Tax Categories for Expenses

Tax Categories for Expenses

Correctly categorising your expenses ensures you claim all allowable deductions on your tax return.

Allowable Expenses

HMRC allows landlords to deduct the following from rental income:

• Repairs and Maintenance — Like-for-like repairs (not improvements).
• Insurance — Buildings, contents, and landlord insurance.
• Management and Letting Agent Fees — Fees paid to agents.
• Legal and Professional Fees — Solicitor, accountant, and surveyor fees.
• Mortgage Interest — Interest only (not capital repayments). Subject to the finance cost restriction.
• Utilities — Gas, electricity, water (if landlord-paid).
• Ground Rent and Service Charges — For leasehold properties.
• Travel — Costs of visiting properties for management purposes.
• Advertising — Costs of marketing vacant properties.
• Stationery and Office Costs — Administrative expenses.

Non-Deductible Expenses

• Property improvements (adding value, not restoring).
• Mortgage capital repayments.
• Personal expenses.
• Fines and penalties.

Tagging in Latch

When recording an expense, select the appropriate category from the dropdown. These categories align with HMRC's tax categories. The Tax Reports feature groups expenses by these categories automatically.

Tip: If unsure whether a cost is a repair or improvement, the general rule is: repairs restore, improvements enhance. Consult your accountant for borderline cases.