Are HMO licence fees tax deductible?

Yes - HMO licence fees paid to the local authority are revenue expenses deductible against rental income. Planning application fees are also deductible in most cases.

Can I claim wear and tear on HMO furniture?

The old 10% Wear and Tear Allowance was replaced in 2016 with the Replacement of Domestic Items Relief. You can claim the cost of replacing (not improving) furniture, appliances, and fixtures in furnished HMO rooms.

Does an HMO count as a business for tax purposes?

HMO letting is generally treated as property investment income, not a trade. Very large scale, actively managed portfolios may qualify as a trade in limited circumstances, opening up different reliefs. Taxbix advises on your specific situation.

How is CGT calculated when selling an HMO?

CGT on HMO disposals is calculated the same way as standard BTL: the gain (sale price minus purchase price minus allowable costs) is taxed at 18% (basic rate) or 24% (higher rate) for residential property, reported within 60 days.

Property & Landlord Accounting

HMO Accountant UK

HMO landlords face more complex accounting than standard BTL landlords - with higher yields, greater maintenance costs, mandatory licensing obligations, and room-by-room income tracking. Taxbix specialises in HMO accounting.

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HMO Licensing and Tax Deductibility

Most large HMOs (5 or more occupants forming 2 or more households) require mandatory HMO licensing from the local authority. Some councils operate additional or selective licensing schemes covering smaller properties. HMO licence fees are deductible as a business expense against rental income - Taxbix ensures these and all other qualifying costs are correctly claimed.

Room-by-Room Income Accounting

HMO accounting requires tracking income room-by-room, with detailed records of occupancy, individual rental amounts, and void periods. This is considerably more complex than a single-tenancy BTL and requires a systematic approach from day one. Taxbix sets up the correct accounting structure for your HMO portfolio.

Replacement of Domestic Items Relief

HMO landlords providing furnished accommodation can claim the Replacement of Domestic Items Relief for replacing furniture, appliances, and fixtures. The relief covers the cost of the replacement item on a like-for-like basis - not an upgrade to a better quality item. Taxbix tracks all qualifying replacements and claims the relief in each annual Self Assessment.

Ltd Company for HMO Portfolios

Many HMO investors purchase through a Ltd company from the outset, given the higher yields and larger mortgage interest costs involved. A Ltd company can deduct full mortgage interest as a business expense, avoiding the Section 24 restriction that applies to individual landlords. Taxbix advises on the optimal structure before your first HMO purchase.

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