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Review exposure to future property tax rates
The taxation of property continues to evolve, with recent changes such as the withdrawal of furnished holiday letting rules and the expansion of Making Tax Digital.
While no separate income tax regime currently applies specifically to property income, landlords should take time to model future income levels, consider ownership structures and review whether current arrangements remain tax efficient in light of ongoing policy developments.
Prepare early for Making Tax Digital for Income Tax
Making Tax Digital for Income Tax will begin from April 2026 for landlords and sole traders with gross income from property and/or self-employment over £50,000, expanding to £30,000 from April 2027.
Before April, property owners should:
- confirm whether their income levels will bring them into MTD IT
- review record‑keeping processes, particularly for jointly owned property
- consider the impact of holding UK and overseas property, which are treated as separate businesses
Preparing in advance will reduce the risk of compliance issues once quarterly reporting begins.
Consider the impact of the end of furnished holiday letting rules
Tax incentives for furnished holiday lettings ended from April 2025, with the changes taking effect from 1 April for Corporation Tax purposes and 6 April for Income Tax and Capital Gains Tax.
Before the year end, it is sensible to:
- review projected tax liabilities following the loss of capital allowances, finance cost relief and pension advantages
- revisit long‑term plans for properties previously run as furnished holiday lets
- check whether any transitional reliefs or disposal reliefs may still be available, depending on the timing of cessation and sale
Don’t overlook Capital Gains Tax and ownership issues
For those considering selling or reorganising property interests, Capital Gains Tax remains an important consideration. Issues can arise where properties have been let, where more than one home is owned, or where ownership is shared between spouses.
Reviewing intentions before April can help ensure that opportunities are not missed and that future disposals are structured efficiently.
Looking ahead
Further changes may be on the horizon, including proposals such as a potential High Value Council Tax surcharge on higher-value residential properties, although no legislation has yet been enacted.
Pulling it all together
Property taxation is becoming more complex, with higher future tax rates, increased reporting obligations and the removal of long‑standing reliefs.
These highlights form part of a broader range of planning points covered in our Year End Tax Planning Guide, where we look in more detail at useful ways to take advantage of available tax reliefs and planning opportunities, with practical planning points for companies and business owners, as well as guidance for families, couples and individuals to help ensure finances are structured as efficiently as possible before the tax year end on 5 April 2026.
If you would like to discuss any of these areas, or explore the full range of planning opportunities set out in the guide, please get in touch. We’d be happy to help.
