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Calling all Landlords

  • 16th January 2014

Calling all Landlords

With the end of the tax year 2013/14 almost upon us, now is as good a time as any for landlords to starting pulling their receipts together and generally, getting their proverbial house in order.

To assist in what is unlikely to be a fun task, we have picked out below five types of expenses where relief may be due against income from the rental of residential accommodation. Enjoy!

1. Loan interest and related costs. Relief is available for interest paid on loans taken out to buy the property and for the costs of arranging such a loan. Note that relief is available for the interest element of the repayments only, and not for any capital repayments.

2. Professional fees. Relief can be claimed for management fees paid to an agent for collecting the rent, etc and in some instances for legal fees (eg. fees incurred in evicting a tenant).

3. Other recurring property expenses. This includes ground rent and insurances including insurance against loss of rents.

4. Repairs and maintenance. These are expenses incurred to stop the property from deteriorating and include painting and decorating, replacing the odd roof tile and repairs to any machinery provided with the property (i.e. getting someone out to fix the cooker).

Where you have carried out a significant amount of work you will need to consider if this is a repair or an improvement (in which case it will be a capital expense, see (5) below). A good example is where a new kitchen has been fitted. If you have replaced like with like then this should be a repair. However, if you have installed extra cabinets or equipment, or if better materials have been used, then the expenditure may be capital.

5. Capital expenditure. Capital expenditure is incurred where an asset is improved or where certain furnishings (eg. a bed) or machinery (eg. a washing machine) are acquired. Where the property is let furnished, the landlord can claim a wear and tear allowance to cover the cost of any capital expenditure incurred. This is equal to roughly 10% of the rent received.

Prior to April 2013, it was possible to claim relief on what was known as the renewals basis for the actual expenditure incurred in replacing furnishings and machinery. This could be claimed instead of the wear and tear allowance where the property was let furnished and was the only option available where the property was let unfurnished. This relief has been scaled back and now will be of little benefit to landlords of furnished or unfurnished accommodation.

Who writes this?

Stephen Relf

Stephen Relf

Tax Consultant
Find out more about Stephen
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