Landlord Tax: Are you claiming everything you could be?

Wed 15 Feb 2017

By Jo White
Kreston Reeves 

There have been a number of changes to the way in which landlords are being taxed recently, which could be to your advantage. So, it is more important than ever to ensure you’re not missing out and you are claiming as many costs and tax reliefs as you can.

One key option is to consider Property Capital Allowances. The general rule behind this is that capital allowances cannot be claimed for capital expenditure used in residential property, as this is not considered to be a qualifying business for this purpose. However, as with most tax rules there are some exceptions.

Where you are letting a House of Multiple Occupancy ("HMO"), it is possible to claim for qualifying costs such as lighting, lifts and electrical systems in the common areas. Common areas used to include rooms such as a kitchen, lounge and communal hallway. However, since 2012 this is no longer possible due to HM Revenue & Customs changing their interpretation of what is considered part of a residential property. This now means that only qualifying items in hallways and similar areas will be eligible for a capital allowances claim.

If you are already letting or planning on letting a Furnished Holiday Let (“FHL”) then it is possible to push this claim further. FHL properties are considered to be business premises for Capital Allowances purposes and therefore any qualifying items situated in these properties, whether items integral to the property such as lighting or furniture, can be subject to a claim.

Additionally, when you purchase a new FHL, it may be possible to claim for Capital Allowances on a proportion of the purchase price. Specialist surveyors will be able to assist you with ascertaining whether or not this is a viable option for your property.

In conclusion, whilst Capital Allowances are a good way of reducing your profits on capital expenditure you might not necessarily get relief for, the extent to which a claim can be made is very restricted. Whatever your individual circumstances, it is important that you make the most of any allowances and tax reliefs you can. If you think you may be eligible for claiming these reliefs, it is worth speaking to a professional advisor to benefit from allowances which you may not know are available.

Please contact Jo White at Kreston Reeves Tax Consultancy Team if you would like more information on how these changes may affect you, or visit for more information.