Landlord Allowable Expenses Scotland: The Complete 2026 Guide

How Landlord Tax Works

As a landlord, you pay tax on your rental profit – your rental income minus allowable expenses. This profit is added to your other income (employment, self-employment, pensions) and taxed at your marginal rate:

• Basic rate: 20% (income up to £50,270)
• Higher rate: 40% (income £50,271 - £125,140)
• Additional rate: 45% (income over £125,140)

The more expenses you can legitimately claim, the lower your taxable profit and the less tax you pay.

The Property Income Allowance

If your gross rental income is under £1,000, you don't need to tell HMRC or pay tax. This is the Property Income Allowance.

If your income is over £1,000, you can choose to:

1. Deduct the £1,000 allowance instead of actual expenses, OR
2. Claim actual expenses (usually better if expenses exceed £1,000)

For most landlords with mortgages, actual expenses will be higher than £1,000.

🔧 Repairs & Maintenance

Repairs to your rental property are fully deductible. This includes:

📋 Scottish Landlord Compliance Costs

Scotland has specific landlord requirements. These costs are all deductible:

• Landlord Registration – mandatory registration with your local council (£68 for 3 years + £15 per property)
• Gas Safety Certificate – annual CP12 check
• Electrical Installation Condition Report (EICR) – every 5 years
• Energy Performance Certificate (EPC) – valid for 10 years
• Legionella Risk Assessment – if applicable
• Smoke and Heat Alarm installation – meeting Scottish standards
• Carbon Monoxide detector

🏠 Insurance

All insurance premiums related to your rental property are deductible:

• Buildings insurance
• Contents insurance (if you provide furnishings)
• Landlord liability insurance
• Rent guarantee insurance
• Legal expenses insurance

🏢 Letting Agent & Professional Fees

• Letting agent management fees – typically 8-15% of rent
• Tenant finding fees
• Inventory check costs
• Accountancy fees – for preparing your tax return
• Legal fees – for drawing up tenancy agreements, evictions (but not for buying/selling property)
• Safety certificate costs – gas, electrical checks

📢 Advertising & Admin

• Advertising costs – Rightmove, Zoopla listings
• Photographs – professional property photos
• Stationery – receipts, contracts
• Phone calls – to tenants, tradespeople
• Mileage – visiting properties (45p per mile)

💰 Mortgage Interest (Section 24)

This is the big one that catches many landlords out. Since April 2020, you can no longer deduct mortgage interest from your rental income.

Instead, you receive a 20% tax credit on your mortgage interest. This means:

• Basic rate taxpayers (20%): No change – still effectively 20% relief
• Higher rate taxpayers (40%): Big impact – now only 20% relief instead of 40%
• Additional rate taxpayers (45%): Even bigger impact

Read my detailed article on Section 24 and how to mitigate its impact.

🪑 Replacement Domestic Items Relief

You can claim the cost of replacing furnishings in your rental property:

• Furniture – sofas, beds, tables
• White goods – fridge, washing machine, oven
• Carpets and flooring
• Curtains and blinds
• Crockery and cutlery (if provided)

Note: This only applies to replacements, not initial furnishing of a new property. And only the like-for-like cost – not upgrades.

❌ What You Cannot Claim

• Capital costs – buying the property, stamp duty (LBTT in Scotland)
• Improvements – extensions, conversions, upgrades beyond replacement
• Personal expenses – your own living costs
• Void periods (partially) – you can't claim mortgage capital repayments
• Full mortgage payments – only interest gets the 20% credit

Frequently Asked Questions