Can landlords claim ground rent, service charges and insurance?

Yes. GOV.UK lists ground rents, service charges and landlord insurance among the costs you can claim, so in 2026-27 they come off your rent if you pay them yourself. Reserve fund payments and improvement works need more care.

The rules below follow GOV.UK and HM Revenue and Customs' Property Income Manual (PIM), checked on 17 October 2026, for an individual landlord letting a leasehold flat in England.

What the rules say

GOV.UK's guide to rental income lists "ground rents and service charges" and "insurance, such as landlords' policies for buildings, contents and public liability" as expenses you can deduct if you pay for them yourself. The general test is that the cost is wholly and exclusively for renting out the property.

• Ground rent. PIM2205 says rent you pay is deductible if paid wholly and exclusively for the property business. If you let part of a property and live in the rest, only the let share counts, and HMRC says that applies to ground rent.
• Insurance. PIM2110 allows premiums covering damage to the fabric of the property, damage to the contents, and loss of rents, including while a property held for letting is empty for a time. Rent guarantee insurance covers loss of rent, so in our reading it is allowable too.
• Insurance payouts. A payout for damage is normally set against the repair it pays for, and GOV.UK says you only claim the repair costs the payout did not cover. A payout for lost rent is taxable income (PIM2110).

Which costs count

Reserve and sinking funds

Many leases make you pay towards a reserve or sinking fund for future major works. HMRC's manuals (PIM1075, TSEM5730) say that where the lease requires these payments, the fund is held on trust under section 42 of the Landlord and Tenant Act 1987, even if the freeholder company holding it does not see itself as a trustee. Section 42 does not apply where the landlord is an exempt landlord (PIM1075).

HMRC does not say directly when a leaseholder can claim the reserve part. Its manual does say a provision for repairs a landlord plans to make in future is not deductible (PIM2040). In our reading, a reserve contribution is similar: the money is held on trust and has not yet been spent on your property, so the cautious approach is to claim it when the fund pays for repairs, and not to claim the share that pays for improvements. Ask your managing agent to show the reserve part separately on each demand.

Major works and section 20

A section 20 notice starts the consultation a freeholder must carry out before major works if it wants to charge any one leaseholder more than £250 for them (regulation 6 of the 2003 regulations), unless a tribunal waives the consultation. In our reading, the bill takes the treatment of the works. Repairing the existing roof is a repair. Adding something that was not there before is capital: GOV.UK's example is a security system where there was not one before, and in our reading a new lift or door entry system is the same. Under the cash basis, capital spending on an ordinary residential property is still not deductible (PIM1095). Keep capital bills for your Capital Gains Tax figures.

Prepaid insurance: cash basis or accruals

The cash basis is the default for most individual landlords with receipts of £150,000 or less (PIM1092). You claim an expense in the tax year you pay it (PIM1094), so a full year's premium paid in March 2027 counts in 2026-27.

If you opt out and use traditional (accruals) accounting, the premium is spread over the period it covers. HMRC's example in PIM1102 splits each premium by the months of cover falling in each tax year.

A worked example

A landlord lets a leasehold flat in Bristol for £1,100 a month and uses the cash basis. In 2026-27 she pays:

Her profit before other costs is £13,200 − £4,810 = £8,390. Using accruals, only about £30 of the insurance (1 month of 12) would count in 2026-27, with £330 in 2027-28. This is an example only.

What this means for you

In our reading, most of what a leaseholder landlord pays the freeholder and the insurer is claimable. The main things to watch are paying for buildings insurance twice, reserve fund payments and improvement works on a section 20 bill. The guide to repairs and improvements covers the test.

Steps to claim these costs

1. Collect the ground rent and service charge demands, the insurance schedules and any section 20 notices for the year.
2. Ask the managing agent to split each demand into day-to-day costs, insurance, reserve fund and major works.
3. Record each payment on the date you paid it, if you use the cash basis.
4. Split any major works bill into repair and improvement. Keep the improvement part apart as capital.
5. Keep the paperwork for at least 5 years after the 31 January deadline for that year's tax return, as GOV.UK says.

Under Making Tax Digital (MTD), each payment becomes a digital record. The free MTD check shows when it starts for you, and the landlord section has more guides.