Land and Property Tax Planning Tips & Advice

UK land and property tax planning focuses on managing the tax implications of owning, letting or selling property in the most efficient way possible. From rental income and allowable expenses to capital gains on sale and inheritance tax considerations, the rules can be complex and vary depending on whether the property is residential, commercial or mixed-use. 

Effective planning can help property owners maximise available reliefs, minimise liabilities and structure ownership to achieve both short-term savings and long-term financial goals.

Joint Property Ownership

Where spouses or civil partners jointly own assets (excluding close company shares and furnished holiday lets), income is deemed, by default , to be split 50:50 for tax purposes. If this does not reflect the true ownership, a declaration can be made to tax each party according to their actual share if the property is owned as ‘tenants in common’ . This declaration should be submitted in a timely manner and the alternative split will apply only from the date of the declaration which must be submitted to HMRC within 60 days of signing.

This declaration will not be required where the property letting amounts to a partnership.  In most cases joint letting in itself will not amount to a partnership, which requires the provision of significant additional services and a high level of business activity.

 Tax planning tips:

• File a Form 17 with HMRC if actual ownership differs from the default 50:50 split to allocate income more tax-efficiently.
  Transfer property shares to a lower-earning spouse or civil partner to reduce overall tax on rental income.

Capital Gains Tax: UK property returns

UK residents disposing of UK residential property and realising a capital gain must file a UK property return and pay CGT within 60 days of completion. Non-UK residents must report all UK land disposals (residential, commercial and indirect), regardless of whether a gain arises.

If the seller is within Self-Assessment, the disposal must also be reported on their annual tax return.

Tax planning tips:

• Prepare documentation and valuations ahead of completion to meet the 60-day reporting deadline.
• Time disposals to align with lower-income tax years and use annual CGT exemptions and loss offsets.

Furnished Holiday Lettings (FHL)

The FHL tax regime was abolished from April 2025. From 2025/26, FHL income will be treated as part of a UK or overseas property business. Key changes include:

• Pension contributions – FHL income will no longer count as relevant UK earnings.
• Finance costs – Relief will be restricted to the basic rate of 20%.
• Capital allowances – Replaced with relief for replacement of domestic items.
• CGT reliefs – Rollover Relief and Business Asset Disposal Relief will be limited, with transitional rules applying.
• Losses – Can be carried forward to offset future profits of the relevant property business.

Stamp Duty Land Tax (SDLT)

From 30 October 2024, the SDLT surcharge for individuals with existing residential property increased by 2%, bringing it up to 5%. 

Corporate purchasers of residential property worth over £500,000 saw SDLT increase from 15% to 17%. Relief may be available in some circumstances such as the property being purchased by a property developer or property rental business.

Non-UK residents face an additional 2% surcharge.  Buyers need to apply the SDLT residence tests to determine their residence for this purpose.

Where property is being purchased jointly, if the higher rates apply to one person they will apply to each person. 

New SDLT rates apply to contracts exchanged after 30 October 2024. Pre-31 October exchanges which completed before 1 April 2025 may use the old rates.

Higher Rates 

Mixed-use properties and transactions including non-residential land remain taxed at 2% for purchases between £150,001 and £250,000, and 5% above £250,000[CR1] . No changes were made for purchases of property-holding companies.

Tax planning tips:

• For high-value purchases, weigh personal vs. company ownership to optimise SDLT and ATED exposure.
• Assess mixed-use classification eligibility to potentially apply the lower 5% SDLT rate.

Annual Tax on Enveloped Dwellings (ATED)

The ATED charge applies to companies owning UK residential properties. For 2025/26, the charge is uplifted by 1.7% (September CPI). 

Tax planning tips:

• Consider 'de-enveloping' properties where company ownership is no longer necessary to avoid ATED charges.
• Regularly review property values to reassess ATED liabilities, especially if usage or market value has changed.

As always, these articles provide an overview of the various measures available and no action should be taken without seeking professional advice.  At Ritchie Phillips, we pride ourselves on providing clear, pragmatic advice to help businesses, individuals and families. If you’d like to discuss any of the above, please get in touch.