The £1,000 property allowance or actual expenses: which is better?

Updated 15 October 2026

Every individual landlord can deduct a flat £1,000 property allowance from gross rent instead of claiming actual expenses (gov.uk). You can't do both. If you use the allowance, you also lose the Section 24 finance-cost tax reducer for that year (HMRC PIM4460).

Rules of thumb

If your gross property income is £1,000 or less, it's fully covered and you may not need to report it.
The allowance can't create a loss, so if your costs are more than your rent, claim actual expenses.
If you have mortgage interest, actual expenses plus the 20% reducer usually win.

Example 1: no mortgage, low costs

Rent £8,000, costs £600, basic-rate taxpayer. With actual expenses: £7,400 × 20% = £1,480. With the allowance: £7,000 × 20% = £1,400. The allowance saves £80.

Example 2: same, plus £3,000 mortgage interest

With actual expenses: £7,400 × 20% = £1,480, minus the reducer (20% × £3,000 = £600) = £880. With the allowance: £1,400 and no reducer. Actual expenses save £520.

The tracker's Summary tab runs both options for you and shows which is lower.

Estimate only, not tax advice. Rough figures for individual UK residential landlords using England, Wales and Northern Ireland rates. Check with HMRC or a qualified accountant.

Keep MTD-ready records for every property with the UK Landlord Property Tracker (£12), or try the free Section 24 calculator.

Rates checked on 15 October 2026 against official sources: gov.uk income tax rates · Section 24 relief · property allowance · MTD quarterly updates · 2027/28 property rates (Finance Act 2026 s.7).

General information only, not tax, legal or financial advice. Our liability is capped at the price paid, as far as the law allows. Your statutory rights are not affected. See the terms of sale. · All Kept Sheets