Most holiday home owners overpay tax because they cannot prove their deductible expenses. A simple tracking habit changes that.
At the end of the tax year, your accountant asks for your expenses. You trawl through bank statements, try to remember what the payment to a plumbing company in March was for, and ultimately give up on anything you cannot identify with certainty.
The result: you understate your allowable expenses, you pay more tax than you need to, and you have spent hours doing it. This happens to a significant proportion of holiday let operators every year, and it is entirely avoidable.
The fix is not complicated — it is consistent, real-time expense logging throughout the year. When it is integrated with your property management system, much of it happens automatically.
For a property operating as a holiday let, a wide range of costs are deductible against rental income.
Property Operating Costs. Cleaning and laundry — professional cleaning between stays and laundry service are fully deductible. Utilities including electricity, gas, water, and broadband where you pay these. Gardening and grounds maintenance. Pool or hot tub servicing if applicable. Security monitoring subscriptions including smart lock management. Waste collection services for rural properties.
Repairs and Maintenance. Repairs to the fabric of the building are deductible as revenue expenses. Appliance repairs and servicing. Plumbing, electrical, and heating maintenance. Painting and decorating for maintenance purposes, not improvements.
Note: capital improvements — extending the property, adding a bedroom, replacing single-glazing with double — are not immediately deductible as revenue expenses. They may qualify for capital allowances. Seek accountancy advice on the distinction.
Professional and Management Costs. OTA platform commissions from Airbnb and Booking.com. Property management fees if you use a management company. Accountancy fees for preparing your rental accounts. Legal fees relating to the rental business. Property management software subscriptions including LetPilot.
Marketing and Guest Costs. Website costs. Professional photography. Guest welcome provisions and hampers (not personal consumption). Towels, bedding, and consumables provided to guests.
Financial Costs. Insurance premiums for specialist holiday let cover. Payment processing fees from Stripe. Mortgage interest — note the tax treatment has changed significantly following the abolition of the Furnished Holiday Let regime from April 2025. Seek current advice from an accountant who specialises in property.
Many hosts fail to claim expenses not because the expenses were not genuine, but because they have no receipt, they are not sure the expense is allowable, they cannot apportion mixed personal and business use, or they logged it too late and cannot remember the details.
Receipts paid in cash, email receipts that were deleted, expenses paid on a personal card that was never reconciled — these all result in legitimate deductions being missed. Over a year and across multiple properties, this can add up to a significant underclaim.
The most effective approach is logging expenses at the moment they occur, categorised correctly from the start. Photograph receipts immediately with a phone — in the car before you drive away from the supplier. Never let a receipt sit in a pocket for more than 24 hours. Use a dedicated card for all property expenses, making reconciliation straightforward. Log cash payments immediately in your property management system before you forget the details.
LetPilot includes an expense tracking module designed specifically for holiday let operators. For each property, you can log the expense amount and date, the supplier name, the category (cleaning, maintenance, utilities, professional fees, and so on), a description and notes, and a photo of the receipt.
Expenses logged in LetPilot flow into your owner statements — deducted from gross revenue to show net owner income — and push to Xero if you have the accounting integration enabled. This means your accounting software is always up to date and your accountant always has access to current figures.
The category structure in LetPilot maps to standard expense categories used in UK property accounting, making it straightforward to produce a schedule for your accountant or for your self-assessment return.
Some expenses relate to both the holiday let and personal use. The most common example is mileage when you visit the property for management purposes.
Mileage: keep a mileage log of every visit to the property for business purposes. HMRC allows the approved mileage rate (45p per mile for the first 10,000 miles, 25p thereafter) as an allowable expense without needing to track actual vehicle costs. Log each journey in LetPilot with the date, purpose, and miles travelled.
Personal stays: if you stay at the property yourself, expenses during your personal stay are not deductible. For most holiday let operators, the property is overwhelmingly in commercial use and personal stays are a small minority. Document personal stay dates and apportion accordingly.
Expense tracking does not need to be a January crisis. With LetPilot expense module and Xero connection, your books are continuously maintained throughout the year. When your accountant asks for figures, you can produce a categorised schedule in minutes rather than weeks — and you can be confident the figures are complete and accurate, rather than hoping you have not forgotten anything significant.