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— LANDLORD ACCOUNTING, CITY OF LONDON

Landlord Accounting for Serviced Accommodation, Buy-to-Let, and Ltd Companies in City of London

If you own or manage a rental property, a serviced accommodation business, or a landlord Ltd company in the City of London, specialist landlord accounting is what keeps more of your rental profit out of avoidable tax and penalties. This guide covers Section 24, VAT, Making Tax Digital, and Capital Gains Tax for City of London landlords, updated for the 2025/26 tax year.

Written by Sharaz Zaman, Founder of GM Professional Accountants, AAT Member with 15+ years London accounting experience. Updated August 2026.

Key takeaways for City of London landlords

1. Making Tax Digital for Income Tax becomes mandatory from 6 April 2026 for landlords with qualifying income above £50,000, and from 6 April 2027 above £30,000.
2. Section 24 restricts mortgage interest relief for personally owned buy-to-let property to a 20 percent tax credit. Limited company and SPV structures are not affected.
3. The Furnished Holiday Lettings regime was abolished from 6 April 2025. Former FHL owners are now taxed as ordinary property landlords.
4. Selling a City of London rental property triggers a 60 day Capital Gains Tax reporting and payment deadline from the date of completion.
5. Serviced accommodation income can trigger a VAT registration obligation once turnover passes the VAT threshold, and the Tour Operators Margin Scheme may reduce the VAT due.

What is landlord accounting for serviced accommodation, buy-to-let, and Ltd companies?

Landlord accounting is the specialist management of rental income, allowable expenses, Self Assessment or Corporation Tax returns, and HMRC compliance across buy-to-let, serviced accommodation, and limited company property portfolios, with the aim of minimising tax legally while meeting every reporting deadline.

Why do City of London landlords need a specialist rather than a general accountant?

The Square Mile has a distinctive landlord profile. Many City of London property owners are professionals working in finance, law, or consultancy who hold one or two high value flats near Barbican, Moorgate, or Aldgate, often alongside a demanding job that leaves little time to track expenses or file quarterly MTD updates. Others run serviced accommodation aimed at corporate short stay tenants, which brings VAT and business rates questions that a standard buy-to-let does not face. Landlord accounting for serviced accommodation, buy-to-let, and Ltd companies in City of London has to account for all three ownership models under one roof.

A general accountant who only files a Self Assessment return once a year will not flag a VAT registration obligation on a serviced accommodation unit, will not model whether incorporation saves tax once mortgage rates and Section 24 are factored in, and will not build the digital record keeping habit MTD now requires.

— OWNERSHIP OPTIONS

Should you hold City of London property personally, through a Ltd company, or through an SPV?

👤

Personal Ownership

Mortgage interest relief capped at a 20 percent tax credit under Section 24. Profit taxed at your Income Tax rate, up to 45 percent. Best for a single property or a short term hold.

Section 24 Income Tax
🏢

Ltd Company

Mortgage interest deducted in full against Corporation Tax at 19 to 25 percent. Profit is taxed again on extraction as salary or dividends. Suits growing, long term portfolios.

Corporation Tax Full Interest Relief
💼

SPV

A special purpose vehicle set up solely to hold property, taxed the same way as a Ltd company. Keeps property borrowing and risk separate from any other trading business you run.

SPV Ring-Fenced Risk

Incorporation is not automatically the right move. Moving an existing personally held property into a company can trigger Stamp Duty Land Tax and Capital Gains Tax on the transfer, so this should always be modelled property by property before you act.

How does VAT affect a City of London serviced accommodation business?

Serviced accommodation is treated differently from ordinary residential letting because it is closer to hospitality than to a standard tenancy. Once your serviced accommodation turnover passes the VAT registration threshold, you must register and charge VAT on your bookings. Many operators can reduce the VAT actually payable by using the Tour Operators Margin Scheme, which calculates VAT on your margin rather than the full booking value, though eligibility depends on how the accommodation is marketed and booked. A short lease unit in the City, aimed at corporate clients near Liverpool Street, will usually generate the turnover needed to trigger this obligation faster than a standard buy-to-let ever would.

What is Section 24 and how does it affect City of London buy-to-let landlords?

Section 24 removed the ability of individual landlords to deduct mortgage interest as an expense before calculating taxable profit. Instead, personal landlords receive a tax credit worth 20 percent of the interest paid, regardless of whether they pay tax at 20, 40, or 45 percent. For a higher rate taxpayer with a large City of London mortgage, this can turn a property that looks profitable on paper into one that generates a real tax bill even in a quiet rental year. Section 24 does not apply to properties held through a limited company or SPV.

When does Making Tax Digital for Income Tax apply to landlords?

Making Tax Digital for Income Tax is phased in over three stages, based on your gross property and self employment income before expenses, known as qualifying income, not your profit.

1. From 6 April 2026, landlords with qualifying income above £50,000 must keep digital records and submit quarterly updates using approved software.
2. From 6 April 2027, the threshold drops to qualifying income above £30,000.
3. From 6 April 2028, the threshold drops again to qualifying income above £20,000, bringing most remaining landlords into scope.

You will still submit a final tax return by the usual 31 January deadline each year, but the quarterly updates mean your records need to be accurate throughout the year. Full details are published on HMRC’s Making Tax Digital for Income Tax guidance.

What Capital Gains Tax applies when you sell a City of London rental property?

When you sell a UK residential property that is not your main home, you must report and pay Capital Gains Tax to HMRC within 60 days of completion, not at the following Self Assessment deadline. Given typical City of London property values, this can mean a substantial payment due in a tight window, so the calculation needs preparing in advance. Reliefs and allowable costs, including agent fees, legal fees, and qualifying improvement works, can all reduce the gain. HMRC’s own guidance on tax when you sell property sets out the reporting mechanics in full.

What HMRC changes should City of London landlords prepare for in 2026 and 2027?

6 April 2026: Making Tax Digital for Income Tax becomes mandatory for landlords with qualifying income above £50,000.

6 April 2027: The MTD threshold drops to qualifying income above £30,000, alongside changes to the taxation of rental income announced at Autumn Budget 2025.

6 April 2028: The MTD threshold drops again to qualifying income above £20,000, bringing most remaining landlords into digital reporting.

Our accounting services for City of London landlords

GM Professional Accountants provides landlord accounting for serviced accommodation, buy-to-let, and Ltd companies in City of London, covering:

1. Self Assessment and property tax returns for individual landlords
2. Ltd company and SPV accounting, including Corporation Tax returns
3. Serviced accommodation VAT registration and Tour Operators Margin Scheme reviews
4. Making Tax Digital setup and quarterly digital record keeping
5. Capital Gains Tax calculations and 60 day HMRC reporting on property sales
6. Incorporation modelling to compare personal ownership against a Ltd company or SPV

If your portfolio also includes property outside the City, our accounting services for Loughton and Ilford landlords cover the same range of self employed tax return, bookkeeping, VAT return, and property tax services for landlords based further into Essex.

GM Professional Accountants is a London based, AAT regulated accounting firm founded by Sharaz Zaman, supporting landlords, SPV directors, and serviced accommodation operators across the City of London and every London borough, as well as clients across Essex including Ilford, Wimbledon, Old Street, and East London.

Frequently asked questions

Do I need a specialist accountant for one buy-to-let flat in the City of London?

Yes, if you want to claim every allowable expense correctly and avoid an HMRC enquiry. Even a single property carries Section 24 restrictions, MTD obligations once income passes £50,000, and Capital Gains Tax reporting rules on sale.

Should I move my City of London property into a limited company?

It depends on your tax band, your mortgage costs, and how long you plan to hold the property. Incorporation removes Section 24 restrictions but triggers Stamp Duty Land Tax and Capital Gains Tax on the transfer, so it needs modelling before you act.

Do serviced accommodation operators in the City of London need to register for VAT?

You must register once your taxable turnover exceeds the VAT threshold. Serviced accommodation is treated differently from standard letting, and the Tour Operators Margin Scheme can reduce the VAT payable.

What happened to the Furnished Holiday Lettings tax regime?

The FHL regime was abolished from 6 April 2025. Former FHL owners, including those running short let serviced accommodation in the City, are now taxed under the same rules as ordinary property landlords, including Section 24.

When do I need to report Capital Gains Tax after selling a rental property?

Within 60 days of completion. This applies to UK residential property that is not your main home, and the tax must be reported and paid to HMRC within that window rather than waiting for your annual Self Assessment return.

Does GM Professional Accountants work with landlords outside the City of London?

Yes. GM Professional Accountants serves landlords and property investors across every London borough as well as throughout Essex, including Ilford, Wimbledon, Old Street, and East London.

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