Is letting and estate agent fees
tax deductible?

Yes for letting agents: fees for finding tenants, collecting rent and managing a let property are allowable (GOV.UK). Estate agent fees for buying or selling a property are not rental expenses; selling fees reduce the gain for Capital Gains Tax instead (GOV.UK).

Letting agents usually take a percentage of the rent for managing a property, or a one-off fee for finding a tenant. Both are straightforward letting expenses. Estate agents who sell a property for you are a different matter: their fee is a cost of disposing of the asset, which counts in the Capital Gains Tax calculation rather than against your rent.

Is letting and estate agent fees tax deductible?

The HMRC rule

Landlords can deduct costs wholly and exclusively for the letting: repairs, water rates, council tax, gas and electricity, insurance, letting agent and management fees, ground rents, service charges and accountancy. The rule comes from Work out your rental income when you let property, UK property notes, SA105.

GOV.UK lists letting agent fees and management fees among the expenses a landlord can deduct (landlords). The SA105 notes put management fees paid to an agent for rent collection, advertising and administration in box 27 (SA105 notes). Costs of selling a property, such as estate agent fees, are deducted when working out the gain (Capital Gains Tax on property).

When you can claim it

• Monthly management fees, usually a percentage of rent.
• Tenant-find and letting fees.
• Inventory, check-in and check-out fees.
• Referencing, tenancy renewal and deposit registration fees you pay.

When you cannot

• Estate agent fees for selling the property, against rent.
• Agent or finder fees for buying a property.
• Fees for managing your own home.
• Fees charged to tenants that you pass on, which are not your cost.

What to claim instead

Estate agent fees when you sell a let property reduce the gain for Capital Gains Tax. Fees for buying a property are part of its cost. Keep both with the property's records.

How to decide if you can claim it

1. Was it for the business? A cost is only allowable if you incur it wholly and exclusively for the business. If it also serves a personal purpose that cannot be separated, such as clothing that keeps you warm or a meal that keeps you going, HMRC disallows it.
2. Is part of it personal? Where a cost has a business part you can identify, such as the business calls on a phone bill or the business miles in a car, you claim that part and leave the rest out, on a reasonable basis you can explain.
3. Is it a running cost or something you keep? Whether it is a running cost or something you keep depends on what you buy. Items used up within two years, and regular renewals, are running costs; things you keep are relieved through capital allowances on traditional accounting and as expenses on the cash basis.
4. Is there a specific rule? For letting and estate agent fees, the deciding rule is running costs of a let property: landlords can deduct costs wholly and exclusively for the letting: repairs, water rates, council tax, gas and electricity, insurance, letting agent and management fees, ground rents, service charges and accountancy.

Worked example: a fully managed let

A landlord's agent charges 12% of £15,600 rent for full management, £1,872, a £480 tenant-find fee on a new tenancy and £150 for an inventory. All £2,502 is allowable. When she later sells the property, the £4,200 estate agent fee reduces her gain instead.

Management and letting fees

Full management fees, rent collection fees and tenant-find fees are all running costs of the letting business, allowable in the year they relate to. Agents usually deduct their fees from the rent they pass on: declare the full rent as income and the fees as expenses, not just the net amount you receive.

Tenant fees and what landlords pay

In England, the Tenant Fees Act 2019 bans most fees charged to tenants, so landlords now pay for referencing, inventories and tenancy set-up. These are allowable. Similar rules apply in Wales and Scotland. Holding deposits and permitted payments from tenants are not your costs.

Agent statements

Your agent's annual statement shows the gross rent, fees and other costs they paid on your behalf, such as repairs. Use it to check your figures, and make sure repairs paid by the agent are claimed once, not twice.

Buying and selling fees

Fees paid to a buying agent or property finder are part of the purchase cost. Estate agent fees on sale are a cost of disposal. Both reduce the gain for Capital Gains Tax, not rental income.

Short-term and holiday lets

Booking platform commissions and management company fees for holiday lets are allowable letting costs in the same way. Since April 2025, holiday lets are treated as residential lets, with the same finance cost restriction.

Switching or leaving an agent

Termination fees and fees for transferring a tenancy when you change agents, or take over management yourself, are allowable running costs, provided the property stays in the letting business.

VAT on agent fees

Letting agents usually charge VAT on their fees. Residential rent is exempt from VAT, so most landlords cannot reclaim it and claim the gross fee as the expense.

Where it goes

Letting and management fees go in legal, management and other professional fees, box 27 of the UK property pages. If your property income is under £90,000, you can add all expenses together in box 29 instead.

If you are a landlord

Letting agent, management, tenant-find and inventory fees are allowable in box 27 of the UK property pages (SA105 notes). Estate agent fees on sale reduce Capital Gains Tax.

Where it goes on your return and in MTD

For a landlord, it belongs in legal, management and other professional fees (property) (SA105 box 27 on the UK property pages), and in the matching category of a Making Tax Digital property update.

Most sole traders now use the cash basis, the default from the 2024/25 tax year, which counts a cost when you pay it. On traditional accounting you count it when you incur it, and equipment you keep goes through capital allowances rather than expenses.

How much an allowable cost saves

The value of a deduction is the tax it removes from your profit, not the cost itself. At the basic rate a sole trader saves 26p for every pound of allowable expense, at the higher rate 42p, and in the personal allowance taper between £100,000 and £125,140 as much as 62p. Landlords pay no Class 4 on rental profit, so they save 20p or 40p.

What £1,000 of allowable expense saves a sole trader in 2026/27

• Basic rate (20% + 6%)£260
• Higher rate (40% + 2%)£420
• Additional rate (45% + 2%)£470
• Allowance taper band (60% + 2%)£620

Records to keep

Keep invoices that describe the work or service, the tenancy agreement, agent statements and, for major work, before and after photos. Keep capital costs with the property’s purchase records, because they reduce any capital gain when you sell. Records must be kept for at least five years after the 31 January deadline for the tax year.

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 keep these records digitally and send quarterly updates under Making Tax Digital, falling to £30,000 from April 2027 and £20,000 from April 2028. The MTD requirement checker shows when it applies to you.

Common mistakes

• Declaring rent net of agent fees.
• Claiming estate agent sale fees against rent.
• Claiming agent-paid repairs twice.

Related expenses

This item sits in the legal, management and other professional fees (property) category, alongside accountancy fees, lease extension, legal fees and tax investigation insurance. The A to Z of expenses answers the same question for every other cost.

TapTax sorts each cost into the right category as you record it, applies the business share where you set one, and keeps the receipts with the figures, ready for your quarterly updates and final return.