Are Broker Fees Tax Deductible? UK Tax Guide (2026/27)

When a client asks “Are broker fees tax deductible?”, you must first identify the type of transaction and the precise nature of the fee. The UK tax code applies fundamentally different deduction rules depending on whether the broker is acquiring a capital asset (such as shares), securing business finance, or arranging a mortgage for a residential property.

For the 2026/27 tax year, HM Revenue & Customs (HMRC) maintains strict boundaries between allowable transactional costs and non-allowable general advice. This guide breaks down the statutory rules across Capital Gains Tax, Income Tax, and Corporation Tax.

Stockbrokers and Capital Gains Tax (CGT)

For investors buying and selling shares, the deductibility of stockbroker fees depends entirely on whether the fee is transactional or advisory.

Transactional Fees (Allowable)

Primary legislation permits taxpayers to deduct the direct costs of acquiring and disposing of assets when calculating a capital gain. Under section 38(1) of the Taxation of Chargeable Gains Act 1992 (TCGA 1992), a taxpayer can deduct the initial purchase price alongside the “incidental costs” of the acquisition and disposal.

Section 38(2) TCGA 1992 explicitly defines these incidental costs to include fees, commission, or remuneration paid for the professional services of an agent, provided the expenditure is incurred wholly and exclusively for the purposes of the acquisition or disposal.  Therefore, standard execution-only stockbroker transaction fees and trade commissions are fully deductible.

Arithmetic Example: Your client buys shares for £50,000 and pays a £500 broker transaction fee. They later sell the shares for £80,000, paying an £800 exit broker fee.

1. Allowable Cost: £50,000 (Shares) + £500 (Broker Fee) = £50,500.
2. Net Consideration: £80,000 (Sale Price) – £800 (Broker Fee) = £79,200.
3. Chargeable Gain: £79,200 – £50,500 = £28,700.

Portfolio Management and Advisory Fees (Disallowable)

If the client pays their broker an ongoing percentage fee for discretionary portfolio management or general market advice, this expenditure is completely blocked.

HMRC’s Capital Gains Manual at CG15250 confirms this strict limitation:

You should allow a deduction for fees paid to a professional adviser only to the extent that they are directly referable to the cost of acquiring or disposing of each particular investment. To the extent that the fees relate to advice about the general state of markets or the prospects of particular forms of investment or the management of a portfolio, they are not allowable.

You must therefore disallow any periodic management fees, market research subscriptions, or generic financial advice fees from the CGT computation.

Mortgage Broker Fees for Landlords

When property investors use a mortgage broker to source funding, you must distinguish between residential and commercial properties to apply the correct rules for the 2026/27 tax year.

Residential Landlords (Section 272A Restriction)

Individual landlords letting residential property cannot deduct mortgage broker fees directly from their rental income. Section 272A(4) of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) dictates that no deduction is allowed for the “costs of a dwelling-related loan” when calculating the profits of a property business.

Section 272B(5) ITTOIA 2005 defines these blocked costs to include the “incidental costs of obtaining finance by means of the loan”.  Instead of a direct deduction, the individual receives a basic rate tax credit equal to 20% of the finance costs.

If an individual residential landlord pays a £1,500 mortgage broker fee, they cannot deduct this from their gross rental profit. Instead, they receive a £300 tax credit (£1,500 × 20%) to offset against their final Income Tax liability.

Commercial Landlords and Corporate Landlords

The section 272A restriction strictly targets individuals with dwelling-related loans.  It does not apply to commercial properties (such as retail units or warehouses), nor does it apply to residential property businesses carried on by a limited company.  For commercial landlords and corporate entities, mortgage broker fees remain fully deductible as business expenses under standard rules.

Broker Fees for Trading Businesses

If a trading business uses a commercial broker to secure a business loan, the fee is fully deductible against their trading profits.

Section 34 ITTOIA 2005 states that expenses are deductible if they are incurred wholly and exclusively for the purposes of the trade.  More specifically, section 58(1) ITTOIA 2005 allows a direct deduction for the “incidental costs of obtaining finance” via a loan, provided the interest on that loan is also deductible.

Primary legislation at section 58(2) ITTOIA 2005 confirms that these incidental costs explicitly include expenses incurred on fees and commissions paid wholly and exclusively for the purpose of obtaining the finance.

Corporate Investment Companies

For corporate entities holding investments, the rules surrounding broker fees are highly restrictive.

Under section 1219(1) of the Corporation Tax Act 2009 (CTA 2009), an investment company can deduct the “expenses of management” of its investment business from its total profits.  However, section 1219(3)(a) imposes a critical statutory block: no deduction is allowed under this section for expenses of a capital nature.

The Court of Appeal confirmed this strict boundary in Commissioners for HMRC v Centrica Overseas Holdings Limited.  The court ruled that professional fees (which include broker and advisory fees) incurred for a capital disposal constitute capital expenses.  Consequently, an investment company cannot deduct these transaction-based broker fees as ongoing management expenses against its general Corporation Tax profits.

Summary of 2026/27 Broker Fee Deductibility

Next steps for advisors: Review the terms of engagement for any wealth management clients to ensure combined “platform and dealing” fees are strictly apportioned, allowing you to deduct the execution elements under section 38 TCGA 1992 while isolating the non-allowable advisory components.