All good things come to an end, and a property rental business is no exception. However, post-letting 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 post-letting 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 post-letting 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 post-letting 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.
Why post-letting expense relief matters and common pitfalls
Many landlords incorrectly assume that once a rental property is sold or a letting business ends, no further tax relief is available. This often leads to missed claims, particularly where costs arise months or even years after cessation, such as legal fees to recover unpaid rent or professional costs relating to former tenants.
A common mistake is failing to recognise when a property rental business has actually ceased. Where a landlord owns multiple rental properties, the business does not end until all properties are sold or repurposed. Claiming post-letting relief too early, or failing to claim it at all, can result in lost tax relief or incorrect tax returns.
Another issue arises around claim deadlines. Post-letting expense relief is not automatic and must be claimed within strict time limits. Missing the deadline — often due to poor record keeping — can permanently block the relief.
For SMEs, individual landlords and property investors, this relief can be valuable, especially where post-cessation expenses are substantial and there are no post-cessation receipts to offset them against. In these cases, relief against general income or capital gains may still be available, improving the overall tax outcome.
Understanding the rules ensures landlords do not overlook legitimate reliefs after exiting the rental market.
FAQs
Post-letting expenses are often overlooked, yet they can still provide valuable tax relief after a rental business ends.
If you would like to check whether you can claim relief or ensure your property tax position is handled correctly, feel free to contact AccounTax Zone for tailored advice.
Partner note: ITA 2007,ss. 125, 126; CTA 2009, ss. 196, 197, 280–285; ITTOIA 2005, ss. 349–356.
