We recently published part one of this article series, where we shared essential tax advice and relief options available to landlords. If you haven’t already, we highly recommend reading through it to see the tax savings you may be eligible for.

In part two, we share seven key tips that every landlord should know to stay both tax-efficient and fully compliant.

Tip one: Keep detailed records

Good record-keeping is essential. It might sound obvious, but this can have a big impact on your taxes. We highly recommend setting up a clear and organised system to track:

• Rental income.
• Allowable expenses.
• Mortgage interest payments.
• Receipts for repairs, replacements, and maintenance.
• Receipts and records of improvement works and equipment.

Tip two: Plan your ownership structure carefully

Your choice of ownership structure (e.g. direct ownership, joint ventures, or a limited company) can impact your tax obligations. You may think that limited companies offer better tax advantages for landlords – given you can expense mortgage interest payments. However, limited companies come with higher administrative costs and legal obligations. You’ll also be taxed twice (once via Corporation Tax on the company accounts and again when you extract profits).

So what is the best approach? Direct ownership or a limited company? The answer depends on your situation. Generally, landlords managing just one or two properties are better off with direct ownership, whereas those with a large or growing property investment portfolio should consider a limited company.

It’s not clear-cut, though. For example, if you don’t need the income right away, then a limited company can be more tax-efficient – even if you only own one rental property.

If you’re unsure, have a read through our guide for some extra help: Property investment – personal ownership vs company ownership. Alternatively, you can discuss your situation with one of our advisers.

Tip three: Pass it on early

If you plan to pass property to your family, consider gifting it as early as possible. Gifts made more than seven years before your death are exempt from Inheritance Tax under the seven-year rule.

You may still face Capital Gains Tax (CGT) when gifting property, so calculate the potential tax liability carefully.

Transferring property into a trust is another option for managing IHT, though it comes with its own tax implications.

Tip four: Use the Marriage Allowance

If you’re married or in a civil partnership, and one partner earns less than the Personal Allowance (£12,570 for 2024/25), you can transfer up to £1,260 of the unused allowance to the higher-earning partner.

The Marriage Allowance, as it’s known, can save up to £252 in tax annually. It’s a small but handy saving, although a better option may be Joint Ownership.

Tip five: Consider Joint Ownership

For properties owned jointly with a spouse or partner, you can choose how to split the income. This means you can allocate ownership percentage (and therefore income) accordingly, maximising income for the partner with a lower Income Tax rate.

If you own the property through a company, you could instead add family members as shareholders. This approach can make the most out of each shareholder’s personal tax reliefs and allowances.

Tip six: Carry losses forward

Most landlords tend to make a profit each year, but losses can happen – for example, if there’s an extended void period or you’ve invested heavily in repairs and maintenance.

If your property operates at a loss (e.g. rental income is lower than total costs), you can offset those losses against future rental profits. By carrying forward the loss, you can reduce your taxable income from the same property business in the future – helping to balance things out.

To benefit, make sure you keep records of losses and speak to a tax professional to ensure proper reporting.

Tip seven: Consult a Property Tax specialist

We’ve seen in this two part series that taxes on rental properties are not simple. It’s very easy to get something wrong when you submit a company or Self-Assessment tax return. With all of the admin and time involved with managing a property, the last thing you need is HMRC chasing you about an error.

So we highly recommend working with a Property Tax specialist (like us!). Your adviser can:

• Help you create a tax-efficient portfolio structure.
• Identify hidden reliefs or deductions.
• Provide tailored advice to suit your financial goals.
• Submit all relevant tax returns and handle any issues with HMRC on your behalf.

Next steps

For further guidance or for an initial consultation get in touch with our Property Tax team today. We’ve helped hundreds of landlords with everything from tax planning to business advice.