The amount increased from £18.1bn in 2020 and comes despite restrictions on the relief that landlords could claim on mortgage interest which was phased in from 2017.

Previously landlords could deduct their full mortgage interest costs from their income when calculating their tax bill, but this fell to 75% and 50%. As of 2020/21, all financing costs incurred by a landlord is given as a basic rate tax reduction (20%).

According to estate agent Ludlowthompson, loan interest made up 37% of tax reliefs claimed by BTL landlords, which is equivalent to £6.9bn.

This was followed by property repairs, maintenance and renewals at 24% of total tax reliefs at around £4.5bn.

The estate agent urged BTL landlords to take advantage of available tax reliefs for upcoming changes to Energy Performance Certificate requirements. This will require all rental properties to have an EPC rating of C or higher.

Once the bill is passed into law, the changes will apply to new tenancies from 2025 and all tenancies from 2028.

Landlords should be mindful that energy efficient improvements aren’t counted as capital improvements as this wouldn’t attract tax relief.

Improvements like double glazing or a modern boiler would be permissible for tax relief as it falls under repairs, maintenance and renewals.

Government should provide more tax reliefs to incentivise landlords

Stephen Ludlow, chairman of Ludlowthompson said there are no specific reliefs currently available to help landlords improve the energy efficiency of their properties in time for the deadline.

“Landlords may be able to make careful use of the repairs, maintenance and renewal allowance to replace fixtures such as boilers with more energy-efficient models,” he said.

He added there was a “strong argument” that the government should provide more generous tax benefits for property improvements as it would incentivise landlords to make upgrades, which would improve the overall housing stock and benefit the tenants too.

“Within an inflationary environment, BTL remains an attractive investment because landlords have the opportunity to increase rents in line with wage growth,” he explained.

In March’s Spring Statement, the Chancellor Rishi Sunak announced a removal of VAT payable on energy saving materials to encourage homeowners and landlords to make their homes energy efficient.

And last week, the government’s £5k boiler grant scheme launched.