UK Property Insurance Payouts Reach Record High – Can You Claim Tax Relief for Home Repairs and Renovations?
- TBA
- Mar 12
- 3 min read
Updated: Mar 18
In recent years, extreme weather and unforeseen events have become more frequent in the UK due to global climate change. These incidents not only disrupt people's daily lives but also place immense financial strain on the insurance industry.
According to the latest data from Deloitte, UK insurance companies are expected to pay out a total of £5.5 billion in claims to cover 2024—the highest level since the summer floods of 2007.
For many homeowners facing costly repairs, insurance coverage may help cover part of the expenses. However, there is another often-overlooked opportunity—making use of tax relief policies.
Today, we’ll explore whether home repair costs qualify for tax relief, break down relevant regulations, and provide practical advice to help you manage your finances and maximise tax benefits.
Rising Payouts Could Lead to Higher Insurance Premiums
Deloitte’s analysis predicts that UK insurers will pay out £5.5 billion in claims in 2024, marking the highest natural disaster-related pay-out since 2007.
Industry experts warn that, after years of underwriting losses, insurers may further increase premiums.
In Q3 2024, the average annual home insurance premium (covering both buildings and contents) was £407, up 16% from the previous year. Adjusted for broader inflation, this brings prices back to 2017 levels. However, claims volumes have surged by 72% compared to 2017.
Tax Relief on Home Repairs – What Qualifies?
With insurance costs on the rise, which home repair or renovation projects qualify for tax relief in the UK? What are the eligibility requirements, and how can you claim? Let’s break it down.
In the UK, home repair and renovation tax relief generally applies to the following situations:
Essential Repairs & Maintenance – This includes repairs due to natural disasters or ageing, such as fixing a roof, replacing damaged plumbing, or repairing electrical systems.
Energy Efficiency Improvements – If renovations improve energy efficiency—such as installing insulation, upgrading to energy-efficient windows, or replacing a boiler—you may qualify for tax relief or even government grants.
Listed Building Repairs – If your property is a listed building, certain repair costs may be eligible for tax relief.
Repairs for Rental Properties – Landlords can deduct maintenance and repair costs as allowable expenses from their taxable rental income.
However, the UK has strict criteria and limitations on tax relief for home repairs. The property’s usage is taken into account, and original invoices and proof of expenses are required. Here are key considerations:
Purpose & Functionality – The repair must be essential to the home's maintenance or improvement. Luxury renovations (e.g. building a swimming pool, high-end decor, or entertainment facilities) do not qualify.
Compliance with UK Regulations – Works must meet Building Regulations and tax laws. Extensions or significant structural changes typically do not qualify.
Proof of Expenses – Keep all invoices, contracts, and payment records in case of HMRC review.
Residential vs Rental Property – Homeowners have fewer tax relief options, whereas landlords can deduct repair costs as business expenses.
No Double Dipping with Insurance Payouts – If an insurance claim has already covered the repair, you cannot claim tax relief on the same expense.
Real-Life Examples
Case 1: Roof Repair & Energy Efficiency Upgrade
Homeowner A’s roof was damaged in a storm and needed replacement. During repairs, he opted for an energy-efficient insulation upgrade, bringing the total cost to £12,000.
£8,000 was covered by insurance.
The remaining £4,000 was out-of-pocket.
Since he used energy-efficient materials, he qualified for a VAT reduction and claimed a £400 tax relief on his Self-Assessment tax return.
Case 2: Leak Repair in a Rental Property
Landlord B owns a rental flat in London. A burst pipe caused water damage to the kitchen ceiling, affecting the tenant’s living conditions. She hired professionals to fix the plumbing and repair the damage, costing £4,500.
According to HMRC rules, landlords can deduct necessary repair costs from rental income. By keeping all invoices and contracts, she classified the £4,500 as a deductible expense, saving £900 in taxes.
How to Claim Tax Relief on Home Repairs
1.Gather All Required Documents – Ensure all invoices, insurance claim records, and repair-related documents are complete and accurate.
2.File the Correct Forms
Homeowners can claim tax relief on energy efficiency improvements through Self-Assessment.
Landlords must report repair costs on Form SA105 (Property Income).
3.Submit Your Claim – Apply via HMRC’s online system or by post and keep copies for future reference.
Need Help? Get Expert Guidance
Although tax relief applications may seem straightforward, they involve complex regulations and eligibility criteria. Mistakes could lead to rejection or potential tax risks.
For professional guidance, consider consulting an experienced accounting firm. At TB Accountants, our team of tax specialists can provide personalised financial and tax advice, ensuring you maximise on tax relief opportunities while staying compliant with UK tax laws.
