Rental relief for ­residential landlords

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Landlords letting residential properties are able to reduce their tax bill by claiming expenses and allowances against their rental income.

The treatment of relief for certain expenditure for unfurnished properties changed in April 2013 and landlords should consider this when completing their 2013/14 tax return.

Broadly, when calculating rental business profits a taxpayer can deduct business expenses so long as they are incurred wholly and exclusively for business purposes and not of a capital nature.

For an expense to qualify the business purpose must be the sole purpose. Where expenditure has a dual private and business purpose then unless the business element can be clearly distinguished then the whole of the expenditure will not be allowable.

Examples of common deductible expenses are, water rates, council tax, gas and electricity, maintenance and repairs to the property, insurance, mortgage interest, letting agents fees, legal fees for lets of a year or less, accountant’s fees, rents, employee costs but not the landlord’s own time, ground rents and service charges and direct costs such as phone calls, certain travelling costs, stationery and advertising for new tenants.

Expenses can be restricted if a property is let at less than a commercial rent.

Wear and Tear Allowance is a deductible allowance of 10 per cent of the “net” rent received - the total rent for the year less any expenses paid by the landlord that would normally be borne by the tenant, for example utility bills or items provided in an otherwise unfurnished let.

An extended version of this article is available at For further information, or to discuss how the changes last April will affect you, contact Mairi Drummond on or 01573 224391.