HMRC's latest One-To-Many letter campaign targets landlords claiming tax relief on high levels of repair costs.
HMRC began sending letters in December 2023 to landlords who, according to HMRC's data, claimed higher levels of expenditure on repairs than other landlords with similar income.
The letters remind landlords that common allowable revenue expenditures relating to Repairs include:
- Exterior and interior painting and decorating.
- Stone cleaning.
- Damp and rot treatment.
- Repairing broken windows, doors, furniture and machines such as cookers or lifts.
- Repointing.
- Replacing roof slates, flashing and gutters.
HMRC state that unallowable Capital costs include:
- Adding insulation where there was none before.
- Adding to the property, such as an extension, loft conversion or conservatory.
HMRC has now issued a Correction letter to confirm that a new boiler can be considered an allowable expense against rental income when:
- it consist of an upgrade due to an advance in technology, and
- the new item does broadly the same job as the old one.
Recipients are asked to check their 2021-22 tax returns and make any amendments necessary to exclude capital costs by 31 January 2024.
The letters also request that landlords check they have not claimed excessive tax relief for property Finance costs.
Useful guides on this topic
Landlords: Boiler upgrades are allowable repairs
HMRC's recent correction letter confirms that a new boiler can be considered an allowable expense against rental income, even when it constitutes an upgrade driven by advancements in technology.
Repairs and renewals
What expenses can you claim for tax? In what situations are repairs disallowed and treated as capital expenditure?
Property profits & losses: Toolkit (2023-24)
Our Property Profits & Losses toolkit takes HMRC's version and adds a great deal more information about what you can claim as an individual.
Restricting mortgage interest relief
Since April 2020, individual landlords' tax relief for finance costs on residential property has been limited to the basic rate of Income Tax. How is the relief calculated? How were the provisions introduced?
Dwelling house for capital allowances
What is a dwelling house for capital allowance purposes? Can capital allowances be claimed in respect of a dwelling house? What expenditure qualifies?
Replacement of Domestic Items Relief
What is Replacement of Domestic Items Relief? When can it apply and what conditions must be met?
Landlords: Capital allowances
Can I claim Capital Allowances in my rental business? What capital allowances can be claimed by a landlord?
External links
CIOT: HMRC One to Many Letters sent to landlords concerning rental costs
