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Relief for post-letting expenses

July 3, 2025

All good things come to an end, and a property rental business is no exception. However, expenses may be incurred in relation to that property rental business after it has ceased. Where this is the case, it may be possible to obtain tax relief for those expenses.

End of the property rental business

A property business may comprise more than one let property (including holiday lets). The business will only come to an end when all the properties have been disposed of or are being used for other purposes.

If one property in that business ceases to be let or is sold, the business will not come to an end. However, if the property rental business comprises only one property, the business will cease when that property is sold or used for other purposes.

Post-cessation expenses

Expenses may be incurred in relation to a property rental business after it has come to an end. However, all is not lost. Special rules allow tax relief for expenses that are incurred within seven years from the date on which the property business ceased, which would have been deductible had they been incurred while the property business was ongoing. For example, a former landlord may incur expenses in recovering unpaid rent from a tenant or recovering cleaning and other costs from a tenant who vacated a property without leaving it in good order.

Where relief is claimed, a claim must be made on or before the first anniversary of the 31 January following the tax year in which the payment was made. For post-cessation expenses incurred in 2025/26, the claim must be made no later than 31 January 2028. Where there are also post-cessation receipts in the same year, the post-cessation expenses are deducted from those receipts.

It may be that there are no post-cessation receipts from which to deduct the expenses. Where this is the case, relief may be available against general income or capital gains.

Post-cessation receipts

In the same way that relief may be available for expenses incurred after the property rental business has ceased, any post-cessation receipts, such as overdue rent or an insurance payout, are taxable in the year in which they are received.

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