I ran this as a poll in my Landlord Tax WhatsApp Group (join below!) after being asked it by one of the members.
The simple answer is yes! Before we get on to the reasoning how did the group do? Well out off 11 respondents 9 got the answer right and 2 got it wrong. Pretty solid! Well done everyone!
Now for the reasoning. Well the HMRC Property Income Manuals set it out for us – see them here
In short the incidental costs of arranging finance are included as a “finance charge”. So this means that YES you should include the cost but that it is also then restricted to 20% like all other finance charges.