Is Landlord Insurance Tax Deductible?
Yes. Landlord insurance is an allowable expense against your rental profit, and HMRC lets you deduct the whole gross premium including the 12% Insurance Premium Tax charged on it.
That covers landlord buildings insurance, the contents cover on items you provide, and property owners’ liability. It also covers rent guarantee and legal expenses cover.
A £320 policy cuts a basic rate landlord’s tax bill by £64 today and by £70.40 from April 2027. This guide covers what qualifies, how to claim it, and how the money is taxed when you actually make a claim.
This is general information rather than tax advice. Check your own position with an accountant or with HMRC before you file.
Landlord insurance is an allowable expense against your rental profit, and you deduct the gross premium including the Insurance Premium Tax charged on it. That takes in buildings and contents cover on items you provide, property owners’ liability, rent guarantee and legal expenses, all entered on the property pages of your Self Assessment return. The Section 24 interest restriction does not touch insurance, but a payout replacing lost rent is taxable income, while one for repairs is usually set against the cost.
Compare landlord insurance quotes and keep the premium as a deductible expense.
- Which insurance costs can you deduct from rental income?
- How do you claim it on your self assessment return?
- Does the section 24 restriction apply to insurance?
- How is an insurance payout taxed?
- Should you claim expenses or the £1,000 property allowance?
- Is it different if you own through a limited company?
- What Changes for Landlords in 2027 and 2028?
- Frequently asked questions (FAQs)
Which insurance costs can you deduct from rental income?
Every premium you pay to protect a property that is let or available to let, plus the Insurance Premium Tax and any broker fee on top. Cover on a home you live in yourself is not deductible.
What hmrc’s property income manual says
HMRC’s guidance on working out your rental income lists insurance as an allowable expense and names buildings, contents and public liability policies. PIM2110 of the Property Income Manual goes wider, allowing premiums against the risk of damage to the fabric of the property, damage to the contents and loss of rents.
The test is purpose, not the name on the schedule. If the premium was paid for the purposes of the property business, it comes off the profit.
Cover on your own home is a private cost and stays out of the calculation. Our comparison of landlord and home insurance explains why a standard home policy would not respond to a let property in any case.
Is Insurance Premium Tax deductible too?
Yes, and it is worth checking you are claiming the gross figure. At the 12% standard rate a £320 premium is £285.71 of net premium plus £34.29 of tax, and the deductible amount is the full £320.
A broker’s arrangement fee is deductible on the same basis. So is any optional section you bolted on, including accidental damage cover.
| Cover or cost | Deductible? | How HMRC treats it |
| Landlord buildings | Yes | Revenue expense against property income |
| Landlord contents | Yes | Only items you provide, not the tenant’s own |
| Property owners’ liability | Yes | Revenue expense, no restriction applies |
| Rent guarantee | Yes | Premium deductible, any payout taxed as rent |
| Legal expenses | Yes | Deductible; recoveries follow the cost they replace |
| Home emergency | Yes | Revenue expense against property income |
| Unoccupied property cover | Yes | Deductible while the property is available to let |
| Insurance Premium Tax at 12% | Yes | Part of the gross premium you actually paid |
| Broker arrangement fee | Yes | Cost of arranging cover for the business |
| Insurance on your own home | No | Private expense, not a property business cost |
How do you claim it on your self assessment return?
Put the premiums you paid during the tax year into the allowable expenses section of the SA105 UK property pages. One SA105 covers every UK property you let.
From renewal notice to sa105
- Collect the schedules, renewal notices and bank statements covering 6 April to 5 April.
- Total the gross premiums paid in that year, including monthly instalments, IPT and broker fees.
- Enter the figure alongside agent fees, repairs, ground rent and accountancy in the allowable expenses box.
- File online by 31 January after the tax year ends, or by 31 October if you file on paper.
The usual Self Assessment deadlines apply whether the property made a profit or a loss. Government guidance on paying tax when you rent out a property sets out when you have to register in the first place.
If one contract covers several properties, use the insurer’s per-property breakdown. A multi-property policy quoted as a single figure needs a fair and consistent split, such as rebuild value or rent.
How long you have to keep the paperwork
HMRC asks individuals to keep property records for at least five years after the 31 January filing deadline for that tax year. Companies keep theirs for six years from the end of the accounting period.
Scanned schedules and downloaded statements are accepted. What HMRC wants is proof of the amount and the date you paid it.
Does the section 24 restriction apply to insurance?
No. Section 24 restricts finance costs only, and insurance is an ordinary revenue expense that still comes straight off your rental profit.
Why insurance is not a finance cost
The restriction bites on mortgage interest, loan arrangement fees and interest on loans taken out to buy furnishings. A buy-to-let mortgage is caught by it, and the policy insuring the same building is not.
Since 6 April 2020 you get no deduction at all for residential finance costs. You get a basic rate tax reduction instead, worth 20% of the lowest of your finance costs, your property profits or your adjusted total income.
That is why the two costs behave differently. A higher rate landlord saves £400 of tax on £1,000 of premiums but only £200 on £1,000 of mortgage interest.
What a deduction is worth in your tax band
| Your tax position | Tax saved on £1,000 of premiums | From April 2027 | Why it changes |
| Basic rate taxpayer | £200 (20%) | £220 (22%) | Property basic rate rises two points |
| Higher rate taxpayer | £400 (40%) | £420 (42%) | Property higher rate rises two points |
| Additional rate taxpayer | £450 (45%) | £470 (47%) | Property additional rate rises two points |
| Company, profits to £50,000 | £190 (19%) | £190 (19%) | Small profits rate, unchanged |
| Company, profits over £250,000 | £250 (25%) | £250 (25%) | Main rate, unchanged |
Run those numbers before you trim cover to save money. Dropping a £320 policy to £260 leaves a higher rate landlord just £36 better off after tax, so it usually pays to compare cover across specialist landlord insurers instead of cutting the sections you might claim on.
How is an insurance payout taxed?
It depends on what the money replaces. A repair recovery is set against the repair cost, a loss of rent payout is taxed as rental income, and a capital payout sits outside your rental profit altogether.
Repair claims are netted off the repair bill
PIM2040 tells HMRC officers to allow as a deduction only the excess of the repair cost over the insurance recovery. On a £6,000 escape of water claim that pays out £5,500, the deductible figure is the £500 you carried yourself.
You can also show the full £6,000 as an expense and the £5,500 recovery as a receipt, which HMRC accepts. Either way your policy excess ends up relieved against the rental profit.
Loss of rent payouts are taxable rent
PIM2110 treats an insurance recovery for lost rents as income of the property business. So a loss of rent settlement goes on your return as rental income, taxed exactly like the rent it stands in for.
None of that is a reason to skip the cover. The premium was deductible on the way in, and the payout is taxed at the same rate as the rent you lost.
When a payout is capital rather than revenue
If the work is an improvement rather than a like-for-like repair, the spend is capital and the recovery follows it. Capital costs stay out of your rental profit and come into play against Capital Gains Tax when you sell.
Swapping a failed boiler for a similar model is a repair. Replacing it with a larger zoned system is an improvement, and the tax relief waits until disposal.
Should you claim expenses or the £1,000 property allowance?
Claim expenses whenever they add up to more than £1,000, which they almost always do once insurance and agent fees are counted. The property allowance is built for very small rental incomes, not for a let property carrying a policy.
How the property allowance works
HMRC gives you up to £1,000 a year of tax-free property income. Take the allowance and you cannot deduct a single expense, insurance included.
Gross property income of £1,000 or less usually means nothing to report at all. Above that you can deduct the £1,000 instead of your real costs, but not both.
Where the break-even point sits
Add up your premiums, agent fees, repairs, ground rent and accountancy. A flat let at £900 a month with a £320 policy and 10% agent fees clears £1,000 of expenses on those two lines alone.
The choice applies to the whole UK property business, not to one property. If you also let a garage or a parking space, the same decision covers them.
Is it different if you own through a limited company?
The premium is still fully deductible, but it comes off the company’s taxable profit rather than your personal rental income. The company claims it in its Corporation Tax return, not on an SA105.
How a company claims the premium
Insurance is a revenue expense in the company accounts, deducted before Corporation Tax is worked out. The saving is 19% on profits up to £50,000 and 25% on profits above £250,000, with marginal relief in between.
Company records have to be kept for six years from the end of the accounting period. Making Tax Digital for Income Tax does not apply to companies at all.
Where companies come out ahead
Section 24 does not apply to companies, so mortgage interest is deductible in full alongside the insurance. That is the single biggest reason incorporated portfolios have grown since 2020.
The trade-off is getting the profit out. Dividends and salary are taxed again in your hands, which can cancel the Corporation Tax advantage on a small portfolio.
What Changes for Landlords in 2027 and 2028?
Making Tax Digital pulls far more landlords into quarterly reporting, and the rates of tax on property income rise by two percentage points from April 2027. Insurance stays deductible throughout, and each pound of it becomes worth slightly more.
The making tax digital timetable
Whether you are caught by Making Tax Digital for Income Tax turns on qualifying income, which HMRC defines as your total self-employment and property income before expenses. It is turnover rather than profit, so £52,000 of rent counts even after £20,000 of costs.
| Qualifying income | Mandatory from | What you file |
| Over £50,000 | 6 April 2026 | Quarterly updates plus a final declaration |
| Over £30,000 | 6 April 2027 | Quarterly updates plus a final declaration |
| Over £20,000 | 6 April 2028 | Quarterly updates plus a final declaration |
| £20,000 or less | Not mandated | Self Assessment on the current timetable |
Insurance goes into the quarterly update covering the period you paid it. The figures are cumulative, so a premium missed in one quarter can be picked up in the next.
The new property income tax rates
For 2027 to 2028 onwards, HMRC’s policy paper on changes to tax rates for property, savings and dividend income sets a property basic rate of 22%, a higher rate of 42% and an additional rate of 47%.
That is two percentage points on every band, and it applies to rental profit rather than employment income. A £400 policy that saves a higher rate landlord £160 today will save £168.
Frequently Asked Questions (FAQs)
Yes, where the underlying work is a revenue repair. HMRC allows the repair cost over and above what the insurer paid, and that difference is normally your excess.
Yes, as long as it is available to let and you are looking for a tenant. Take it off the rental market for good and the premiums stop qualifying.
Yes. Claim the instalments paid during the tax year, and record any credit charge the insurer adds separately from the premium itself.
Yes, as an ordinary property business expense. The furnished holiday lettings regime was abolished from 6 April 2025, so short-let and Airbnb cover is now claimed on the same basis as any other let.
Yes. The allowance and your actual expenses are alternatives, so you pick one or the other for the whole UK property business.
Costs incurred before letting begins can generally be treated as incurred on the first day of the business, provided they would have been allowable then.
Only if the figure does not match your records. Keep the schedule, the renewal notice and the payment showing the gross amount you paid.
No. Premiums are a revenue cost against rental income, and only capital improvement spending reduces the gain on disposal.
Yes. It increases the loss, which you carry forward against future profits of the same property business.
Not under the Rent a Room scheme, which gives £7,500 of tax-free income in place of any expense deduction. You can opt out and claim a fair share of costs instead.
Yes. HMRC treats a recovery for lost rents as income of the property business, so it goes on your return alongside the rent you did collect.