Landlord Accounting in Wimbledon: Tax Advice for Serviced Accommodation & Buy-to-Let

What Is the Difference Between Buy-to-Let and Serviced Accommodation Accounting?

Buy-to-let (BTL) landlords rent on assured shorthold tenancy (AST) agreements, typically 6–12 months. Income is classified as rental income, reported via Self Assessment, and subject to Section 24 mortgage interest restrictions for individual landlords.

Serviced accommodation (SA) operates on short-term lets — think Airbnb, Booking.com, or corporate lets. Because services are provided alongside the property (cleaning, linen, utilities), SA is treated differently for VAT, income classification, and potentially CGT. Explore our Property Accountants in London service for a full overview of the UK property tax landscape.

What Tax Do Landlords Pay on Rental Income in 2026?

Rental income is added to your other income and taxed at your marginal rate: 20% (basic), 40% (higher), or 45% (additional). Individual landlords may no longer deduct mortgage interest directly — instead, a 20% basic rate tax credit applies. From 6 April 2027, a 2% property income surcharge takes effect under the Finance Act 2026, adding material cost to every portfolio.

Allowable expenses for both BTL and SA landlords include letting agent fees, repairs and maintenance, landlord insurance, ground rent and service charges, professional accountancy fees, advertising costs, and travel for property management. Capital improvements are not deductible against income but increase your base cost for Capital Gains Tax.

Should I Hold My Properties in a Limited Company or Personally?

This is one of the most consequential decisions a London landlord can make. Limited company SPVs (Special Purpose Vehicles) allow full mortgage interest deduction as a business expense, provide Corporation Tax rates currently at 25% on profits above £250,000, and offer inheritance planning flexibility. However, there are stamp duty costs on transfer, CGT on incorporation, and annual compliance costs.

Individual ownership retains simplicity but has become significantly less tax-efficient since Section 24. Higher rate taxpayers in particular should model both scenarios before buying their next property. GM Professional Accountants provides London SPV accounting services for landlords considering incorporation.

What Are the Tax Rules for Serviced Accommodation in London After the FHL Abolition?

Prior to 6 April 2025, a Furnished Holiday Letting (FHL) that met HMRC’s qualifying conditions (available 210 days, let 105 days per year) enjoyed capital allowances, Business Asset Disposal Relief (entrepreneurs’ relief equivalent), and pension contribution treatment. Those advantages no longer exist. From 2025/26, SA income is taxed as ordinary property income under the same Section 24 restrictions as BTL.

However, serviced accommodation operators face additional considerations that standard BTL landlords do not:

VAT: If you provide services alongside accommodation (cleaning, linen changes, utilities), income may be treated as taxable rather than exempt. Once your taxable turnover exceeds the VAT registration threshold, you must register. London landlords operating at scale through Airbnb or Booking.com should review this carefully. Check HMRC’s VAT registration guidance here.

90-Day Rule (Greater London): Short-term lets of a property in Greater London are limited to 90 days per calendar year without planning consent under the Deregulation Act 2015. Exceeding this limit without permission carries significant penalties and may affect your tax position.

Business Rates vs Council Tax: Properties let as serviced accommodation for more than 140 days in a year may be assessed for business rates rather than council tax, affecting your cost base and relief entitlements.

Our team assists SA operators in Ilford, East London, Wimbledon, Old Street and across the wider London and Essex area. See our dedicated page on Accountants for Rent-to-Serviced Accommodation for a full guide to R2SA accounting.

What Does Making Tax Digital (MTD) Mean for London Landlords in 2026 and 2027?

MTD for Income Tax Self Assessment (ITSA) is now live. Landlords with combined gross income from property and self-employment over £50,000 must use MTD-compatible software and submit four quarterly updates per year from 6 April 2026. Those over £30,000 are brought into scope from April 2027.

Each quarterly submission covers a summary of income and expenses for that period. A final year-end declaration replaces the traditional Self Assessment return. Non-compliance carries automatic HMRC penalties.

GM Professional Accountants helps landlords across London and Essex set up MTD-compatible software (QuickBooks, Xero, FreeAgent), migrate from spreadsheets, and manage quarterly submissions on their behalf. For the full picture, read our guide: MTD Updates for London Landlords.

What Expenses Can a Buy-to-Let Landlord Claim in the UK?

Allowable revenue expenses reduce your rental profit before tax is calculated. Capital expenditure is not deductible against rental income but increases your property’s acquisition cost for CGT. The distinction matters enormously when HMRC investigates.

Do I Need to Pay Capital Gains Tax When I Sell a Rental Property in London?

Yes. Gains on the disposal of UK residential property are subject to Capital Gains Tax. As of 2025/26, the rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers on residential property gains (after the annual exempt amount, which stands at £3,000). For companies, Corporation Tax applies to gains.

Critical deadline: You must report and pay any CGT owed on a UK residential property within 60 days of completion. Missing this deadline triggers automatic HMRC penalties. Our team helps London landlords in Canary Wharf, Ilford, Wimbledon and Essex plan for CGT well in advance of any disposal.

For further detail, visit our page on Capital Gains Tax services.

How Does SDLT Affect London Landlords Buying Additional Properties?

Stamp Duty Land Tax (SDLT) on additional residential properties carries a 5% surcharge above the standard rates. First-time buyers purchasing a property intending to let it lose FTB relief if it is not their main residence. Limited company purchases are always subject to the surcharge regardless of whether it is the company’s first property acquisition.

Certain reliefs and refunds may be available — for example if you sell a previous main residence within three years. GM Professional Accountants reviews SDLT positions for landlords across London and Essex to ensure no overpayment occurs and any available refund is claimed.

Our Landlord Accounting Services in London and Essex

GM Professional Accountants serves landlords across London, including Canary Wharf, Covent Garden, Old Street, Wimbledon, and East London, as well as clients throughout Essex including Ilford. We provide a full range of accounting and tax services to landlords at every stage of their property journey.

Frequently Asked Questions: Landlord Accounting & Property Tax