By Sam Niranjan & Co – Property Tax Specialists

Being a landlord in the UK can be profitable, but the tax rules for rental properties are complex and constantly changing. Every year, landlords lose thousands of pounds because they misunderstand the rules around:

• Section 24 mortgage interest

• CGT on property

• Allowable expenses

• Serviced accommodation vs FHL

• SDLT and incorporation

• VAT for serviced accommodation

As specialist property tax accountants, we’ve listed the 25 most common tax mistakes landlords make — and what you can do to avoid them.

1. Misunderstanding Section 24 (Mortgage Interest Restriction)

Many landlords still think they can deduct all mortgage interest. Under Section 24, higher-rate landlords only receive a 20% tax credit. This increases taxable profits and pushes some landlords into higher tax brackets.

2. Confusing Repairs With Improvements

A classic HMRC enquiry trigger. Repairs = deductible, Improvements = capital expenditure. Misclassification means paying more tax than necessary.

3. Missing Allowable Expenses

Many landlords forget to claim:

• Mileage for property visits

• Accountancy fees

• Phone/broadband apportionment

• Use of home

• Insurance

• Subscriptions: Missing these can cost hundreds every year.

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4. Not Claiming Replacement Domestic Items Relief

This applies when replacing sofas, beds, appliances, carpets (like-for-like). It replaces the old “wear and tear allowance”.

5. Missing the 60-Day CGT Return Deadline

If you sell a UK residential property, you must file a 60-day CGT return, even if:

• No tax is due

• You already declared it on your Self Assessment

• You are abroad

HMRC penalties apply automatically.

6. Wrong Classification: Serviced Accommodation, FHL or B&B

Each has different rules for:

• VAT

• CGT

• Capital allowances

• Trading statusWrong classification = incorrect tax.

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7. Incorrect Loan Interest Claims

Interest relief depends on how the loan was used. Mixed-purpose loans must be apportioned accurately.

8. Poor Record Keeping

HMRC expects landlords to keep digital records, including:

• Receipts

• Invoices

• Bank statements

• Tenancy agreements

• Mileage logs

Poor records = higher tax and enquiry risk.

9. Picking the Wrong Structure (Personal vs Limited Company)

Many landlords rush to form a company after hearing online advice. But incorporation may create:

• Higher tax

• SDLT

• CGT

• Refinancing issuesAlways get a tax forecast before incorporating.

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10. Applying Section 24 to Commercial Property by Mistake

Commercial property mortgages are fully tax-deductible. Many landlords restrict interest unnecessarily.

11. VAT Issues in Serviced Accommodation

Serviced accommodation is usually a trading business, not a passive rental.VAT mistakes can cost thousands.

12. Overclaiming Private Use Costs

Dual-purpose costs (fuel, phone, internet) must be apportioned appropriately.

13. Overpaying SDLT

Many landlords miss SDLT reliefs:

• MDR (Multiple Dwellings Relief)

• Mixed-use

• Replacement of the main residence rules

An SDLT review often refunds thousands.

14. Not Planning Capital Gains Tax

CGT can be reduced through:

• Timing

• Spousal transfers

• Enhancement expenditure

• Annual exemption

Missing these = higher tax.

15. Incorporating Without Planning the Tax Consequences

Incorporation mistakes can trigger:

• CGT

• SDLT

• Higher interest rates

• Lender restrictions

Never incorporate without a specialist review.

16. Not Claiming Pre-Letting Expenses (7-Year Rule)

Landlords can claim allowable expenses incurred up to 7 years before the first tenant moves in. This is often overlooked.

17. Not Using Spousal Transfers to Reduce Tax

Shifting beneficial ownership between spouses can reduce higher-rate tax bills. Requires:

• Declaration of trust

• Form 17 (if unequal ownership)

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18. Ignoring Non-Resident Landlord Rules

NRLs must register with HMRC. If not, agents/tenants deduct tax at source.

19. Not Preparing for Basis Period Reform (SA Traders/FHL Operators)

SA operators running a trading business may be affected by the basis period reform from 2024/25 onwards.

20. Ignoring Inheritance Tax on Property Portfolios

Property pushes estates into IHT quickly. Few reliefs apply — early planning is essential.

21. Incorrect Mixed-Loan Apportionment

Interest must be divided correctly when loans are partly funded:

• Property purchase

• Personal use. Many landlords get this wrong.

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22. Charging Below Market Rent to Family

If you charge family members less than market rent, you cannot claim full expenses—a widespread misunderstanding.

23. Poor Timing of Repairs vs Refurbishment

Doing all work together can turn deductible repairs into capital improvements. Tax planning around timing is essential.

24. Missing Capital Allowances (Huge Tax Savings)

Available for:

• Serviced accommodation

• Furnished holiday lets (FHL)

• Hotels

• B&Bs

• Commercial units: Capital allowances can save tens of thousands in tax.

  
  

25. Not Using a Property Tax Specialist

DIY tax returns often miss:

• Reliefs

• Elections

• Apportionments

• Important deadlines

• Structuring opportunities

Specialist accountants recover more than their fee.

⭐ Conclusion – Maximise Your Property Profits & Reduce Tax Legitimately

The UK property tax system is full of traps, but also full of opportunities to save tax legally.

At Sam Niranjan & Co, we specialise in property-specific tax advice for:✔ Landlords✔ Serviced Accommodation operators✔ Property partnerships✔ Limited company landlords✔ FHL owners✔ Property investors

We help you:

• Pay only what is legally due

• Reduce your tax bill

• Avoid HMRC penalties

• Structure your portfolio

• Grow profits and long-term wealth

  
  

📞 Need Specialist Property Tax Advice?

👉 Call us: 07878 070765👉 Visit: snaccountants.co.uk👉 Book a consultation