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Pre-Letting Expenditure: What Can you Claim?

It's easy to fall into the capital expenditure trap ...



When a landlord purchases a new property to let out, they'll spend money on getting it up to a standard to maximize the rental income. But what pre-letting expenditure is allowed?

What pre-letting expenditure can you claim against rental income?

What pre-letting expenditure can you claim against rental income?

copyright: kurhan / 123rf stock photo

The worry is always that HMRC will say that any improvements are capital expenditure and cannot be claimed against rental income. In reality, there is very little that is disallowed if you think in the long-term.

"Even bringing an HMO up to standard could be classed as capital expenditure!"

So, improving a property in any way, maybe because you want a better class of tenant, would be a capital expenditure and could not be claimed for against rental income.

Replacing like-for-like can be:

  • A complete rewiring of the property as the existing system does not comply with current standards

  • Replacing old fire-extinguishers and smoke alarms

  • A new bathroom as the old one is tired

  • A new kitchen as the old one has been damaged or is well used

But even this comes with caveats!

Even the smallest things could be classed as an improvement rather than a replacement. Extra storage in the kitchen, new power points in the bedrooms and additional smoke alarms throughout the property. HMRC could have issues with them all.

Remember, if you make improvements to the property, however small, then HMRC may class it as capital expenditure, and you cannot get tax relief until the property is sold.

"Would you like to know more?"

If you'd like to find out more about pre-letting expenditure and what would and wouldn't be allowed, then do give me a call on 01908 774323 or click here to ping me an email and let's see how I can help you.

Until next time ...


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More about Helen Beaumont ...

Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.