The Non-resident Landlords Scheme - HM Revenue & Customs

• maintenance charges made by freeholders, or superior
leaseholders, of leasehold property;
• maintenance contracts (for example gas servicing);
• provision of services (for example gas, electricity, hot
water);
• rates;
• rental warranty and legal expenses insurance;
• repairs which are not significant improvements to the
property, such as
- damp and rot treatment,
- mending broken windows, doors, furniture,
cookers, lifts, and so on,
- painting and decorating,
- replacing roof slates, flashing and gutters,
- repointing, and
- stone cleaning;
• water rates.
Value Added Tax (VAT)
10.6 If any expenses that are deductible in computing the profits of
the rental business have borne Value Added Tax (VAT) and
that VAT cannot be relieved as ‘input tax’ because, for
example, the landlord is not registered for VAT, the deductible
expense is the amount inclusive of VAT.
Letting agents’ own fees
10.7 Subject to paragraph 10.4 above, letting agents’ own fees are
deductible expenses, even though they are retained by the
letting agent from rents received as opposed to paid out by the
letting agent to a third party.
Excess expenses
10.8 Where, in a quarter, letting agents pay out more in deductible
expenses than they receive in rental income, they can set off the
excess expenses against rental income received on behalf of the
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Non-resident Landlords Scheme: Guidance Notes (01/12) 48