Owning a rental property in Reading looked like a safe bet for a long time. Students fill houses near the university every September, and since the Elizabeth line opened, flats near the station have been popular with commuters heading into London. The rent comes in each month, and the property usually goes up in value. As landlord accountants in Reading, we’ve watched that picture change.
Then the costs started climbing. Buy-to-let mortgage rates went up, repairs got more expensive, and the rules changed so that most landlords can no longer deduct their mortgage interest in full. Making Tax Digital has now arrived for larger landlords, and tax rates on rental profits are due to rise in April 2027. A rental business that looked healthy on paper can end up making very little once tax is paid.
At Asmat & Co, our Reading branch on Oxford Road works with landlords who own one buy-to-let and with landlords who own a dozen. This guide sets out the tax issues we see most often, and how the right accountancy services UK landlords use can help you keep more of your rental profit.
Here are four issues that regularly cost landlords money:
| Issue | What it means for you | What can help |
|---|---|---|
| Section 24 | Mortgage interest is no longer deducted from rent. You get a basic-rate tax credit instead (20% for 2026/27), so higher-rate landlords pay more | Model your figures, review who owns the property and compare personal and company ownership |
| Making Tax Digital | Landlords over the income threshold must keep digital records and send quarterly updates to HMRC | Set up compatible software early, or let your accountant send the updates |
| Empty periods | No rent comes in, but the mortgage, council tax and bills still have to be paid | A cash buffer, plus claiming costs such as council tax and utilities during empty periods |
| Selling a property | Gains on residential property are taxed at 18% or 24%, and the tax is due within 60 days of completion. | Plan the sale date, ownership and reliefs before you accept an offer. |
Section 24: why your tax bill feels too high
Before 2017, landlords who owned property in their own name could deduct their mortgage interest from their rent and pay tax only on what was left. That has been phased out. Now you pay tax on your rental profit before mortgage interest, then get a tax credit at the basic rate on the interest. For 2026/27, that credit is 20%. For a basic-rate taxpayer, that works out roughly the same. For a higher-rate taxpayer, it doesn’t.
A quick example for 2026/27. Sarah is a higher-rate taxpayer through her job. Her rental flat brings in £15,000 a year. She pays £6,000 in mortgage interest and £2,000 in other costs, so the profit she actually keeps is £7,000.
Need Help With Your Accounts Or Tax?
Whether you need support with self assessment, VAT returns, payroll, bookkeeping, CIS, company accounts or corporation tax, Asmat & Co Accountants can provide clear, practical advice for your business or personal finances.
- Her taxable rental profit is £13,000, because the mortgage interest isn’t deducted.
- Tax at 40% is £5,200, less a credit of £1,200 (20% of £6,000), giving a tax bill of £4,000.
- That’s about 57% of the £7,000 she actually made.
Section 24 can also push a basic-rate taxpayer into the higher-rate band, because the profit HMRC uses is higher than the cash you really keep. A specialist accountant in Reading can model your own figures and look at the options. These might include changing who owns the property between spouses or civil partners, paying down the most expensive borrowing first, or holding future purchases in a limited company. None of these suits everyone, which is why the numbers need to be checked before anything is moved.
Personal ownership or a limited company?
One of the questions property accountants across the UK hear most often is: should my properties be in a limited company? Companies aren’t caught by Section 24, so they can deduct mortgage interest in full, and their profits are taxed at Corporation Tax rates of 19% to 25%. That can look very attractive.
There are costs too. Taking money out of a company usually means paying dividend tax on top, and buy-to-let mortgages for companies often have higher rates and fees. The biggest problem is that moving properties you already own into a company is treated as selling them at market value. That can trigger Capital Gains Tax and Stamp Duty Land Tax, including the 5% surcharge on additional properties. Incorporation relief can defer the Capital Gains Tax where the letting is run as a genuine business. It doesn’t help with Stamp Duty, though, and the conditions are strict, so HMRC looks at these claims closely.
| In your own name | Through a limited company | |
|---|---|---|
| Tax on rental profit | Income Tax at your rate. Property income rates rise from April 2027 | Corporation Tax at 19% to 25% |
| Mortgage interest | Basic-rate tax credit only (Section 24), 20% for 2026/27 | Deducted in full as a business cost |
| Taking money out | No extra tax: the profit is already yours | Salary or dividends, taxed when you take them |
| Selling a property | Capital Gains Tax at 18% or 24%, with a £3,000 annual exemption | Corporation Tax on the gain, then tax when the money is taken out |
| Paperwork | Self Assessment, plus Making Tax Digital if it applies | Annual accounts, Corporation Tax return and a confirmation statement |
If a company is right for you, our company accounts preparation services keep it compliant with Companies House and HMRC and give your lender clean accounts when you want to borrow again. How your properties are shown in the accounts depends on the reporting rules the company uses. Under FRS 102, they’re shown at fair value each year, while micro-entity accounts show them at cost, less any depreciation. We’ll explain which suits your company, because it affects what a lender sees on your balance sheet.
Rental income, Self Assessment and allowable expenses
Most landlords we meet in Reading let property alongside a day job. Your rental profit is added to your salary, which can easily push part of it into the 40% band. Rental profits are reported on your Self Assessment return, and for the 2025/26 tax year the online return and any tax owed are due by 31 January 2027.
Our self assessment tax return services make sure the profit is worked out properly, and every allowable cost is claimed. The most common ones are:
Improvements such as an extension or a new kitchen that adds value aren’t deducted from rent. They’re added to the property’s cost and reduce your Capital Gains Tax when you sell, so keep those invoices too. If your rental income is very small, you may be able to use the £1,000 property allowance instead of claiming actual costs.
Landlord tip: Keep a separate bank account just for your rental income and costs. It makes your records cleaner, your quarterly updates quicker and an HMRC enquiry far less painful.
Making Tax Digital for landlords
Since 6 April 2026, landlords and sole traders whose combined property and self-employment income was over £50,000 have had to keep digital records and send HMRC quarterly updates through compatible software. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028, and it’s based on your gross income before expenses, not your profit. If you own a property jointly, your own share of the rent is what counts.
If you still keep your rental records in a notebook or a spreadsheet you update once a year, this is the year to change. We can set up QuickBooks for you, connect it to your rental bank account, and send the quarterly updates on your behalf.
Selling a property, or buying to flip
When you sell a rental property you own personally, any gain above the £3,000 annual exemption is taxed at 18% if it falls in your basic-rate band and 24% above it. If there’s tax to pay, you must report the sale to HMRC and pay the tax within 60 days of completion. Missing that deadline brings penalties and interest. Careful planning can make a real difference, for example choosing which tax year the sale falls in, using both spouses’ allowances where you own the property together, or making sure every improvement cost is claimed.
Flipping is different. If you buy houses to renovate and sell rather than to let, HMRC will usually treat the profit as trading income, not a capital gain. That means Income Tax and National Insurance, or Corporation Tax if you trade through a company, and the 60-day Capital Gains Tax rules don’t apply. Getting this wrong can mean the wrong tax being paid, so it’s worth agreeing how your activity is treated before your first sale.
The 30-second landlord check
Answer these three questions honestly:
If you answered no to any of them, it’s worth a conversation. A short review often finds savings, and it gives you a clear picture before the next tax bill arrives.
Frequently asked questions
Do I need an accountant if I only have one rental property?
Not by law, but Section 24, Making Tax Digital, and the April 2027 rate changes catch out plenty of single-property landlords. A good accountant usually saves more than the fee.
Should I move my buy-to-let into a limited company?
Sometimes, but not always. Transferring property you already own can trigger Capital Gains Tax and Stamp Duty. We compare both options using your own figures before you decide.
When do I have to tell HMRC about selling a property?
Within 60 days of completion, if there’s Capital Gains Tax to pay on a UK residential property. You report and pay through HMRC’s online property service, and the sale also goes on your Self Assessment return.
Does Making Tax Digital apply to me?
It already applies if your gross rental and self-employed income was over £50,000 in the 2024/25 tax year. From April 2027, it also applies if that income was over £30,000 in 2025/26. HMRC uses your total income before expenses, not your profit.
Speak to our landlord accountants in Reading
Whether you let one flat or manage a growing portfolio, Asmat & Co provides fixed-fee accountancy services for landlords across the UK. We prepare your Self Assessment or company accounts, handle Making Tax Digital, give practical property tax advice and deal with HMRC for you, with unlimited support and a reply within three hours.
Visit our Reading branch at 365-367 Oxford Road, or call 0118 950 9841. We also see landlords at our Slough head office and our West Midlands office. Book a meeting with Asmat & Co today. We do Numbers & You do Business!
This article is general information for the 2026/27 tax year, including changes announced in the Autumn Budget on 28 October 2026. It isn’t personal tax advice. Please speak to us about your own circumstances before acting.
Need Help With Your Accounts Or Tax?
Whether you need support with self assessment, VAT returns, payroll, bookkeeping, CIS, company accounts or corporation tax, Asmat & Co Accountants can provide clear, practical advice for your business or personal finances.
