Is mortgage arrangement fees
tax deductible?

For residential landlords, not as a deduction. The costs of getting a loan for a residential let, such as arrangement and broker fees, are finance costs that give a 20% tax reduction, like the interest (GOV.UK; SA105 notes). For commercial lets and business loans, the costs of getting the loan are deducted in full.

Mortgage fees follow the interest. For a residential let, the costs of getting or repaying the loan are finance costs, restricted to basic-rate relief just like the interest. For a commercial let or a trading loan, they are ordinary deductible costs. On your own home, they are personal, even if you work from it.

Is mortgage arrangement fees tax deductible?

The HMRC rule

Mortgage and loan interest and other finance costs for residential lets are not deducted from rental profit. They give a tax reduction at the basic rate of 20 per cent instead. Non-residential finance costs are deducted in full. The rule comes from Work out your rental income when you let property, Legal and financial costs.

GOV.UK lists fees and any other incidental costs for getting or repaying mortgages and loans among the finance costs restricted for residential landlords (landlords). The SA105 notes say the costs of getting a loan to buy a residential property you let go in box 44 for a tax reduction, while those for a non-residential property are claimed in full in box 26 (SA105 notes). Business loan costs are allowable finance costs for sole traders (legal and financial costs).

When you can claim it

• For residential lets, a 20% tax reduction on arrangement, broker and valuation fees for the loan.
• For commercial lets, the full cost of getting the loan.
• For a trading business, arrangement fees on business borrowing.
• Early repayment charges on refinancing, as finance costs.

When you cannot

• A deduction from rental profit for residential let mortgage fees.
• Fees on your own home’s mortgage.
• Fees on borrowing used for personal purposes.
• Survey fees for buying the property, which are part of the purchase cost.

What to claim instead

Enter residential finance costs, including fees, in box 44 of the UK property pages. Keep lender and broker invoices with each property's records, because a remortgage produces new fees each time.

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? It is a running cost, so on the cash basis it counts when you pay it and on traditional accounting when you incur it. Nothing about it needs spreading over later years.
4. Is there a specific rule? For mortgage arrangement fees, the deciding rule is residential property finance costs: mortgage and loan interest and other finance costs for residential lets are not deducted from rental profit. They give a tax reduction at the basic rate of 20 per cent instead. Non-residential finance costs are deducted in full.

Worked example: a buy-to-let remortgage

A landlord remortgages a buy-to-let flat, paying a £999 arrangement fee and a £400 broker fee. Both are residential finance costs: she enters £1,399 in box 44 with her mortgage interest, giving a tax reduction of £279.80. They are not deducted from her rental profit.

Fees added to the loan

Many lenders let you add the arrangement fee to the mortgage. The fee is still a finance cost when incurred, and the interest on it is part of your interest. For residential lets, both are restricted to the 20% tax reduction.

Spreading fees over the loan

On traditional accounting, costs of obtaining finance can be spread over the term of the loan in line with accounting practice. On the cash basis, the default for most landlords, they are dealt with when paid. For residential lets, the timing affects when you get the 20% reduction.

Survey and valuation fees

A valuation required by the lender for the loan is a cost of getting finance. A survey you commission to decide whether to buy is part of the cost of acquiring the property, which counts for Capital Gains Tax rather than rental income.

Commercial lets and mixed borrowing

If a loan funds both residential and non-residential property, apportion the fees and interest reasonably. Only the residential part is restricted; the non-residential part is deducted in full in box 26.

Trading businesses

A sole trader who borrows for the business can claim arrangement fees as a finance cost, in box 25 or 26. Fees on a loan used partly for personal purposes are allowable only for the business share.

Your own home

Mortgage fees on your own home are personal, even if you work from home. A working-from-home claim can include a share of mortgage interest, but not arrangement fees for the mortgage.

If you are a landlord

Residential landlords enter arrangement, broker and similar loan fees in box 44 with the interest, for a 20% tax reduction (GOV.UK). Non-residential finance costs go in box 26 and are deducted in full.

Where it goes on your return and in MTD

It is not an allowable expense, so it does not reduce your profit. Where your bookkeeping shows it as a business payment, record it as drawings, or include it and add it back as a disallowable expense on the full self-employment pages.

For a landlord, it belongs in residential property finance costs (SA105 box 44 on the UK property pages), and in the matching category of a Making Tax Digital property update.

If your turnover was under £90,000, you can use the short self-employment pages (SA103S), which ask for a single figure for total allowable expenses rather than a box-by-box breakdown, and the full pages let you give just a total in box 31 too. The category still matters for your own records and for Making Tax Digital, where each quarterly update uses the same categories unless you choose to send one consolidated figure.

The accounting basis changes when a cost counts. On the cash basis, the default for sole traders since 2024/25, it counts when you pay it; on traditional accounting, when you incur it, with things you keep claimed through capital allowances.

How much an allowable cost saves

An allowable expense does not come back to you in full: it reduces your profit, so it saves tax at your marginal rate. For a sole trader in England, Wales or Northern Ireland that is 26p in the pound at the basic rate (20% Income Tax plus 6% Class 4 National Insurance) and 42p at the higher rate. The sole trader tax calculator works out the figure for your own profit.

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 bank and card statements, loan agreements and annual interest statements, and a note of how you split any account or loan used for both business and personal purposes. Records must be kept for at least five years after the 31 January deadline for the tax year.

If Making Tax Digital for Income Tax applies to you (qualifying income over £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028), the records must be digital, and each quarter's costs go into a quarterly update. Check your date with the MTD requirement checker.

Common mistakes

• Deducting residential mortgage fees from rental profit.
• Treating purchase surveys as loan costs.
• Claiming fees on your own home’s mortgage.

Related expenses

This item sits in the bank, credit card and other financial charges category, alongside bank charges and platform and payment fees. The A to Z of expenses answers the same question for every other cost.

If you record your costs in TapTax, each one lands in the HMRC category it belongs to, with its receipt attached, so your quarterly updates and year-end return use the same figures.