HMO Accountants for Landlords and Property Companies

Rent often includes utilities, council tax, broadband and cleaning. The full rent is property income, and those costs are generally deductible when paid by the landlord for the let. Separate service charges should be recorded consistently.

Licence fees for mandatory or additional licensing, fire alarms and doors, safety certificates, letting-agent fees and repairs are generally revenue costs. Converting a house into an HMO, extensions or adding bathrooms is usually capital, which reduces a future gain rather than rental profit.

For residential lets, replacing furniture, appliances and furnishings with like-for-like items can usually be claimed under the replacement of domestic items relief. The initial cost of furnishing a new HMO is not deductible under that relief. Capital allowances are generally not available for items in a dwelling, though they may be for communal areas in some cases.

Individual landlords cannot deduct mortgage interest from residential property income; they receive a 20% basic-rate tax credit instead. A company deducts interest in calculating profit and pays Corporation Tax, but profits taken personally are taxed again as dividends or salary.

The government has announced separate property income tax rates for individuals of 22%, 42% and 47% from 6 April 2027. Moving existing properties into a company can trigger Capital Gains Tax and Stamp Duty Land Tax, so modelling comes before any transfer.

Rates, thresholds and dates reflect the UK position at the content update date, including measures announced for future tax years. Check current GOV.UK guidance, or ask us, before relying on them.

Individuals with qualifying self-employment and property income above £50,000 must follow MTD for Income Tax from 6 April 2026, with the threshold falling to £30,000 from April 2027 and £20,000 from April 2028. Qualifying income is gross receipts, so HMO rents can bring landlords in quickly. Quarterly updates need compatible software; companies are not within MTD for Income Tax.