Usually yes. Expenses before your first let are treated as incurred on the day your rental business starts, provided they fall within seven years before it began, are the kind you could have deducted once letting, were wholly and exclusively for the rental business and are not capital. HMRC's Property Income Manual sets this out at PIM2505.
The rule in plain terms
A new landlord often spends money before there is any rent. HMRC's rule gives that spending a home: it is treated as if you incurred it on the day your rental business started, and is deducted from that year's rents with the other allowable expenses. Three conditions apply. The cost must fall within seven years before the business began, it must not be otherwise allowable, and it must be something you could have deducted had you been letting at the time.
It still has to pass the usual tests
The cost must also be wholly and exclusively for the rental business and must not be capital. This is where claims fail, not on timing.
Repairs or improvements
- Repair, usually allowable: fixing damage, repainting, replacing worn fittings with equivalent ones.
- Improvement, capital: an extension, a new access road, refurbishing a derelict property.
- Modern equivalent: replacing old materials with modern ones of broadly the same kind is usually still a repair, unless it gives a significant improvement.
Properties bought in poor condition
If the property could not be let until the work was done, or you paid less because of its condition, HMRC treats the repairs as capital. Check this before you claim, because it is the usual point of challenge.
Your own home
If you are moving out of your own home and letting it, costs that were really about living there are not relieved. The business only starts when letting does.
Other items
Furniture and appliances follow separate rules, which depend on whether you use the cash basis or traditional accounting. Qualifying capital costs can also attract allowances. Both are worth checking before you file.
Keeping the claim safe
Keep the evidence together as you go. See also what landlords can claim during void periods and the landlord tax return.
Sources: HMRC manual PIM2505: commencement of a rental business · HMRC manual PIM2030: is the expenditure capital?
Frequently asked questions
Speak to James Fitzpatrick: free consultation
New landlord with costs before the first let? We will tell you what to claim and what to leave out.
Book a free consultation Call 07534 476727