As the end of the tax year approaches, it’s time to review your property related finances, ensuring you are maximising reliefs and planning opportunities for property owned as an individual or business.
Time to review your property tax position
Property tax planning should be an ongoing process, but the end of the tax year is a key opportunity to review your position, address historic issues and identify forward‑looking planning opportunities. This guide highlights common property tax considerations for individuals, landlords, developers and businesses as we approach the end of the 2025/26 tax year.
Is my current ownership structure still appropriate?
Have I claimed all available reliefs and allowances?
Are there historic transactions that may need revisiting?
Am I ready for upcoming changes to Making Tax Digital?
Company owned residential property
Holding residential property in a company can offer commercial and tax advantages, but it also brings additional complexity and compliance obligations. Getting this wrong can result in unexpected tax costs.
Stamp Duty Land Tax (SDLT) (MTD)
Companies acquiring residential property may be subject to higher SDLT rates, including the 17% flat rate on properties costing £500,000 or more, and SDLT as high as 19% in some cases.
Stamp Duty Land Tax: Common risk areas
SDLT continues to be a high‑risk area, particularly where transactions are complex or unusual.
Early advice is essential to avoid costly mistakes and penalties. Common issues include:
Shared ownership staircasing
SDLT can arise at different points depending on elections made.
Separation and divorce
Poorly structured transfers can trigger SDLT unexpectedly.
Mixed use claims
Significant savings may be available, but HMRC challenge these claims routinely.
Properties unsuitable for use as a dwelling
Non‑residential rates may apply, but claims must meet strict criteria, the threshold here is set much higher than many tax payers are led to believe
Property Capital Allowances
Capital allowances on non‑residential property can generate substantial tax savings and enhance asset value. Protecting capital allowances should be considered at every stage of the property lifecycle.
Key points include:
Significant financial value to businesses, and even non-tax paying entities such as charities and pension schemes
Key to consider on acquisition, refurbishment and disposal
Missed claims can be corrected but can be lost permanently if action isn't taken promptly
Property VAT planning
VAT treatment varies widely depending on the nature of the property and the transaction.
Key considerations include:
- Correct VAT rates on construction and refurbishment (0%, 5% or 20%)
- Planning for conversions, new builds and developments
- Option to Tax (OTT) elections
- Transfer of a Going Concern (TOGC) planning and risks including the Capital Goods Scheme (CGS)
Holiday and short stay accommodation:
Recent case law has confirmed that VAT schemes such as TOMS apply narrowly. Operators should review VAT treatment carefully to ensure compliance if they are currently using the TOMS VAT scheme.
Property Incorporations and Portfolio Restructuring
Incorporation remains attractive for some landlords and investors, offering:
- Access to corporation tax rates
- Greater flexibility over profit extraction
- Ability to retain profits for reinvestment
However, incorporations are complex and heavily scrutinised by HMRC. SDLT, CGT, ATED, IHT and anti‑avoidance rules must all be considered, and more!
Professional advice is essential before proceeding with such a significant restructuring exercise.
Making Tax Digital for Income Tax (MTD) – A landlords perspective
Making Tax Digital for Income Tax Self‑Assessment represents a major change for landlords.
Who is affected?
From 6 April 2026, unincorporated landlords with combined property and trading income of £50,000 or more (before expenses) will be required to comply.
What does MTD involve?
- Keeping digital records of income and expenses
- Submitting quarterly updates to HMRC
- Filing a final annual declaration
- Using MTD‑compatible software
Jointly owned properties
Landlords with jointly owned properties:
- Only report their share of income and expenses
- Can use simplified digital records
- May exclude jointly owned expenses from quarterly updates and finalise them at year end
Record keeping simplifications
- Turnover under £90,000 allows less detailed categorisation
- Property income allowance is claimed at year end, not through quarterly updates
Preparing early is key to avoiding disruption.
HMRC Compliance activity
HMRC continues to focus heavily on the property sector, targeting:
- Under‑reported rental income or capital gains
- Incorrect relief claims often with significant amounts of tax at stake
- Misclassified property transactions
Regular reviews and proactive advice can significantly reduce exposure to enquiries and penalties.
Looking ahead – future changes
Income tax on rental income (from April 2027)
Proposed increases to income tax rates on rental income will affect many landlords and increase complexity.
High value council tax surcharge (from April 2028)
A new surcharge will apply to residential properties valued at £2m or more. Early planning is recommended.
Business rates reform
Revaluations and changing reliefs will impact many businesses, particularly in hospitality and leisure. There is a lot of change and relief is planned, but no doubt many will still face significant higher rates bills moving forward.
How we can help
Affinia’s Property Tax team advises on the full lifecycle of property ownership – from acquisition and development through to restructuring and disposal. Working hand in hand with the wider Affinia Advisory teams to ensure a fully holistic outcome for you, your family and your business.
If you would like to review your position or discuss any of the areas covered in this guide, please contact us.
Explore everything in one place
Download our full 2025/2026 Year End Tax Planning guide for a clear, helpful overview, designed to make year end tax feel a little easier.
Read more about tax year end planning:
Private Clients
Find out more about reliefs and planning opportunities for your private wealth including:
- Income tax planning
- Investments
- Capital Gains tax planning
- Inheritance tax
- Residency and domicile
Business Owners
As a business owner, it is important to consider the reliefs and planning opportunities such as:
- Owner managed business reliefs
- Upcoming IHT changes
- Trading and investments
- Preparing for Making Tax Digital
Employers
As the end of the tax year approaches, employers should be prepared for decision surrounding:
- PAYE, wages. benefits and expenses
- Employee status and self-employed engagements
- Apprenticeship levy and workforce planning
- Off-payroll working (IR35)
- Key dates and deadlines
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