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Accountants for landlords
One property or a portfolio, held personally or through a company.
Start with the agent’s statement, not the bank
If a letting agent collects your rent, what reaches your account is the rent less their management fee, less anything they have paid out for repairs. Your rental income for tax is the gross rent; the fee and the repairs are expenses you claim. Working from the bank alone understates both your income and your costs, and the tax rarely comes out right.
The finance cost restriction
Mortgage interest on a residentially let property held personally is no longer deducted from your rental profit. Instead it comes off as a basic-rate tax reducer at 20 per cent. For a higher-rate taxpayer that is a materially worse outcome than the old rules, and it can push taxable income above thresholds that affect child benefit or the personal allowance. We will show you the actual number for your situation.
Repairs or improvement?
A repair is deductible now. An improvement is capital, and only comes into play when you sell. Replacing a broken boiler with a similar one is a repair; a new extension is not; replacing a kitchen with a better one sits somewhere in between and depends on the detail. Getting this line right is usually the largest single judgement on a landlord’s return.
Also worth getting right
- Replacement of domestic items relief, which replaced the old wear and tear allowance.
- Jointly owned property, and how the income is split between spouses.
- Furnished holiday lets, and the changes to how they are treated.
- Whether a company is actually better for you - it often is not, once you count the tax on getting the money back out.
- Capital Gains Tax when you sell, including the 60-day reporting deadline for UK residential property.
Making Tax Digital for Income Tax applies to property income as well as self-employment. Over the threshold, that means quarterly updates instead of one annual return. Check whether it applies to you.
Common questions
Landlords - the questions we get asked
My agent pays me net. What do I declare?
The gross rent the tenant paid. The agent's fee and anything they paid out for repairs are then claimed as expenses. Declaring only the net amount that reached your bank understates your income and usually your expenses too.
Can I still deduct my mortgage interest?
Not from the profit, if you hold the property personally and let it residentially. It gives a 20% tax reducer instead. For higher-rate taxpayers that is worse than the old rules, and it is worth seeing the actual figures for your properties.
Should I move my properties into a company?
Sometimes, but far less often than people are told. Moving existing properties can trigger Capital Gains Tax and Stamp Duty, and getting profits back out of a company is taxed again. We will do the arithmetic for your case before recommending anything.