Property investment has long been a popular route for building wealth in London, but the tax landscape for landlords has become significantly more complicated over the past decade. Changes to mortgage interest relief, the introduction of additional stamp duty surcharges, evolving rules on furnished holiday lettings, and the ever-present question of whether to hold property personally or through a limited company all mean that landlords today need considerably more sophisticated financial advice than in years past. Understanding exactly what a good small business accountant should be doing for you as a landlord helps you assess whether your current arrangements are genuinely serving your interests.
The restriction on mortgage interest relief, often referred to as the section 24 changes, has had a profound effect on landlords who own property personally rather than through a company. Rather than deducting mortgage interest as an expense against rental income, individual landlords now receive only a basic rate tax credit, which can push higher and additional rate taxpayers into a materially higher effective tax rate on their rental profits. A competent accountant should be modelling the impact of this restriction on your specific portfolio and advising whether incorporating your properties into a limited company structure would improve your tax position, taking into account the costs and implications of transferring properties into a company.
Deciding whether to hold property personally or through a limited company is one of the most significant decisions a landlord will make, and it is rarely a simple answer. While companies are not subject to the mortgage interest relief restriction and benefit from corporation tax rates that can be lower than higher rate income tax, extracting profits from a company for personal use triggers additional tax, and transferring existing personally-held properties into a company can trigger stamp duty land tax and capital gains tax charges. A thorough small business accountant will run the numbers for your specific circumstances rather than offering generic advice, because the right answer depends heavily on your income level, the number and value of properties, and your long-term plans.
Allowable expenses are another area where landlords frequently either miss deductions or, conversely, claim things that are not genuinely allowable. Legitimate expenses can include letting agent fees, insurance, ground rent and service charges, repairs and maintenance, and certain professional fees, but the distinction between a repair and a capital improvement is not always obvious and has significant tax consequences. Fred Michael & Co helps landlord clients understand exactly what can be claimed against rental income and keeps records organised so that claims can withstand scrutiny if HMRC ever raises questions.
Capital gains tax planning is essential for any landlord considering selling a property. The rules around reporting and paying capital gains tax on residential property sales require submission and payment within 60 days of completion, a considerably tighter deadline than under the standard self-assessment system, and missing this deadline results in penalties and interest. A good accountant will help you calculate your likely gain in advance of a sale, identify any reliefs that might apply, and ensure the reporting deadline is met without last-minute stress during what is often already a busy and emotional transaction.
For landlords with a portfolio of properties, understanding stamp duty land tax on additional purchases is equally important. The surcharge on additional residential properties adds a meaningful cost to every acquisition, and there are specific rules around multiple dwellings relief and mixed-use property that can, in the right circumstances, reduce the amount payable. An accountant who works regularly with property investors should be able to flag these opportunities before a purchase completes, since SDLT reliefs generally cannot be claimed retrospectively once a transaction has gone through incorrectly.
Landlords letting furnished holiday lets have historically benefited from more generous tax treatment than standard buy-to-let landlords, including the ability to claim capital allowances and to offset losses more flexibly, though qualifying rules around occupancy and availability must be met and monitored carefully. Given ongoing government reviews of these rules, landlords in this category particularly benefit from an accountant who keeps track of legislative changes and advises promptly when the rules affecting their properties shift.
Record keeping is a foundational expectation that landlords should have of any accountant they engage. With Making Tax Digital for income tax due to extend to many landlords with property income above certain thresholds, digital record keeping is becoming a legal requirement rather than simply good practice. A forward-thinking small business accountant should already be helping landlord clients transition to compliant digital record keeping well ahead of the relevant deadlines, rather than waiting until the requirement becomes mandatory and creates a last-minute scramble.
Beyond compliance, landlords should expect genuine strategic advice from their accountant, including guidance on remortgaging decisions, portfolio expansion plans, succession and inheritance tax planning for property passed to the next generation, and how rental income interacts with other sources of income for overall tax efficiency. Property tax has become genuinely intricate, and landlords who treat their accountant purely as a compliance function rather than a strategic adviser are often missing significant opportunities to improve their after-tax returns.
Void periods and maintenance reserves are practical realities of letting property that landlords sometimes underestimate when planning their finances. Between tenancies, a property may sit empty for weeks while repairs, redecoration, or marketing take place, and larger maintenance items such as a new boiler or roof repair can arise unexpectedly. A small business accountant can help you build a realistic reserve for these costs into your overall property budgeting, so that a void period or an unplanned repair does not derail your wider financial plans or force an uncomfortable choice between properties.
Inheritance tax planning is another area landlords should expect their accountant to raise proactively rather than leaving until it becomes urgent. Property portfolios can represent a substantial part of an individual's estate, and without proper planning, a significant inheritance tax liability can fall on the next generation, sometimes forcing a rushed sale of property assets simply to fund the tax bill. A small business accountant can work alongside a solicitor to explore options such as trusts, lifetime gifting, or restructuring ownership, always with a clear eye on the tax consequences of each approach.
Landlords with properties held jointly, whether with a spouse, family member, or business partner, also need clarity on how rental income is split for tax purposes, since this is not always simply based on legal ownership percentages and can, in some circumstances, be adjusted through a formal declaration to HMRC. Getting this wrong can mean a couple pays considerably more tax than necessary simply because income has not been allocated in the most tax-efficient way between them, something a good accountant should identify and correct early in the relationship.
Finally, landlords should expect their accountant to keep them informed as legislation changes, since property taxation has been subject to more frequent and more significant change than almost any other area of UK tax policy over the past decade. From the phasing in of mortgage interest relief restrictions to shifting SDLT surcharges and evolving energy efficiency requirements for rental properties, staying current requires genuine ongoing attention rather than a once-a-year conversation at tax return time.
Fred Michael and Co works with landlords across London to provide exactly this blend of compliance and strategic advice, helping property investors navigate a tax landscape that has become considerably more complex in recent years. Whether you own a single buy-to-let or a substantial portfolio, having an accountant who genuinely understands property taxation gives you the confidence that your investments are structured as efficiently as possible while remaining fully compliant with HMRC's requirements.
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