Repairs or improvements? What you can deduct from rental income, and what you cannot

In England, Wales, Scotland and Northern Ireland, the income-tax and Capital Gains Tax rules for rental-property repairs and improvements are UK-wide, so the same repair-versus-capital test applies across all four nations. The practical question is whether the work restores what was there, improves it beyond its original condition, or creates capital enhancement to be dealt with later.

What is the difference between a repair and a capital improvement?

A repair restores the rental property or a subsidiary part of it, while a capital improvement makes the property significantly better than its original condition or forms part of buying, creating or upgrading the asset. HMRC’s repair definition is direct: “Repair means the restoration of an asset by replacing subsidiary parts of the whole asset,” and HMRC adds that “There won't be a repair if a significant improvement of the asset beyond its original condition results – that will be capital expenditure.” There is no percentage threshold, approved materials list or automatic rule for deciding whether repairs and maintenance have crossed into capital improvements: HMRC says, “It is largely a question of fact and degree in each case whether expenditure on a property leads to an improvement.” Modern equivalent materials can still be a repair, because “The cost normally remains revenue expenditure where any improvement arises only because the customer uses new materials that are broadly equivalent to the old materials.” But work on a property bought derelict or run-down is capital, even where the invoices look like ordinary repairs.

What repairs can you claim on a rental property?

You can claim genuine rental-property repairs and maintenance that restore the property, including repairs paid up to seven years before the letting business starts, but not costs that improve or alter the property as capital expenditure. GOV.UK summarises allowable landlord expenses as “maintenance and repairs to the property (but not improvements),” and the SA105 property notes give examples including “exterior and interior painting, damp treatment, stone cleaning or roof repairs.” For pre-letting costs, HMRC allows qualifying expenses where the cost “is incurred within a period of seven years before the date the property business is started,” so an otherwise deductible repair does not fail merely because it was paid before the first tenant moved in. Replacement domestic items are a separate relief for moveable contents: HMRC lists “Moveable furniture... Furnishings... Household appliances,” but if the replacement is upgraded, the deduction is capped at “the lesser of: the cost of the new item or the cost that would have been incurred if the old item had essentially been replaced like-for-like.” Abodient can track rental income, expenses and tax-return figures across a portfolio, which matters because the tax treatment depends on what each cost actually was.

Are home improvements and renovations tax deductible?

Home improvements and renovations are not deductible from rental income when they are capital, but the cost may be deferred rather than lost because enhancement expenditure still reflected in the property at sale can be deductible against Capital Gains Tax. The income-tax rule is the hard “no”: ITTOIA 2005 says, “In calculating the profits of a trade, no deduction is allowed for items of a capital nature,” and the SA105 property notes say, “Do not include the cost of buying, selling, improving or altering any land, property, equipment, furnishings or furniture. These are capital costs.” The CGT rule is the missing half of many flat answers to whether home improvements are tax deductible: TCGA 1992 allows “the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset.” That means a qualifying renovation is not written off against rent, but may reduce the taxable gain when the rental property is sold.

Can you claim for a new kitchen on a rental property?

You can claim for a new kitchen on a rental property only where the work is a repair or like-for-like replacement of the existing kitchen; a better, extended or newly created kitchen is capital and not deductible from rental income. HMRC’s core rule is that “There won't be a repair if a significant improvement of the asset beyond its original condition results - that will be capital expenditure,” so replacing worn units with broadly equivalent modern units may be revenue, while reconfiguring, enlarging or materially upgrading the kitchen points to capital. The replacement domestic items rules do not rescue a fitted kitchen: HMRC says “fixtures are not domestic items and do not qualify for 'Replacement of Domestic Items Relief'.” Nor is there a fixed price limit that decides the issue; HMRC says, “It is largely a question of fact and degree in each case whether expenditure on a property leads to an improvement.” In practice, a kitchen invoice needs splitting only if there are genuinely separate repair and improvement elements.

Can you claim for decorating a rental property?

You can claim for decorating a rental property when it is routine repair or maintenance, but not when the decorating is part of a capital improvement project. HMRC’s SA105 notes expressly include “exterior and interior painting, damp treatment, stone cleaning or roof repairs” as repair and maintenance examples, so ordinary repainting between tenancies or restoring tired finishes is normally a revenue deduction against rental income. The line changes where the decorating follows capital work: HMRC says, “Where a significant improvement arises from the change of materials, the whole of the cost is capital expenditure. This includes things like redecoration after the main work has been done.” That is why the same decorating invoice can be treated differently depending on context: repainting scuffed walls is maintenance, while repainting after an extension, structural alteration or major upgraded refurbishment is usually swept into the capital cost. The label “decorating” is less important than what the work completed.

Are structural repairs tax deductible?

Structural repairs are tax deductible when they restore a worn or dilapidated rental property, but structural alterations or additions that improve the property beyond its original condition are capital. HMRC states, “Repairs to reinstate a worn or dilapidated asset are usually deductible as revenue expenditure,” so roof repairs, damp treatment, stone cleaning and comparable fabric repairs can be allowable where they reinstate what was already there. Modern materials do not automatically make the work capital, because HMRC says, “The cost normally remains revenue expenditure where any improvement arises only because the customer uses new materials that are broadly equivalent to the old materials.” But structural work that creates something new is different: HMRC gives the example that “there will be a capital improvement if the customer takes off the roof and builds on another storey.” The deciding question is not whether the work is structural, but whether it restores the existing asset or materially improves it.

Can you claim capital allowances against rental income?

Residential landlords generally cannot claim capital allowances against rental income for plant or machinery used in a dwelling-house, and furnished holiday lets no longer get the former special exception for furniture, white goods or fixtures from 6 April 2025 for income tax and 1 April 2025 for companies. The Capital Allowances Act 2001 says, “The person's expenditure is not qualifying expenditure if it is incurred in providing plant or machinery for use in a dwelling-house,” and HMRC restates the furnished residential letting rule: “Where a taxpayer lets a residential property furnished, plant and machinery capital allowances cannot be claimed on furniture, furnishings or fixtures within the property.” Older HMRC pages still say “FHL businesses are entitled to capital allowances on the furniture, white goods, etc. within the property,” but the current governing update says, “The special treatment of furnished holiday lettings (FHL) for capital allowances purposes no longer applies.” Unrelieved FHL pools can continue: HMRC says “the unrelieved qualifying expenditure that would otherwise have been carried forward... is transferred to the appropriate pool for the 'corresponding property activity'.” Common-parts plant may still qualify where HMRC says it “will not comprise part of any dwelling-house.”

Last reviewed August 2026.

Sources

• “HMRC Property Income Manual PIM2025 — — "Repair means the restoration of an asset by replacing subsidiary parts of the whole asset.” Source
• “HMRC Property Income Manual PIM2025 — — "There won't be a repair if a significant improvement of the asset beyond its original condition results – that will be capital expenditure.” Source
• “HMRC Property Income Manual PIM2030 — — "The cost normally remains revenue expenditure where any improvement arises only because the customer uses new materials that are broadly equivalent to the old materials.” Source
• “HMRC Property Income Manual PIM2030 — — "Where a significant improvement arises from the change of materials, the whole of the cost is capital expenditure.” Source
• “HMRC Property Income Manual PIM2030 — — "the cost of refurbishing or repairing a property bought in a derelict or run-down state” Source
• “HMRC Property Income Manual PIM2030 — — "It is largely a question of fact and degree in each case whether expenditure on a property leads to an improvement.” Source
• “ITTOIA 2005 s.33 — — "In calculating the profits of a trade, no deduction is allowed for items of a capital nature.” Source
• “GOV.UK, Renting out your property: Paying tax — — "maintenance and repairs to the property (but not improvements)” Source
• “HMRC Property Income Manual PIM3210 — — "A domestic item is an item for domestic use such as: Moveable furniture... Furnishings... Household appliances” Source
• “HMRC Property Income Manual PIM3210 — — "the deduction is... the lesser of: the cost of the new item or the cost that would have been incurred if the old item had essentially been replaced like-for-like” Source
• “HMRC Property Income Manual PIM3210 — — "fixtures are not domestic items and do not qualify for 'Replacement of Domestic Items Relief'” Source
• “UK Property notes SA105 — — "Do not include the cost of buying, selling, improving or altering any land, property, equipment, furnishings or furniture. These are capital costs.” Source
• “UK Property notes SA105 — — "exterior and interior painting, damp treatment, stone cleaning or roof repairs” Source
• “TCGA 1992 s.38 — — "the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the asset” Source
• “HMRC Property Income Manual PIM2505 — — "is incurred within a period of seven years before the date the property business is started” Source
• “Capital Allowances Act 2001 s.35 — — "The person's expenditure is not qualifying expenditure if it is incurred in providing plant or machinery for use in a dwelling-house.” Source
• “HMRC Property Income Manual PIM3220 — — "Where a taxpayer lets a residential property furnished, plant and machinery capital allowances cannot be claimed on furniture, furnishings or fixtures within the property.” Source
• “HMRC Capital Allowances Manual CA23060 — — "A lift or central heating system serving the common parts of a building which contains two or more dwelling-houses will not comprise part of any dwelling-house.” Source
• “HMRC Property Income Manual PIM4140 — — "There are no capital allowances for the cost of the property itself or the land on which it stands.” Source
• “HMRC Property Income Manual PIM4140 — — "FHL businesses are entitled to capital allowances on the furniture, white goods, etc. within the property.” Source
• “HMRC Property Income Manual PIM4180 — — "The special treatment of furnished holiday lettings (FHL) for capital allowances purposes no longer applies” Source
• “HMRC Capital Allowances Manual CA20025 — — "the unrelieved qualifying expenditure that would otherwise have been carried forward from the last chargeable period of the furnished holiday lettings business is transferred to the appropriate pool for the 'corresponding property activity'.” Source