How to Save Money on Property Tax

property tax relief

Property owners can save a lot of money from rental tax. One of the essential and crucial steps they can make to save money when renting out property in the UK is to notify the HM revenue and customs and going ahead to pay tax. This is essential as it will prevent them from charging penalties.

Another aspect to saving money from rental property tax is understanding the different tax rules for different kinds of rental properties such as: residential properties, furnished holiday lettings, commercial properties and thus, using these tax rules to your advantage to reduce tax.

Save Money on Property Tax

Image Courtesy: Practical Taxes Accounting

For example, on residential properties, you must pay tax on the profit you make from renting out the property, after deductions for permitted expenses. In the case of holiday homes that are furnished, you can claim machinery allowances, plant allowances, capital allowances on furnishings and furniture and also on equipment that is used outside the property.

Another provision is Capital Gains Tax reliefs which cover gifts of business assets, Entrepreneurs’ Relief and relief for loans to traders. These can reduce the tax to be paid.

Allowable expenses that were mentioned earlier in the article are things you need to expend on in the daily running of the property. They are typically spent to ensure the smooth functioning of the property. They include:

Agent Letting Fees

If you employ agents to manage your property or to find tenants, you’ll you could claim £1,350 a year for agency letting fees.

Mortgage Interest

You can use the interest you pay on your mortgage each year to offset your tax bill.

Advertising & Tenancy Agreements

If you advertise to attract prospective tenants or buy a tenancy agreement, you can claim these back as tax deductibles.


Any expenditure on maintenance and repair to keep a property in good condition is tax deductible. These could include painting of the premises and fixing broken items such as doors and windows.


For furnished properties, you can claim the precise cost of replacing the individual furniture or wear and tear allowance, which is usually 10% of the annual rent

Service Charges

You can deduct charges for the services that you provide within the property such as lighting, security and garbage collection.

Council Utility Bills

You can claim the whole amount of a paid council utility bill as a tax deductible. Council utility bills and tax bills can be claimed even during the period there is a vacancy in the rental property.

The points discussed above are just some of the aspects of rental property tax in the UK which property owners can utilize to reduce their total tax due. This will enable them to save money and have a modest return on their investment on the rental property.

Property owners should understand the tax rules that apply to different rental properties in order to identify areas in which they can qualify for tax deductibles.

Time to keep track of the expenses beyond your home?

Share This: