Advice to buy to let investors

I was recently asked by a client to provide a checklist of all expenditure which can be claimed against rental income. "Buy to let" landlords are an important part of my business and, in the current difficult climate, it is important that they are minimising their tax liabilities.

I have found an excellently written concise guide at http://www.paragon-mortgages.co.uk/files/taxguide.pdf.

I have used this as the basis for the advice below.

Mortgage interest
You may generally claim tax relief on interest payments on a mortgage or loan taken out to fund the purchase,refurbishment or repair of a let property.

Insurance
You may include all insurance policies paid by you in connection with your property.

Water rates, council tax, service charges, ground rent
You can include these costs on the let property in question if these are not paid by the tenant.

Council Tax
In certain circumstances, a landlord may be liable for Council Tax. This could then be included.

Legal fees and Management or Letting Agent fees
These fees in respect of ongoing tenancies are allowable.

Accountancy
Any accountancy costs can be offset as long as they relate directly to the let property.

Repairs and maintenance
When making repairs to your let property you may be able to go beyond replacing 'like with like' and make an improvement. For example, HMRC are usually agreeable to replacing wooden window frames with UPVC ones.

Wear and tear
For fully-furnished let properties, you can claim for wear and tear on all furnishings (but not fittings), calculated as 10% of the rental income for the year, less water rates and Council Tax (if paid by you). Alternatively, you can claim for replacement costs but in most cases, the 10% allowance is both more beneficial and simpler.

Motor vehicle costs for visiting/inspecting the property
As long as they are appropriate to the circumstance and are incurred visiting the rental property, petrol and vehicle costs are an allowable expense. You should speak to us to identify what is and isn't deemed to be an acceptable expense.

Advertising
Any costs you incur advertising for tenants to fill your rental property are allowable.

Energy Saving Allowance
Landlords are allowed a deduction for Income Tax purposes up to a maximum of £1,500 p.a. when they install loft or cavity wall insulation, draft proofing, insulation for hot watersystems or floor insulation in a dwelling house, which they let. This is a relatively new allowance and often not claimed.