Most landlords learn about property tax the expensive way. After the mistake, not before.
So this week I sat down with Simon Misiewicz of Optimise Accountants, a property investor for 25 years and a property tax specialist for 20 of them, to go through the boring, expensive stuff properly.
One sentence from Simon stuck with me more than any other:
It’s not the price of a tax return that costs you, it’s the cost of getting it wrong.
Making Tax Digital
MTD is HMRC’s move to quarterly reporting for self-employment and property income, and the thresholds are tightening fast. For the 2024/25 tax year, the trigger is £50,000 of gross income, not profit, but the actual rent collected. That threshold drops to £30,000, then £20,000, and eventually to zero.
Simon’s statement:
Everyone gets caught eventually, it’s just a matter of when.
Two traps catch people out specifically:
Gross means gross. If you use a letting agent, it’s the rent they charge your tenant, not what actually lands in your account after their fees.
Self-employment and property income stack together. £20,000 from property plus £30,000 from a trade or service business tips you over £50,000, even though neither alone would.
Miss a quarter and HMRC’s new system won’t fine you outright. There’s a points-based approach, and they’ve acknowledged teething problems on both sides. But Simon’s advice was blunt: don’t bury your head in the sand hoping it goes away. Start tracking income and costs quarterly now, even before you’re required to, so the habit is already built when it becomes mandatory.
On tools:
Somon’s not against spreadsheets in principle, but points out roughly 85% of spreadsheets contain errors, and the real cost isn’t the £50-a-month software; it’s your own time. His actual recommendation costs nothing. A Mettle, NatWest or RBS account paired with FreeAgent bookkeeping software, which is free for as long as you bank with them.
Section 24
Section 24 removes your ability to deduct mortgage interest as a cost before tax. Instead, you get a flat 20% tax credit on it, regardless of your actual tax rate. For a higher-rate taxpayer, that gap between paying 40-42% and only getting 20% relief back is where the damage happens. Simon’s worst client case: an effective income tax rate of 167% on the property’s actual profit.
His reframe:
Section 24 isn’t just a problem; it can be the nudge toward a bigger decision. Two real routes he’s used with clients, neither involving a limited company:
Deed of trust between spouses/partners. If one of you gives up higher-rate employment, transferring the property to the non-taxpaying partner can remove the Section 24 impact entirely.
Moving your own tax residency abroad. If your only UK income becomes the property itself, you can drop out of higher-rate tax altogether, and the mortgage interest math works itself out.
Neither is right for everyone, but both are options a lot of landlords never hear about because incorporation is where the conversation usually jumps to first.
Incorporation
Simon was direct:
Incorporation is often pitched as the only answer, and it’s frequently the worst-fit one. Moving a property from your own name into a limited company can trigger capital gains tax personally, and stamp duty for the company, and the fees firms charge to manage that move typically run £20,000 to £50,000.
Beyond the upfront cost, there’s ongoing double taxation to weigh. The company pays corporation tax on profits, then you pay income tax again on any dividends you draw out. And a mortgage in a limited company usually carries a higher interest rate than one in your own name, since lenders see it as higher risk.
His test before anyone incorporates:
Don’t describe your situation now and ask for a solution. Describe where you expect to be in five years, and ask what fits that. A structure that suits your current tax position can leave you worse off once your circumstances change.
Property Acquisition and Allowable Costs
This is where Simon’s own story enters the picture:
Understanding what counts as an allowable cost on acquisition and refurbishment meant he personally paid no tax on his property profits for eight straight years.
The rule of thumb: repair, replace, renew.
If a cost is genuinely replacing something like-for-like - a kitchen, a bathroom, single glazing for double- it can usually be offset against rental income, not treated as a capital cost.
His tip for anyone briefing a builder:
Make sure the invoice says “replace,” not “install” or “fit.”
His closing point on where people waste their attention:
Small tax hacks make for good YouTube videos, but refurbishment costs are the biggest line item by far, roughly 80% of the total, on his numbers. Getting that one category right matters more than any amount of receipt-chasing on smaller items.
Simon also runs a free property tax course on the Optimise Accountants YouTube channel, covering stamp duty land tax, VAT, limited companies, and more of what's touched on above.
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