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What is Pre-letting expenses?
Last verified 23 October 2026
Pre-letting expenses are costs you pay before your property business starts, such as advertising or legal fees for a first tenancy. If they meet HMRC's conditions, they are treated as paid on the day the business starts and deducted from that year's rent.
Why it matters to landlords
To qualify, the cost must be paid within seven years before the property business starts, must not be deductible under any other rule, and must be a cost you could have deducted had it been paid once letting began. It must also be wholly and exclusively for the property business. Capital costs never qualify, so buying the property or improving it is not a pre-letting expense; HMRC notes that some work done on a property before you let it will be capital.
Keep the receipts from the start. Under Making Tax Digital for Income Tax you record these costs in your digital records so they are included in the first year's figures for your property business. The rule matters most in the first year, when rent may only cover a few months but you have paid a lot to get ready.
Example
In March you pay £450 to advertise a flat and £300 for an inventory, and the first tenant moves in on 1 June. Both costs are treated as paid on 1 June and deducted from that tax year's rent. The £8,000 extension you built before letting is capital and does not qualify.
Allowable expenses for landlords →