to evidence your apportionment:

  • Show HMRC your calculation method
  • Provide logs, records, or calendar entries supporting your split
  • Explain why the method is reasonable for your circumstances

If HMRC disagrees with your apportionment, they may disallow the expense entirely or adjust your claim. This can result in additional tax, interest, and penalties.

Edge cases and when to seek advice

Some situations are complex and may benefit from professional advice:

Furnished holiday lets with personal use

If you use a furnished holiday let personally for some weeks, you need to track availability periods carefully. HMRC has specific rules for qualifying as a furnished holiday let, and personal use can affect this.

Home office in a rental property

If you live in one of your rental properties and use part of it as an office for your property business, this creates overlapping personal and business use that's difficult to apportion. Seek advice before claiming.

Vehicles used exclusively for property business

If you have a dedicated van or car used only for property-related travel, you can claim 100% of costs. But if the same vehicle is used for personal trips, you'll need detailed mileage logs.

See Travel costs and mileage for guidance on claiming vehicle expenses.

Properties let to family or friends at below-market rent

HMRC may treat these as uncommercial lets, which limits the expenses you can claim. If the property isn't let at arm's length, consult an accountant.

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