Property company accounts and tax: rent, mortgage interest, ATED and what you file each year

What’s taxed

The company is taxed on its rental profit: the rent it is owed for the period, less the costs of running the letting business, such as letting agent fees, repairs, insurance, service charges and the interest on its loans. The profit goes on the CT600 with any other income, and the tax is worked out at the rates every company pays¹.

Mortgage interest is where a company and a personal landlord differ most. Individuals letting homes have their relief for finance costs restricted. HMRC’s own manual says that rule applies to income tax on property businesses run by individuals, and that “companies carrying on property business are not affected”². A company deducts the interest from its profits in full.

The cost of buying a property is not a running cost. It sits on the balance sheet, and when the company sells, the gain is taxed as part of its profits in that year’s return.

Furniture, appliances and fixtures

A company can’t claim capital allowances on plant or machinery for use in a dwelling-house it lets: beds, sofas, fridges and the like in a let home don’t qualify⁴. When it replaces one of those items, though, the cost of the new one is deductible under replacement of domestic items relief⁵. The rules:

• the old item was already provided in the property, and the new one replaces it and is solely for the tenant’s use⁵;
• an upgrade is only deductible up to the cost of a like-for-like replacement, and anything received for the old item reduces the deduction⁵;
• fixtures are outside this relief: anything fixed to the building so that it becomes part of it, including a boiler or a radiator⁵.

Equipment that isn’t for use in a let home, such as a laptop for running the business, is not caught by the dwelling-house rule⁴.

When the letting makes a loss

A loss from a UK property business is first set against the company’s total profits for the same accounting period, such as interest or a gain. Anything left over is carried forward to the next period, as long as the company still has the property business, and used there if the company claims it³.

Letting to family: the close investment-holding company rule

Most small property companies are close companies, controlled by five or fewer people. A close company only keeps the 19% small profits rate and marginal relief if it exists wholly or mainly for permitted purposes^7,6. Letting land counts, but only if the letting is commercial, and the law treats a letting to a connected person, or to a relative such as a parent, child, brother or sister, or their spouse or civil partner, as not commercial⁶.

So a company that mainly lets to its directors’ family can be a close investment-holding company. If it is, every pound of its profit is taxed at the 25% main rate, however small the profit⁷. Fileyear asks whether the company is one, and uses the main rate if it is.

Your accounts: micro, small or more

The accounts follow the same size rules as any company. A company is a micro-entity if it meets two of: turnover of £1 million or less, a balance sheet total of £500,000 or less, and 10 employees or fewer; it is small if it meets two of £15 million, £7.5 million and 50 employees¹³. A property company with almost no staff can still go over the micro balance sheet limit through the value of its properties, so check the balance sheet total before assuming micro-entity accounts. See micro-entity accounts and small company accounts.

The deadlines are the usual ones: accounts 9 months after the year end, Corporation Tax 9 months and a day after it, and the CT600 12 months after it. For a year ending 31 March 2026 that is accounts by 31 December 2026, tax paid by 1 January 2027 and the return by 31 March 2027. Check your own dates with the deadline checker.

ATED: homes worth more than £500,000

The Annual Tax on Enveloped Dwellings applies to a UK dwelling valued at more than £500,000 that is owned wholly or partly by a company⁸. Each chargeable period runs from 1 April to 31 March, and the return is due by 30 April for a property in scope on 1 April^8,9.

A home let to a third party on a commercial basis, where no one connected with the owner occupies it or can, can qualify for relief¹⁰. The relief has to be claimed: if it takes the charge to nil, the company still submits a Relief Declaration Return through HMRC’s ATED online service, and one return can cover the same relief for several properties^10,9. ATED is separate from the CT600, and Fileyear doesn’t file it: use HMRC’s ATED service.

Buying another property

Two things to know when the company buys:

• Stamp Duty Land Tax: a company pays a 5% surcharge on residential property, and the 17% higher rate on a home costing more than £500,000 unless a relief applies, such as the one for property rental businesses¹¹.
• The mortgage charge: a charge the company creates over its property has to be registered at Companies House within 21 days, beginning with the day after it was created¹². See charges on property you buy.

Filing with Fileyear

Fileyear reads the company’s type from its Companies House record and prepares the accounts and CT600 for a property company: rent and costs from your bank lines, mortgage interest kept apart and deducted in full, and the questions about furniture, property sales and close investment-holding status that decide the tax. The price follows the company’s type, with an extra charge for each property over three, and is shown before you pay. Start with accounts and tax return.