Expenses will be treated as revenue expenditure provided they are incurred wholly and exclusively for the purposes of the business and are not of a capital nature.
The commonly incurred expenses in a rental business are as follows:-
Replacement of Domestic Items
Wear and tear allowance was scrapped in April 2016. Landlords are now able to claim tax relief when they purchase furniture for their rental property/properties.
Landlords can deduct the actual costs of replacing like for like or the cost of similar items:
- Furniture
- Furnishings
- Kitchenware
Benefits of the new rule is that it is easier for landlords to calculate and determine expenses.
Landlords that have a portfolio of furnished, unfurnished and part-furnished property/properties can also deduct the above expenses
Travel Expenses
From 6 April 2017 you can calculate a flat rate mileage allowance in connection with your rental property/properties.
Approved mileage rates:
- Cars & goods vehicles – 45p per mile for the first 10,000 miles, then 25p per mile thereafter
Motorcycles – 24p per mile for the first 10,000 miles then 24p per mile thereafter
Professional Fees
Solicitors’ fees incurred wholly and exclusively for the purpose of the rental business is an allowable expense.
Management fees/agent fees are fully tax deductible, even if the landlord chooses to advertise their property privately, the cost is an allowable expense.
Redecoration Costs
The cost of redecorating would be an allowable revenue expense. However, if the work being undertaken is an improvement then the cost is treated as being capital.