Repairs vs Improvements: What Landlords Can Deduct (2026/27)
Last updated 23 June 2026 · 9 min read · By the LandlordTaxAi Editorial Team
The short answer
A repair restores the property to its original condition — it is a revenue cost you deduct against rental income now. An improvement enhances the property beyond its previous state — it is capital, so you cannot deduct it now, but you add it to your cost when you sell, cutting Capital Gains Tax later. Replacing like-for-like with a modern equivalent still counts as a repair.
“Is a new kitchen a repair or an improvement?” is one of the most-asked landlord tax questions — and getting it wrong either inflates your tax bill or invites an HMRC enquiry. The distinction between revenue and capital decides which tax the cost reduces and when you get relief. This guide draws the line clearly, with examples and a worked case. It pairs with replacement of domestic items relief for movable furnishings.
Why the line matters
| Repair (revenue) | Improvement (capital) | |
|---|---|---|
| Reduces | Rental income (Income Tax) | Capital gain (CGT) on sale |
| When | The tax year you spend it | Only when you eventually sell |
| Rate | Up to 45% relief (your income tax rate) | 18% / 24% relief (the CGT rate) |
A repair usually gives faster and often larger relief, which is why landlords prefer costs to qualify as repairs — but you cannot simply relabel an improvement. The facts decide it.
Clear examples on each side
Repairs (deduct now)
- Repainting and redecorating
- Fixing a leaking roof or replacing tiles
- Replacing a broken boiler with a similar one
- Single to double glazing (modern equivalent)
- Mending guttering, fences and gates
- Like-for-like kitchen or bathroom replacement
Improvements (capital)
- Extensions and loft conversions
- Adding a new bathroom or en-suite
- Upgrading to a much higher specification
- Converting a house into flats
- A new conservatory or garage
- Initial repairs to make a wreck lettable
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Rental profit & tax calculator
Estimate the tax on your rental income for 2026/27
Result
- Taxable profit (rent − expenses)
- £11,200
- Income Tax at 40%
- £4,480
- Less mortgage interest credit (20%)
- − £1,000
- Tax due on this property
- £3,480
- Income after tax
- £7,720
Estimate based on verified 2026/27 UK rates. Informational only — not personal tax advice.
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See how it worksThe modern-materials exception
The most useful rule for landlords: if you replace something using the nearest modern equivalent, it is still a repair — even though the new version is technically better. You cannot buy 1980s windows or an obsolete boiler today, so HMRC accepts that fitting the current standard is restoration, not improvement. The line is only crossed when you go beyond a fair modern equivalent into genuine betterment — for example ripping out a basic kitchen to fit a luxury one, or adding units and appliances that were never there.
A worked example
Nadia spends £8,000 on her rental’s kitchen. £6,000 replaces the tired old units and appliances with a similar mid-range kitchen; the other £2,000 adds an island and extra cabinets that were never there.
| Like-for-like replacement | £6,000 | Repair — deduct now |
| Island + extra units (betterment) | £2,000 | Capital — adds to CGT cost |
Nadia deducts £6,000 against this year’s rental income and records the £2,000 as a capital improvement to set against her gain when she eventually sells. Splitting a mixed project like this — and keeping the invoices that prove the split — is exactly what HMRC expects, and it keeps you out of trouble in an enquiry.
Frequently asked questions
Is a repair tax deductible for landlords?
Yes. The cost of repairs and maintenance that restore a property to its original condition is a revenue expense, deductible in full against your rental income in the year you incur it. Examples include redecorating, fixing a leak, replacing broken roof tiles, servicing a boiler, and mending a fence. These reduce your taxable rental profit straight away.
Is an improvement tax deductible?
No — not against your rental income. An improvement is capital expenditure because it enhances the property beyond its original state, for example an extension, a loft conversion, or adding a new bathroom where there was none. You cannot deduct it from rental profit, but you can add it to your acquisition cost when you sell, reducing your Capital Gains Tax bill. So it is not lost relief — it just moves from income tax to CGT.
Is a new kitchen a repair or an improvement?
It depends on whether you replaced like-for-like or upgraded. Replacing a worn-out kitchen with one of a similar standard is generally a repair, even if the new units are modern equivalents, so it is deductible against rental income. But if you significantly upgrade — a much higher specification, or adding extra units and worktop where there were none — the improvement element is capital. HMRC accepts that you cannot buy 1980s materials today, so a modern equivalent is still a repair; deliberate betterment is not.
What about replacing single glazing with double glazing?
HMRC now accepts that replacing single-glazed windows with double glazing is a repair, not an improvement, because double glazing has become the standard modern equivalent. The same logic applies to many materials that have simply moved on. The test is whether you are restoring the property using what is normally available today, rather than genuinely enhancing it beyond its previous character.
Are initial repairs to a newly bought property deductible?
Usually not. If you buy a run-down property at a reduced price because it needs work before it can be let, those initial repairs are treated as part of the capital cost of acquiring it, not as deductible revenue repairs. They are added to your CGT base cost instead. Repairs only become deductible once the property is in a lettable state and the work is genuine ongoing maintenance.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 23 June 2026 · Based on HMRC guidance on the revenue-versus-capital distinction for property repairs (PIM2030 onwards). Figures are for the 2026/27 tax year. This article is informational only and does not constitute tax advice. Always check the latest details on GOV.UK or with a qualified accountant.