Buy-to-Let Accountants in Harrow

Section 24 is the biggest change to property tax for landlords in a generation. Individual landlords cannot deduct mortgage interest from rental income; finance costs get a tax credit at 20% instead. For a higher-rate (40%) or additional-rate (45%) landlord, the effective rate on rental profit can exceed 60% once the credit is allowed for. From April 2027 property income gets its own income tax rates of 22%, 42% and 47%, and the finance-cost credit rises to 22%. We model the Section 24 cost each year, apply the restriction to finance costs and nothing else, and show when Section 24 mortgage interest strategies or incorporation start to pay.

A good landlord accountant also claims the full set of allowable expenses. Repairs and maintenance, letting agent fees, legal fees on tenancy renewals, accountancy fees, landlord insurance, mileage to inspect properties or meet tenants, ground rent and service charges, advertising for tenants, replacement of domestic items, and council tax and utilities during void periods are all deductible. We document each claim so it stands up if HMRC asks, and the smaller categories often add up to more than landlords expect. Our guide to allowable expenses and capital expenditure for landlords lists them in full.

Capital spending on improvements is not a current-year expense. When work creates a new asset or upgrades one beyond its previous condition, the cost is added to the property base cost and reduces capital gains tax when you sell. A like-for-like boiler replacement is a repair; an upgrade to a higher-spec system is capital. A bathroom refit that restores the original standard is a repair; one that modernises beyond it is capital. Applying the test correctly keeps the Self Assessment tax return accurate now and protects your position when you sell.

Joint ownership between spouses follows its own rules. Married couples and civil partners who own property jointly are taxed 50/50 on the rent by default, whatever their actual shares, unless they file Form 17 declaring unequal beneficial ownership that matches the legal position exactly. Where one spouse pays a lower rate of income tax, a Deed of Trust and Form 17 can move more of the income to them. We advise on the split and keep the paperwork consistent with the tax returns.

Unrelated co-owners are taxed on their share of the rent, each reporting it on their own Self Assessment tax return. Joint ownership is not a partnership by default; a formal property partnership needs real business activity and documents that support it. We set up the structure that fits, prepare the accounts for each owner's share and keep the figures consistent.

Making Tax Digital for Income Tax applies to landlords from 6 April 2026 where qualifying income is over £50,000, falling to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is gross rent plus any self-employment income, before expenses, and joint owners count their own share. Landlords in scope keep digital records, send quarterly updates through compatible software, and file a final declaration in place of the old tax return. Our Making Tax Digital guide for landlords sets out who is caught and when.

Tax planning runs through the whole year rather than only at the January deadline. Timing repairs, choosing when to sell, using both spouses' allowances, and deciding whether to buy the next property personally or through a limited company SPV all change the bill. We review each client's property tax position before the tax year ends on 5 April, so property investors can act while there is still time.

Replacement of domestic items relief. Since 2016 landlords can deduct the cost of replacing furniture, appliances and kitchenware, but not the first purchase. A like-for-like replacement is fully deductible. An upgrade is deductible only up to the cost of an equivalent item, and the extra is capital.

Pre-letting spending. Work done before a newly bought property is first let, to make it fit to let, is generally capital and goes into the base cost. Treating a pre-letting refurbishment as a repair is a common reason for an HMRC enquiry.

Section 24 timing. The restriction is calculated on finance costs for the tax year. Interest accrued but not paid by the year-end needs care, and the figures should match the mortgage statements.

Unused finance-cost credits. Where rental profit is too low to absorb the full credit in a year, the unused finance costs carry forward to later years. Missing the carry-forward means paying more tax when the property returns to profit.

Capital gains tax on a sale. Selling a rental property triggers capital gains tax at 18% within the basic-rate band and 24% above it. The gain must be reported and the tax paid within 60 days of completion through HMRC's capital gains tax on UK property service. Allowable deductions include the purchase price, stamp duty land tax and legal fees on purchase, capital improvements, the costs of selling, and the £3,000 annual exempt amount. Our capital gains tax guide for property disposals works through an example.

Former furnished holiday lets. The furnished holiday lettings regime ended on 6 April 2025. Properties that qualified lost full mortgage interest relief, new capital allowances and business asset disposal relief from that date and are now taxed as an ordinary property business with Section 24 applying. The transition needs care: closing the capital allowance pools, carrying old losses into the ordinary property business, and checking business asset disposal relief on a later sale, which depends on when the holiday letting business ceased. See our furnished holiday lets guide.