Top 9 Tax Deductions for Property Investors: Pay Less Tax in 2025

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Understanding tax deductions is crucial for landlords and property investors who want to keep more of their income while staying compliant with HMRC regulations.

Whether you own buy-to-let properties personally or through a limited company, these tax-saving strategies can help you offset expenses, reduce your overall tax burden, and increase your net profit. Many landlords and investors fail to claim all of the allowable deductions available to them, which can result in overpaying thousands in tax each year.

If you want to pay less tax on your property income and structure your portfolio in the most tax-efficient way, this video is essential viewing.

Key Tax Deductions Covered in This Video:

1. Mortgage Interest Relief – How to Offset Your Mortgage Costs

If you own property in your personal name, you can no longer deduct 100% of your mortgage interest as an expense due to the Section 24 tax changes. Instead, you can claim a 20% tax credit on mortgage interest payments, which can increase your taxable income and push you into a higher tax bracket.

However, if you own property through a limited company, mortgage interest is still a fully deductible business expense. This is a key reason why many landlords and property investors have moved their portfolios into Special Purpose Vehicle (SPV) limited companies to benefit from full mortgage interest deductions and lower corporation tax rates.

2. Repairs and Maintenance – What Counts as an Allowable Expense?

Landlords can claim tax relief on the cost of repairs and maintenance that keep their rental properties in a habitable condition. This includes expenses such as:
• Fixing broken boilers
• Repainting or redecorating between tenancies
• Replacing damaged carpets and flooring
• Repairing leaking roofs, faulty plumbing, or electrical issues

However, it is important to distinguish between repairs and capital improvements.

3. Directors’ Salaries – How to Pay Yourself Tax-Efficiently

If you operate your property business through a limited company, paying yourself a tax-efficient salary can help you reduce your corporation tax liability.

4. Pension Contributions – How to Reduce Tax and Build Wealth
One of the most underutilised tax deductions for property investors is pension contributions. If you own property through a limited company, your company can make employer contributions into your pension, which is:
• A fully deductible business expense, reducing your taxable profits
• Exempt from Income Tax and National Insurance Contributions
• Able to grow tax-free inside your pension, helping you build long-term wealth

Instead of taking all of your rental profits as dividends and paying tax, you could redirect some of those funds into a self-invested personal pension (SIPP) or a Small Self-Administered Scheme (SSAS) for significant tax savings.

5. Letting Agent and Property Management Fees
If you use a letting agent to find tenants or manage your property, you can deduct these costs from your taxable rental income. These expenses include:
• Tenant-finding fees
• Rent collection services
• Full property management fees
• Inventory checks and referencing costs

6. Home Office Expenses – Claiming for Property Management from Home

Many landlords manage their rental portfolios from home but fail to claim home office expenses as a deductible cost.

You can claim:
1. A flat-rate allowance of £6 per week (£312 per year) without needing to provide receipts.
2. A proportion of household costs (based on how much space is used for business) including:
• Mortgage interest or rent
• Council tax
• Utilities such as gas and electricity
• Broadband and telephone bills

7. Employing Your Children – Claiming ‘Pocket Money’ as a Business Expense

If you have children, you can legally employ them in your property business and pay them a reasonable salary for work they perform, such as:
• Administrative tasks like filing receipts and data entry
• Bookkeeping assistance
• Social media management for property marketing

By doing this, you:
• Can offset their wages as a deductible business expense
• Allow them to earn up to £12,570 tax-free (if below the personal allowance)
• Move money out of your property business without paying tax
As long as the salary is justifiable for the work performed, this is a completely legal and tax-efficient way to reduce your taxable profits.