First Letting of a property for more than a year - deduction of legal and management and other

According to SA105 Notes UK Property Notes , i cannot claim under Box 27 legal, management and other professional fees for costs for the first letting or subletting of a property for more than a year. I have purchased a new built property and signed a tenancy contract for 36 months (2 years fixed) for letting out my property, does it mean that I cannot claim the management fee paid to agent for the whole contracts (meaning 3 tax years )? May I know the reason behind for this treatment? Thanks.

Hi Petitechien,

As per PIM2120, professional fees of a revenue nature are deductible if they are incurred for the purposes of the rental business but are not deductible if they are of a capital nature or incurred not wholly and exclusively for the rental business. the property notes draw attention to the differences between capital and revenue expenditure.
If the professional fees are incurred towards say the purchase of the property or re-claiming rental income, then this would be deemed as capital and not claimable.
Revenue expenses of advertising for new tenants and conducting viewings are allowable to the extent that they are incurred solely for the rental business, so you may claim the fees within box 27. Guidance on PIM2120 is attached here: PIM2120 - Deductions: main types of expense: legal and professional costs.

Thank you.