MTD categories explained: SA105 property expenses
HMRC doesn’t want a shoebox of receipts. It wants your property income and expenses sorted into specific categories (based on the SA105 property pages). Here’s what each category actually covers, in plain English.
Income categories
| Category | What it covers |
|---|---|
| Rent received | Rent and other income from letting out your property |
| Lease premium income | Income from granting a lease, where applicable |
Expense categories
| Category | What it covers |
|---|---|
| Repairs & maintenance | Repairing and maintaining the property, not improvements |
| Insurance | Landlord or property insurance premiums |
| Letting agent & management fees | Fees paid to a letting or managing agent |
| Loan interest & finance costs | Mortgage interest and other finance costs (relief rules apply: HMRC calculates the actual relief, it isn’t a simple deduction for residential property) |
| Legal & professional fees | Legal, accountancy, and other professional fees for the property business |
| Other allowable expenses | Any other allowable cost that doesn’t fit the categories above |
The one that trips people up: repairs vs. improvements
“Repairs & maintenance” covers restoring something to its previous condition: fixing a leak, repainting, replacing a broken boiler with an equivalent one. It does not cover improvements that add value beyond the original condition, like adding an extension or upgrading to something significantly better than what was there. Improvements are treated differently for tax purposes, so keep them separate from day-to-day repairs.
The one that’s easy to get wrong: finance costs
Mortgage interest for residential property doesn’t work as a straightforward deduction any more. HMRC applies relief separately rather than letting you subtract it directly from rental income. Record it as a finance cost anyway; the software (and ultimately HMRC’s calculation) handles how relief is applied.
How this works day-to-day
You don’t need to memorise this table. When you add a transaction (whether typed in manually or imported from a bank CSV), Simple MTD suggests a category based on the description (a known letting agent’s name, for example, suggests “agent fees” automatically). You only need to check the ones it’s genuinely unsure about.
See the full landlord guide for how categorised transactions turn into a quarterly update.