Calculated News
The Tax Team welcomed Donna Brown this month as our newest accountant. Donna is experienced in both trading and property companies and individuals and is a great addition to our pretty superb tax team.
All Calculated clients have dedicated Client Manager who will be a tax advisor or an accountant (depending on your business). Your Client Manager is your main point of contact, and they will answer most of your queries but, if appropriate, they may ask other members of the team to deal with your enquiry.
We are a remote team and communication is one of our strong points, so be assured, your Client Manager will always be kept informed.
Tax & Accounting
‘Every little Helps’
Two examples of simple but significant tax allowances peculiar to the property investor.
Limited Companies owners: Do you have a Qualifying Loan?
If you have remortgaged your main residence, a personally owned Buy to Let property or taken out a personal loan to put into your property investment company to purchase buy to let properties you may be eligible for tax relief on the proportion of interest relating to the loan made to your company.
There is no restriction to 20% as for personally owned Buy to Let properties. Therefore, if you are a higher rate taxpayer, you will receive 40% tax relief on the interest element that relates to the amount put into your company.
Example: you remortgage your main residence to take out £50k to put into your limited company to purchase buy to let properties.
The annual interest on this portion of the loan is £2,500.
As a higher rate taxpayer you would qualify for tax relief at 40% for the interest paid of £2500, therefore the annual reduction in your personal tax would be £1000.
The allowance can be added to your tax code which means you pay less tax on your earnings via payroll or if you do a self-assessment tax return, the claim can be made on there.
Arrangement Fees/Broker Mortgage Fees
Mortgage arrangement fees are very high in the current climate and can be up to 3% of the mortgage borrowing. Did you know that these fees (even if they have been added to your mortgage) are allowable as a cost of finance against tax due on your rental profits?
They are treated the same way as mortgage interest and therefore subject to the 20% restriction for tax relief. Therefore, if you have remortgaged and paid arrangement and broker fees these will both qualify for tax relief.
Example: Your BTL mortgage of 100K is due for renewal and you pay an arrangement fee of £2000. You also have a broker fee of £500.
On top of your annual mortgage interest that you can claim, you will have costs of finance of £2500, which will reduce the tax due on your property income by £500.
HMRC Annual Tax on Enveloped Dwellings (ATED)
What is it? ATED is an annual tax payable, mainly by companies who own UK residential property** valued at more than £500,000 (for any single property).
If you are a limited company or a partnership who own a UK residential property** (or a trust who jointly own a UK residential property** with a company), and the value of any property is more than £500,000 you will need to complete an ATED return annually even if there is no tax to pay.
Returns for the 2025-26 tax year must be submitted on or after 1 April 2025 and any tax due must be declared and paid by the 30 April 2025.
Can I claim any relief? There are reliefs and exemptions which may mean you do not have any tax to pay. You will still however, need to submit an ATED return.
- There are reliefs available if the** let to a third party on a commercial basis and is not, at any time, occupied (or available for occupation) by anyone connected with the owner.
- Note: In this instance “commercial” means you are charging and receiving a market rent for your let property. So, for a large number of companies who own BTL properties there will be no tax to pay.
- open to the public for at least 28 days a year.
- being developed for resale by a property developer.
- owned by a property trader as the stock of the business for the sole purpose of resale.
- repossessed by a financial institution as a result of its business of lending money acquired under a regulated home reversion plan.
- being used by a trading business to provide living accommodation to certain qualifying employees.
- a farmhouse occupied by a farm worker or a former long-serving farm worker owned by a registered provider of social housing or a qualifying housing co-operative.
Is any property exempt? HMRC use the term “dwelling” when referring to the tax. Your property is considered a dwelling if all or part of it is currently used, or could be used, as a residence. Some properties, for example, hotels, guest houses, boarding school accommodation, hospitals, student halls of residence, military accommodation, care homes and prisons are not classed as dwellings.
Contact your client manager if have any questions or you need assistance with your return.
HMRC Making Tax Digital for Income Tax (MTD IT) (aka MTD ITSA)
What is it? The Making Tax Digital for Income Tax regime will be introduced by HMRC from 1st April 2026. It will require all sole traders and landlords with qualifying turnover to keep digital records of all your business income and expenses, including all your income from self-employment or property and complete and submit 4 quarterly “simple” income and expenditure returns per income stream plus a final, end of year return with adjustments using compatible software.
So, if you have a sole trader business and you are also a landlord with personally owned property, you will need to complete and submit the returns for each income stream. This is the single biggest change to sole trader and landlord income tax reporting and compliance for a very long time and we will all need to pay careful attention to compliance to avoid penalties.
What is the qualifying turnover? For individuals, MTD for ITSA will be introduced in two phases:
from April 2026, for those with qualifying income over £50,000
from April 2027, for those with qualifying income over £30,000
The government has said it also remains committed to the future introduction of MTD for IT to partnerships.
Do I need to do anything now? Not yet. HMRC have said that they will review the FY 23/24 Tax returns submitted to forewarn those who “may” be included in MTD IT, with letters due to go out from April 2025 onwards.
Your FY 24/25 Self-Assessment Return will determine if you are to be automatically enrolled in the scheme. You will receive a letter from HMRC following 31st January 2026 to inform you if you are enrolled. You cannot choose to opt out in the same tax year.
Will Calculated complete and submit the returns for me? Yes. We have been monitoring the information coming from HMRC and, now that it is becoming clearer, we will contact clients who we believe will be affected. We will also be involved in the trial this year to ensure we know what’s coming and how to ensure our affected clients have a smooth introduction to the changes.
In Summary:
Making Tax Digital for IT (aka MTD ITSA)
- From April 2026 : 4 “simple” quarterly returns per income stream for Sole Trader and Landlords with personally owned property with qualifying income (turnover) plus end of year return with adjustments, using compatible software.
- Look out for letters from HMRC to let you know if you are likely to be enrolled and if you will definitely be enrolled. Please let us know if you received these.
- Look out for further information from Calculated. We will be in touch with more information in the next few months.
We are always available to answer your questions by phone or email, and by Teams meeting on request.
Contact Us:
| Tax & Accounting | 01904 948860 Option 1 | tax@calculateduk.com |
| Mortgages | 01904 948860 Option 2 | mortgages@calculateduk.com |
| Commercial Mortgages | 01904 948860 Option 2 | commercial@calculateduk.com |
