Tailored property tax advice, aligned to you
Tax on Property Income & Ownership
Owning property and receiving an income from this investment is taxable, and it depends how the property is owned to determine the type of tax you are liable for. We can advise on the pros and cons of holding property personally versus within a limited company, as well as the implications of obtaining mortgages, claiming relief on the mortgage interest and finally, the effects of stamp duty land tax.
Personal Ownership
Holding an investment property in your own name means that any income arising is subject to income tax at rates of 20%, 40% or 45%, depending on your other income. On sale, any gain you make is subject to capital gains tax.
We can help you calculate the taxable income, ensure all available reliefs are claimed, necessary tax forms completed and advise on payment of liabilities.
From 6 April 2026, many landlords will be required to report rental income and expenditure on a quarterly basis under HMRC’s new regime – Making Tax Digital (MTD) for Income Tax. Digital records must be kept using compliant software, adding a further administrative burden to taxpayers.
MTD will be phased in over the next 3 years; those with a combined turnover from rental and/or self-employment of £50,000 or more being first, in April 2026. Those with combined turnover of £30,000+ will follow from 6 April 2027 and those with combined salary of £20,000+ from 6 April 2028.
We offer services to deal with the reporting requirements on your behalf or assist you to take control of your own reporting.
Limited Company Ownership
Where the property is held in a limited company, profits from rents and gains on disposal are both subject to corporation tax at rates between 19% and 25%.
We can assist with the preparation of annual accounts, calculation of corporation tax liabilities and complete all necessary forms.
We will assist with annual filings of accounts, confirmation statements and any other relevant forms required.
We can advise on how shares in a property company can be passed to children and other family members in a more tax efficient way than gifting property ownership.
Incorporation does not reduce the administrative burden; you must also factor in the additional costs of running a company. You may also experience double taxation if extracting profits from the company.
MTD does not apply to property business held within a corporate structure.
Additional Considerations
Mortgage interest restrictions, which allows tax relief of only 20% on personally held properties, does not apply to properties held in companies.
If you currently own property personally but would like to take advantage of transferring them to a limited company, you must be aware of the potential pitfalls such as Capital Gains Tax and Stamp Duty.
The disposal from individual to company must be done at market value with capital gains tax payable by the individual on the gain. If the business is a genuine property letting business, rather than a passive investment, the transaction may qualify for Incorporation Relief, effectively rolling over the gain into the value of the shares you receive in the company. Capital Gains Tax will be payable in the future on the disposal of those shares.
Stamp Duty will also apply when transferring a property to a connected party purchaser (the company). The charge is on the market value of the property, and the additional 5% surcharge also applies to most residential transfers.
If the property business is a correctly structured partnership, consisting of a formal partnership agreement, partnership accounts and partnership tax returns for a number of years, it may be possible to avoid stamp duty.
You must review any finance arrangements as mortgage compliance differs for personal and company borrowings.
It is also important to consider passing assets on after your death and the implications of the way property is held for the purposes of your estate and inheritance tax position.
We can assist with estate planning to reduce inheritance taxes when passing property to beneficiaries.
