Frequently asked questions on income from property
Q: I have replaced the fitted kitchen in my rental property, is this an allowable expense or is it capital?
A: Provided the kitchen is replaced with a similar standard kitchen and does the same job as before, then this is a repair and the expenditure is allowable. If the kitchen is substantially improved, for example if standard units are replaced by expensive high quality materials or the layout is significantly changed, then the expenditure would be capital. You can find further information via these links: Income tax when you rent out a property: working out your rental income and Property income manual 2020.
Q: I have replaced the old boiler in my property. The gas fitter has told me he has to fit a condensing boiler. Is this a repair or an improvement?
A: As long as the new boiler is the closest equivalent in capability, then the replacement boiler will be a revenue repair. It is important to look at the position when the work is carried out. As technology and industry practice change over time, there will be changes in what amounts to simply repairing the asset. Something that was seen as an improvement ten years ago may now be the industry standard for that type of work, for example due to changes in building/safety regulations. Further information can be found at: Income tax when you rent out a property: working out your rental income
and Business income manual 46920 and Business income manual 46925.
Q: Is the replacement of wooden windows with UPVC an allowable expense?
A: At one time, replacing single glazed windows with double-glazing was an improvement. Over time, double-glazing became the industry norm. This meant that replacing single glazing with double-glazing ceased to be an improvement, and capital expenditure, and became allowable expenditure for tax purposes as it was simply replacing like with currently available like. There is further guidance here: Business income manual 46925.
Q: Now that the wear and tear allowance has been replaced, does that mean that I can claim the cost of white goods, furniture, carpets etc?
A: You can claim a deduction for the cost of replacing domestic items such as moveable furniture, household appliances and other furnishings like carpets and floor coverings. The initial cost of purchasing these items is not a deductible expense, it is only when you replace them. The deduction for replacement items is capped at the equivalent cost of the same type of item if you upgrade it, for example to replace a standard sofa with a sofa bed.
It is worth mentioning that domestic items does not include fixtures such as kitchen units, boilers, baths etc. When these are replaced, tax relief may be available on the basis that this is a repair to the property as a whole. For further information, please see Income tax when you rent out a property: working out your rental income.
Q: I have replaced a washer with a washer-dryer in my rental property, can I claim this?
Q: I have paid out expenses on my rental property but I do not have a tenant yet, can I claim these?
A: Usually the rental business does not begin until the first property is let. Any expenses incurred before the first let must be solely for the rental business and must not be capital expenditure. Any qualifying pre-letting expenses are treated as incurred on the day the rental business commences, which to confirm, is usually the day the property is first let. After the first property has been let, any later expenditure leading up to the letting of the second and later properties is part of the rental business and can be deducted - provided it is incurred wholly and exclusively for the purpose of the business and isn’t capital expenditure. For further information, see Property income manual 2505.
Q: My rental property is quite a long way from where I live. Can I still claim travelling expenses for my visits to the property?
A: Where the sole purpose of the journey is for your rental business, then this will generally be allowable. However, if the journey has a dual purpose, for example you also go shopping or visit relatives, then none of the travel expenses will be deductible. I would definitely recommend you look at the guidance here. Property income manual 2220.
Q: Can I claim the simplified mileage rate (45p per mile) for travelling to my property?
A: From 2017/18, landlords can choose to use a fixed rate mileage deduction rather than deducting actual running costs and claiming capital allowances. The rates per business mile that can be claimed are: 45p per mile for the first 10,000 miles and 25p per mile thereafter. Please refer to the guidance at PIM2220 Property income manual 2220.
Q: Can I claim any costs for running my letting business from home?
A: Where a landlord genuinely runs the rental business from home they may claim the extra business costs that they incur - such as the cost of extra lighting and heating. Where a specific part of their home is used exclusively for running the rental business for a significant amount of time, then a proportion of all fixed expenses referable to that room may be deducted. Further information can be found at Property income manual 2100.
Q: I am in-between tenants and I am paying council tax on my rental property. Can I claim this as an expense?
A: If the landlord pays council tax or other costs such as utilities because they are in-between tenants, then these will be allowable to the extent they are solely for the purpose of the rental business. For further information, please see Property income manual 2140.
Q: I’ve had to obtain a mandatory landlord’s license from my local authority is the cost deductible from my rental income?
A: The fee charged by a local authority for a mandatory landlord’s license is usually an allowable deduction.