A Sheffield Landlord Guide to Tax-Deductible Expenses

What Can I Actually Claim? A Sheffield Landlord's Guide to Tax-Deductible Expenses

Tax isn't the most exciting topic. But when you're running a buy-to-let property, understanding what you can and can't claim makes a real difference to your bottom line. We've lost count of how many landlords we've spoken to who are either missing out on legitimate deductions or, worse, claiming things they shouldn't be.

So let's cut through the jargon and talk about what you can actually claim as a Sheffield landlord in 2026.

The Basic Rule (That's Not Always That Basic)

HMRC's rule is straightforward on paper: you can deduct costs that are "wholly and exclusively" for your rental business. In practice? It gets murky pretty quickly.

That leaking tap? Definitely claimable. The extension you built to add an extra bedroom? Not so much—that may be an improvement, not a repair, and so the tax treatment can be completely different.

The Expenses Most Landlords Get Right

Let's start with the obvious ones, because frankly, if you're not claiming these, you're leaving money on the table.

Letting agent fees are deductible. Finding tenants, managing the property, chasing rent, organizing inventories, the lot. If you're paying us to do it, you can claim it.

Insurance premiums are straightforward too. Buildings insurance, contents insurance, landlord liability cover, rent guarantee insurance—claim them all. Just don't try claiming your car insurance unless you've got a proper business vehicle that's used exclusively for property visits.

Repairs and maintenance are where most landlords rightly claim the most. Fixing a boiler, treating damp, replacing broken appliances, redecorating between tenancies—all good. The key word is "repairs" though. You're putting things back to their original condition, not making them better than they were.

Here's where people trip up: replacing that ancient kitchen with a modern one isn't a repair, even though the old kitchen was knackered. That's an improvement, which can be treated differently for tax purposes.

Professional fees get overlooked surprisingly often. Your accountant's fees? Claimable. Legal costs for sorting out a tenancy dispute or drafting agreements? Claimable. That surveyor you called in to check if the crack in the wall was serious? Also claimable.

The Mortgage Interest Headache

This is where it gets frustrating, and we still have landlords calling us confused about it years after the rules changed.

Before 2020, you could deduct your mortgage interest from your rental income before working out your tax bill. Simple. Since then? Not so much.

Now you pay tax on your full rental income (minus other expenses), and then you get a 20% tax credit based on your mortgage interest costs. If you're a basic-rate taxpayer, it works out roughly the same. If you're a higher-rate taxpayer, you're almost certainly worse off.

We're not accountants and you should always get professional advice, but we've seen enough landlords' tax calculations to know this has hit some people hard. If you're in this situation, talk to a property tax specialist. The savings from proper planning can dwarf our letting agent fees

Utilities and Running Costs

If you're paying the bills—council tax when the property's empty between tenants, water rates, electricity, gas—you can claim them. This comes up more with HMOs or serviced accommodation where utilities are often included in the rent.

Council tax while a property sits empty between tenancies is claimable, which is one reason we work hard to minimize void periods. Every week empty is money you're losing twice—once in rental income and again in costs you're covering.

What About That Old Sofa?

The "Replacement of Domestic Items Relief" lets you claim the cost of replacing furnishings and appliances. Notice the word "replacing"—you can't claim for the initial furnishing of a property, only when you swap old items for new ones.

This covers furniture, carpets, curtains, white goods, TVs, kitchen equipment—basically anything movable that isn't part of the building structure. You claim the cost of the new item minus whatever you got for selling or disposing of the old one.

The old "Wear and Tear Allowance" that used to give furnished property landlords an automatic 10% deduction disappeared in 2016. Now you only claim when you actually replace something, which means keeping those receipts is more important than ever.

Ground Rent and Service Charges

Leasehold property owners can claim annual ground rent and service charges. If you're paying a managing agent for the building (separate from your letting agent), those fees are deductible too.

These often slip through the cracks because they're annual payments that don't always sync up with your tax year. Worth checking you've not forgotten to claim them.

The Stuff You Definitely Can't Claim

Let's save you from some awkward conversations with HMRC.

Your own time? Not claimable, no matter how many hours you spend dealing with property stuff. HMRC doesn't care that you spent your Sunday fixing the fence—they're not giving you a tax break for it.

Capital improvements don't count as allowable expenses. That loft conversion, the new extension, even replacing all the old single-glazed windows with double glazing—they're capital costs. You might get some relief when you eventually sell the property through Capital Gains Tax calculations, but that's a different thing entirely.

The initial purchase costs—stamp duty, legal fees, survey costs—also aren't allowable expenses. They're baked into the property's value for capital gains purposes later.

Why Record Keeping Actually Matters

Keeping receipts isn't thrilling. But this is the bit that really matters when HMRC comes knocking.

Keep every invoice, every receipt, every bank statement showing property-related transactions. Spreadsheets are your friend—income in one column, expenses categorized in others. It doesn't need to be fancy, just accurate and complete.

The legal requirement is usually six years, but honestly, just keep everything. Storage is cheap, and the one time you bin something is the one time you'll need it.

Using accounting software or working with an agent who provides detailed monthly breakdowns makes this infinitely easier. We provide all our landlords with comprehensive financial reports because we've seen too many people scrambling at tax return time trying to recreate a year's worth of transactions from memory and crumpled receipts.

Getting It Right

Tax rules for landlords aren't going to get simpler anytime soon. The Section 24 changes showed that pretty clearly. But understanding what you can claim—and more importantly, what you can't—means you're not overpaying or setting yourself up for problems down the line.

Keep good records, claim everything you're entitled to, don't try to be clever with things you know are dodgy, and get professional advice if your situation is anything beyond straightforward. An accountant who specializes in property will usually save you more than they cost.

And if you're working with a letting agent, make sure they're giving you proper documentation for everything. Those monthly management statements aren't just paperwork—they're your evidence trail when the taxman comes asking questions.

We at Dove Residential offer our Landlords free property statements with receipts of expenses (either by email or post) and and also access to our free 24/7 online Landlord Hub where they can access all their financial information 24/7 hours a day 365 days a year.

Quick disclaimer: We're property people, not tax advisors. Everything here is general information, not advice for your specific situation. Please talk to a qualified accountant about your circumstances

Thank you,

From all the Team at Dove