London property in 2026 operates in a tax environment that has fundamentally shifted over the past decade and the limited companies navigating it best are the ones treating their accountant as a strategic partner, not just a compliance function.
Section 24 has fully phased in, removing mortgage interest relief for individual landlords and making the case forlimited company ownership stronger than it has ever been. Stamp Duty Land Tax surcharges apply on additional residential properties. The furnished holiday let regime has been abolished. Capital gains tax rates on residential property rose in the October 2024 Budget. Renters reform legislation is reshaping the dynamics between landlords and tenants. And HMRC's focus on property income — particularly undisclosed rental income, offshore ownership structures, and incorrect SDLT returns — has never been more intense.
At the same time, London property remains one of the most financially significant asset classes in the UK. The decisions made about how to structure, finance, acquire, hold and eventually exit property assets have consequences that compound over decades. Getting the structure right from the outset — and reviewing it regularly as legislation changes — is not optional for a serious London property business.
This guide is written for limited company property investors, developers, landlords and estate agents operating in or around London in 2026. It covers the tax landscape, the structuring decisions, the compliance requirements, and where a specialist accountant makes a material difference.
Pulse Accountants is a specialist accountancy firm for limited companies, with our London office at 368 Gray's Inn Road, King's Cross, our Newcastle office, and our head office in Newton Aycliffe, County Durham. Property is one of the sectors we work with most.
Property tax is one of the most complex areas of UK tax law, and London property sits at the highest end of the value and complexity spectrum.
A generalist accountant can prepare annual accounts and file a tax return for a property-owning limited company. What they cannot reliably do is navigate the interaction between income tax, corporation tax, SDLT, CGT, inheritance tax and VAT that surrounds a growing London property portfolio, or spot the structuring decisions that make a six-figure difference over five years.
Here is what a genuine property tax specialist brings:
A specialist accountant understands the difference between a property investment company, a property development company and a property trading company and why the distinction matters fundamentally for Corporation Tax, VAT and stamp duty treatment.
A specialist accountant knows when an SPV (Special Purpose Vehicle) structure makes sense for a London investor building a portfolio, how inter-company loans should be structured within a group, and what the tax implications are at the point of refinancing or disposal.
A specialist accountant understands SDLT at the level of mixed-use properties, linked transactions, partnership transfers, and the multiple dwellings relief rules and can structure acquisitions in ways that reduce the SDLT liability legitimately before contracts are exchanged.
A specialist accountant knows that the furnished holiday let regime was abolished in April 2025 and can advise on the transitional issues, the loss of capital allowances previously available on FHL properties, and the restructuring options available to affected landlords.
The stakes in London property are higher than almost anywhere else in the UK. A single acquisition decision whether to buy personally or through a limited company, whether to elect for commercial VAT treatment, whether to use multiple dwellings relief can have tax consequences measured in hundreds of thousands of pounds. Getting specialist advice before the decision, not after, is what separates property businesses that build genuine wealth from those that build assets and give a significant portion to HMRC unnecessarily.
Pulse Accountants works exclusively with limited companies across the UK. Property is one of our strongest sectors. We work with residential landlords, commercial property investors, property developers, HMO operators, and estate agents from our offices in London, Newcastle and Newton Aycliffe.
For most London property investors acquiring new properties in 2026, a limited company is the more tax-efficient structure but the decision depends on your specific circumstances.
The phased removal of mortgage interest relief for individual landlords, known as Section 24 was completed in the 2020/21 tax year. Individual landlords can no longer deduct mortgage interest costs from rental income before calculating their tax liability. Instead, they receive a basic rate tax credit worth 20% of finance costs. For a higher rate taxpayer with significant mortgage debt, this creates a situation where tax is paid on income that does not exist after financing costs are taken into account.
A limited company, by contrast, pays Corporation Tax on profits after all allowable expenses including finance costs. At the current small profits rate of 19% (applying to profits below £50,000), the effective tax rate on rental profits retained within a company is significantly lower than the 40% or 45% income tax rate an individual higher rate taxpayer would pay on the same income.
Limited company ownership tends to make financial sense when:
The investor is a higher or additional rate taxpayer who does not need to withdraw all rental profits for personal living expenses, retained profits in the company are taxed at corporation tax rates, not personal income tax rates.
The investor is building a portfolio over time rather than holding one or two properties, the compounding effect of lower corporation tax rates on retained profits, reinvested into further acquisitions, becomes significant over a five to ten year horizon.
The investor has or anticipates significant mortgage finance on the portfolio, section 24 makes individual ownership increasingly punitive as the debt level rises.
The investor has a longer-term intention to pass the portfolio to family members, company structures offer more flexibility for Inheritance Tax planning than individually-held properties, though this area requires specialist advice.
The limited company route is not universally superior. The additional costs, corporation tax returns, annual accounts at Companies House, more complex personal tax returns, potential double taxation when profits are extracted as dividends mean it needs to be modelled properly against your specific numbers rather than assumed.
Transferring an existing individually-held portfolio into a limited company also creates SDLT and potentially CGT exposure on transfer, which in a high-value London portfolio can make the transfer prohibitively expensive. The right time to move into a company structure is typically before acquisition, not after several properties have been accumulated personally.
Section 24 of the Finance (No. 2) Act 2015 removed the ability of individual landlords to deduct mortgage interest and other finance costs from rental income before calculating their tax liability. The restriction applies to all residential property let by individuals, including buy-to-let, HMOs, and properties let through a partnership. It does not apply to properties held within a limited company.
The impact of Section 24 scales with the ratio of finance costs to rental income and London landlords, who typically carry higher mortgage values relative to property values than regional investors, are disproportionately affected.
A London landlord with a buy-to-let property valued at £600,000, a mortgage of £400,000 at 4.5% interest, and annual rental income of £28,800 faces a situation where their mortgage interest cost of £18,000 per year is no longer deductible. Their taxable income is £28,800 before allowable expenses other than finance — rather than £10,800 after finance costs. At the higher rate of 40%, the difference in tax liability on the finance cost alone is £3,600 per year, partially offset by the 20% basic rate credit of £3,600, but the effective tax burden on a property generating modest net income after financing is significantly higher than pre-Section 24.
For London landlords with multiple mortgaged properties, this calculation compounds across every property in the portfolio and for additional rate taxpayers, the effective marginal rate on rental income can exceed 100% of actual profit after financing costs.
The primary structural response is moving new acquisitions into a limited company. For properties already held personally, the options are more constrained, incorporation typically triggers SDLT and potentially CGT but there are circumstances where the long-term tax saving justifies the transfer cost, and a specialist accountant can model this properly.
Short of structural change, the tax planning options include reviewing the ownership split between spouses or civil partners (basic rate taxpayers are far less affected by Section 24), maximising all allowable deductions other than finance costs, and timing disposals carefully against available CGT reliefs.
Stamp Duty Land Tax is one of the most significant transaction costs in any London property acquisition, and the rates for residential property carrying the additional dwelling surcharge, which applies to limited companies acquiring residential property and to individuals purchasing additional residential properties — are substantial.
For a limited company purchasing residential property in 2026, the SDLT rates (including the 3% additional dwelling surcharge and the further 2% surcharge for non-natural persons acquiring residential property above certain thresholds) mean effective rates that can reach 17% on the portion of purchase price above £1.5 million. On a £1 million London residential acquisition through a limited company, SDLT alone can run to £73,750 or more.
Multiple Dwellings Relief (MDR) applies where a single transaction involves the purchase of two or more dwellings, for example, a block of flats purchased in a single transaction, or a portfolio acquisition involving multiple residential units. Where MDR applies, SDLT is calculated on the mean dwelling value rather than the aggregate consideration, which can significantly reduce the overall liability. MDR was the subject of HMRC consultation but remains available in 2026.
Mixed-use classification can reduce SDLT significantly where a property has both residential and commercial elements — a flat above a shop, a development site with a residential element, a property with an operational business component. Mixed-use transactions attract commercial SDLT rates rather than residential rates, which are meaningfully lower. The classification requires careful analysis and documentation.
First time buyers relief and the nil rate band have limited application for limited company purchasers, but understanding exactly which reliefs are and are not available and how the transaction is structured is critical before contracts are exchanged. SDLT is a transaction tax: once the purchase completes, the liability is crystallised and the planning opportunity has passed.
The October 2024 Budget increased the capital gains tax rates on residential property for higher and additional rate taxpayers. The current rates for residential property disposals (for 2025/26 and 2026/27) are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These apply to gains on individually-held properties.
For property held within a limited company, gains are subject to Corporation Tax rather than CGT, at 25% for companies with profits above £250,000 or 19% for small profits below £50,000. The interaction between corporation tax on the gain, the subsequent dividend tax when profits are extracted personally, and the base cost available to the company needs to be modelled carefully for significant disposals.
Private Residence Relief (PRR) remains the most significant relief available, exempting the gain on a principal private residence from CGT. For London property owners who have lived in a property before letting it, a period of occupation creates PRR entitlement that reduces the chargeable gain, alongside a final period of deemed residence.
Annual Exempt Amount has been significantly reduced from historic levels, the current exempt amount for individuals is £3,000 per year (2026/27), which has limited practical value for most London property disposals where gains typically run to six or seven figures.
Holdover relief is available in certain circumstances for gifts of business assets, and Business Asset Disposal Relief (formerly Entrepreneurs Relief) may apply where a property business qualifies as a trading business, though the conditions are restrictive and pure investment property does not qualify.
CGT planning on property disposals is most effective when it starts several years before the intended disposal, structuring the ownership, the timing across tax years, the allocation between spouses, and the interaction with other income in the year of disposal. A disposal timed to straddle two tax years can utilise two annual exempt amounts and potentially two basic rate bands where relevant.
A Special Purpose Vehicle (SPV) is a limited company established for the specific purpose of holding a property or group of properties. Each SPV holds its own assets and liabilities, creating a ring-fence between different properties or different parts of a portfolio.
For a London property investor building a significant portfolio, an SPV structure offers a number of advantages. Risk is isolated between properties, a problem with one property does not expose the assets of the others. Financing can be arranged at the SPV level, with lenders securing against the specific property. Individual SPVs can be sold as a share sale rather than a property sale, potentially creating SDLT savings for the buyer and enabling a cleaner exit for the seller.
The most common structure for a growing London property business is a holding company sitting above multiple SPVs, with the operating functions (management, administration, any trading activity) sitting in the holding company or a separate trading subsidiary.
The inter-company loan arrangements, the dividend flow from SPVs to holdco, the management fee arrangements, and the group relief provisions all need to be set up correctly from the outset. Getting this wrong or not setting it up at a group level at all, creates problems at the point of refinancing, disposal, or bringing in investors that are expensive to fix retrospectively.
The VAT treatment of property in the UK is one of the most complex areas of VAT law, and getting it wrong on a significant London transaction creates substantial liability.
The default position for property is VAT-exempt, meaning that rent and property sales are not subject to VAT and the seller or landlord cannot recover input VAT on related costs. However, there are important exceptions.
New residential property sold for the first time: zero-rated, meaning no VAT is charged but the developer can recover input VAT on construction costs. This is one of the most valuable VAT positions in property development.
Commercial property: exempt by default, but the owner can make an Option to Tax election, converting the supply to standard-rated. This allows recovery of input VAT on costs, the acquisition, fit-out, maintenance but means VAT must be charged on rent and any subsequent sale.
Residential conversions and certain renovations: subject to the reduced rate of 5% VAT on construction services in certain circumstances, a significant saving on major London renovation projects.
The Option to Tax on commercial property is irrevocable once made (with a 20-year clawback period) and affects both the company and any future purchaser. It makes sense where the business is a fully taxable person (not exempt) and the input VAT recovery significantly exceeds the VAT cost imposed on tenants or buyers.
For a London property company developing or refurbishing commercial premises, the Option to Tax can generate substantial input VAT recovery on construction and fit-out costs. The decision needs to be made before significant expenditure is incurred, not after — the timing determines the recoverability.
The furnished holiday let (FHL) tax regime was abolished with effect from 6 April 2025. Properties that previously qualified as FHLs — broadly, properties available for at least 210 days per year, actually let for at least 105 days, and not in long-term occupation for more than 31 consecutive days — no longer receive the advantageous tax treatment that made FHLs popular with London property investors and those holding properties in tourist areas.
The abolished FHL regime allowed: mortgage interest deducted in full (not subject to Section 24), capital allowances on furniture and equipment, Business Asset Disposal Relief on disposal (10% CGT rather than 24%), potential access to pension contribution relief from FHL profits, and treatment of income as earnings for pension purposes.
From April 2025, FHL properties are treated as ordinary residential letting businesses for tax purposes. The loss of capital allowances on furniture, the loss of BADR on disposal, and the loss of full finance cost deduction are the most financially significant changes for investors who built their London short-let strategy around the FHL regime.
For investors who were relying on BADR to reduce the CGT on a planned disposal, timing that disposal before April 2025 was the ideal outcome, for those who have not yet sold, the post-abolition CGT position needs to be factored into disposal planning.
For investors holding FHL properties within a limited company (where Section 24 never applied and BADR was not available in any case), the abolition has less impact on the ongoing tax position but capital allowances on furniture and fittings are no longer available.
Estate agency is a distinct business type within the property sector, with its own tax and accounting requirements that differ from property investment and development.
A London estate agency limited company is typically a service business generating commission income but the financial complexity beneath that simple description is significant.
Commission recognition and timing creates accounting questions that affect the Corporation Tax liability in any given year — particularly around conditional commissions on sales that are subject to contract, withdrawal risk, and delayed completions. Getting the revenue recognition right across a high-volume London sales business requires careful application of accounting standards.
VAT applies to estate agency services at the standard rate of 20%. A London estate agent approaching the VAT threshold (£90,000 rolling 12 months) needs to plan registration carefully, particularly where the timing of completion-based commission creates lumpy income that can cross the threshold unexpectedly.
PAYE and IR35 issues arise frequently in estate agency where high-performing negotiators operate through personal service companies or on self-employed arrangements. HMRC scrutinises agency worker status carefully, and the off-payroll working rules (IR35) have significant implications for the agency's obligations as the client engaging those workers.
Goodwill and valuation on acquisition are significant for estate agencies being acquired or merged — the allocation of purchase price between goodwill, restrictive covenants, and client lists has Corporation Tax implications for both buyer and seller that require specialist advice at the transaction stage.
Pulse Accountants works exclusively with limited companies, and property is one of our strongest sectors. We work with residential landlords, HMO operators, commercial property investors, property developers, SPV structures, property management companies and estate agents across the UK — from our London office at 368 Gray's Inn Road, King's Cross, our Newcastle office, and our head office in Newton Aycliffe, County Durham.
Property tax is not a sideline for us. We understand the structuring decisions, the compliance requirements, and the planning opportunities across the full lifecycle of a property business — from first acquisition through to exit.
If you are running a limited company property business in London — whether you are a landlord reviewing your structure, an investor planning an acquisition, a developer managing VAT on a build, or an estate agent looking for a specialist firm that understands your business — we would like to hear from you.
The first conversation is free and without any obligation.
Get in touch: help@pulse-accountants.co.uk
Should a London property investor use a limited company or buy personally in 2026?
For most London property investors who are higher or additional rate taxpayers and intend to grow a portfolio, a limited company is typically more tax-efficient in 2026. Section 24 removes mortgage interest relief for individual landlords, meaning higher rate taxpayers can pay tax on income that does not exist after financing costs. A limited company pays Corporation Tax on profits after all allowable expenses including finance costs — at 19% for profits below £50,000. The right answer depends on your personal tax position, portfolio size, financing levels, and whether you need to extract all rental profits for personal expenditure. Pulse Accountants models this based on your actual numbers before you make any acquisition decision.
What is Section 24 and how does it affect London landlords?
Section 24 removed the ability of individual landlords to deduct mortgage interest from rental income before calculating their tax liability. Instead, a basic rate tax credit of 20% of finance costs is available. For a higher rate taxpayer with significant mortgage debt on a London property portfolio, this means paying 40% income tax on gross rental income and receiving back only 20% of finance costs — creating a situation where tax is paid on income that does not exist after financing. Limited companies are not subject to Section 24 and can deduct finance costs in full.
What SDLT does a limited company pay when buying residential property in London?
A limited company purchasing residential property in London pays SDLT at residential rates plus the 3% additional dwelling surcharge that applies to all additional residential property purchases. Companies purchasing residential property above £500,000 also pay an additional 2% surcharge introduced for non-natural persons. On a £1 million residential acquisition through a limited company, SDLT can exceed £73,000. SDLT planning — including multiple dwellings relief and mixed-use classification where applicable — should be considered before contracts are exchanged, not after.
What happened to furnished holiday let tax relief in the UK?
The furnished holiday let tax regime was abolished from 6 April 2025. Properties that previously qualified as FHLs no longer receive the advantageous tax treatment the regime provided — including full mortgage interest deduction, capital allowances on furniture, Business Asset Disposal Relief on disposal, and pension contribution treatment of FHL profits. From April 2025, former FHL properties are treated as ordinary residential lettings for tax purposes. Investors affected by the abolition should review their disposal plans and ongoing structuring with a specialist accountant.
Does VAT apply to rental income from London property?
Most residential rental income is exempt from VAT — meaning no VAT is charged but the landlord also cannot recover input VAT on costs. Commercial property is also exempt by default, but a landlord or developer can make an Option to Tax election to convert the supply to standard-rated, allowing recovery of input VAT on acquisition, refurbishment and running costs. The decision to opt to tax is irrevocable for 20 years and needs to be made carefully before significant expenditure is incurred. New residential property sold for the first time is zero-rated, allowing developers to recover input VAT on construction costs.
Does Pulse Accountants work with property businesses outside London?
Yes. While our London office at 368 Gray's Inn Road, King's Cross serves property businesses across the capital, we support property limited companies nationwide from our head office in Newton Aycliffe, County Durham and our Newcastle office. We work with investors, developers, HMO operators and estate agents across the UK — the same specialist expertise wherever you are based.