Property
Accountant for Landlords and Property Investors
Since mortgage interest stopped being a deductible expense, the tax on a rental portfolio rarely matches what the profit looks like. We work out what you actually owe and what can still be done about it.
Finance costs on residential property are no longer deducted from rental income. Instead you get a basic-rate tax reducer, which means the profit HMRC taxes you on can be considerably higher than the money you have. For higher-rate taxpayers this changed the arithmetic of letting property, and it is still catching people out.
We act for landlords across London and the North London boroughs — from a single let flat to portfolios held personally and through companies — covering the annual return, the planning around it, and the capital gains position when a property is sold.
Property pages done properly
Rental income and allowable expenses, per property, on your return.
Section 24 modelled
What the finance-cost restriction actually costs you, in figures.
Capital gains on disposal
The 60-day reporting deadline is easy to miss and carries a penalty.
Company vs personal ownership
Modelled on your numbers, including the cost of moving.
What you can and cannot deduct
The line between a repair and an improvement decides whether a cost comes off this year's rental profit or waits until you sell and reduces the capital gain instead. Replacing a broken boiler with a similar one is a repair. Adding an extension is not. Replacing single glazing with double glazing sits in between, and HMRC has a settled view on it that is worth knowing before you file.
- Letting agent fees, ground rent and service charges
- Repairs and maintenance, but not improvements
- Insurance, and the replacement of domestic items in furnished lets
- Professional fees, including our own
- Mortgage interest — as a 20% tax reducer, not a deduction
Selling: the 60-day rule
If you dispose of UK residential property at a gain, the capital gains tax has to be reported and paid within 60 days of completion — not through your annual return. The deadline is short, the calculation needs your original purchase costs and every capital improvement since, and the penalty regime for missing it is separate from your self-assessment. If a sale is coming, tell us before completion rather than after.
Should the property be in a company?
Companies still deduct mortgage interest in full, which is why so many landlords ask about incorporating. But moving existing property into a company is a disposal for capital gains tax and usually triggers stamp duty at the higher rates, so the transfer cost can take years to earn back. It also changes how you get the money out. We model both positions on your actual figures — including the exit — rather than assuming the answer.
Should the property be in a company?
It is the question every landlord asks after the finance-cost restriction, and the answer is far less often yes than the internet suggests.
A company pays corporation tax on rental profit and deducts mortgage interest in full, which is the attraction. But getting an existing property in is a sale at market value: capital gains tax on the gain to date, and stamp duty for the company at the higher rates on the way in. Those are real costs paid now against a saving spread over years.
Then taking money out is taxed again, mortgage rates for companies are usually higher, and there are accounts and filings that a personal let does not need. For someone buying their next property it can be the right structure. For someone moving three they already own, it very often is not.
Jointly owned property
Where a property is owned jointly by a married couple or civil partners, HMRC taxes the income half and half by default — regardless of who actually owns what, and regardless of which of you is the higher-rate taxpayer.
If the beneficial ownership is genuinely unequal, the split can be matched to it, but only by making a declaration and only from the date it is made. It cannot be backdated, which means the tax saved is the tax on the years after you get round to it. That makes it worth doing early in a tax year rather than late.
Holiday lets and short lets
Letting short-term rather than on an assured shorthold tenancy used to bring genuinely different tax treatment. That has changed, and the position now catches out landlords who set the arrangement up under the old rules and have not revisited it.
The furnished holiday letting rules have gone
The separate regime for furnished holiday lettings has been abolished, so a property let on that basis is now taxed broadly like any other residential letting. The advantages that made the structure attractive — the treatment of finance costs, the capital allowances position, and how the income was regarded for pension purposes — no longer distinguish it. If a decision in your portfolio was built on those advantages, it is worth re-examining rather than assuming it still works.
London has a 90-night limit
Letting a whole London home on a short-term basis for more than ninety nights in a calendar year requires planning permission. This is a planning rule rather than a tax one, but it has direct financial consequences: exceeding it without consent is a planning breach, and platforms have increasingly enforced the limit themselves. Any projection assuming year-round short letting of a London property needs to account for it.
VAT can enter the picture
Ordinary residential letting is exempt from VAT. Holiday and other short-stay accommodation is not — it is standard-rated, so once turnover from it passes the registration threshold, registration follows. Landlords who think of themselves as being outside VAT entirely because they let property are occasionally very surprised by this.
Frequently asked
Do I need to file a return for one rental property?+
If your gross rental income is over £1,000 you need to tell HMRC. Whether you end up paying anything depends on your expenses and your other income, but the obligation to report starts well below the point where tax is due.
Can I claim the cost of my own time managing the property?+
No. You cannot pay yourself for your own labour and deduct it. You can claim a proportion of costs genuinely incurred in running the letting business, such as mileage to the property and a use-of-home allowance, and those are worth claiming properly.
I let a room in my own home. Is that different?+
Yes. Rent-a-Room relief exempts a set amount of income per year from letting furnished accommodation in your main home, and if you are under the threshold there is nothing to report. Above it you can choose between paying on the excess or being taxed normally, and which is better depends on your expenses.
What about holiday lets?+
The furnished holiday lettings regime has been abolished, so short-term lets are now taxed broadly the same as any other residential property. If you were relying on the old treatment — full interest relief, capital allowances, business asset disposal relief — that planning needs revisiting.
Should I move my properties into a limited company?+
Usually not, if you already own them. Transferring is a disposal at market value, so there is capital gains tax now and stamp duty at the higher rates for the company, against a saving spread over years — and money still has to be taken out and taxed again. For a next purchase it is a genuine question; for an existing portfolio it rarely pays.
We own a flat jointly — can we split the income unevenly?+
Only if the beneficial ownership is genuinely unequal, and only by declaring it. Married couples and civil partners are taxed 50/50 by default whatever the deeds say. The declaration takes effect from the date it is made and cannot be backdated, so the sooner it is done the more it saves.
I have a furnished holiday let. Has anything changed?+
Yes, substantially. The separate furnished holiday lettings regime has been abolished, so the property is now taxed broadly like any other residential let — which removes the finance cost treatment, the capital allowances position and the pension-relevant earnings status that made the structure attractive. If you arranged ownership, borrowing or a company structure around those advantages, the arrangement should be looked at again rather than left running.
Can I let my London flat on a short-let platform all year?+
Not without planning permission. Short-term letting of a whole London home is limited to ninety nights in a calendar year unless consent is obtained, and platforms increasingly apply the cap themselves. It is a planning rule rather than a tax one, but it constrains the income you can actually earn, so a projection that assumes full-year occupancy is not a projection you can rely on.
Do I have to charge VAT on a holiday let?+
Potentially. Residential letting is exempt, but holiday and short-stay accommodation is standard-rated, so income from it counts towards the VAT registration threshold and registration becomes compulsory once you cross it. Landlords with a mix of long and short lets need to know which income counts, because it is easy to cross a threshold you did not think applied to you.
Local to you
Chartered accountants, just up the road.
We are based in Finchley and work across North London. Come in, call, or do the whole thing by email — whichever suits you.
Or call 07480 281548