Accounting for different property businesses is never a copy‑and‑paste exercise. Buy‑to‑let landlords, property developers and estate agents may all earn money from bricks and mortar, yet the way they recognise income, claim expenses and plan taxes differs markedly. By shaping your systems and advice around each model, you not only stay compliant but also free up cashflow to reinvest.
Average UK monthly private rents have risen 7.7% year‑on‑year to £1,332, squeezing margins for many landlords. Meanwhile, the VAT registration threshold moved to £90,000 from 1 April 2024. Facts like these shape the advice we give every day. Below, we highlight the best practices we recommend for the three main property niches.
Why one size rarely fits all
Nineteen percent of UK households now rent privately. That growth, together with ongoing demand for new‑build homes and a vibrant agency market, means the property sector is broad and fast‑moving. Each business type faces unique rules on allowable costs, VAT, tax reliefs and reporting deadlines. Tailored accounting for different property businesses therefore underpins better decisions and sustainable growth.
Buy‑to‑let landlords: Focus on cashflow and taxes
Mortgage interest and Section 24
Since the phased restrictions ended, landlords now receive a flat 20 % tax credit for finance costs. Recording interest separately from capital repayments is vital so you can claim the full credit.
Repairs versus improvements
Routine maintenance is deductible immediately, while improvements are added to the capital gains tax (CGT) base. Keep digital copies of invoices in your accounting software to avoid debate if you sell.
Making Tax Digital for Income Tax (MTD IT)
From April 2026, landlords with gross rents over £50,000 must file quarterly updates. Cloud‑based bookkeeping and bank‑feeds make these submissions painless – and give you real‑time profit data.
Capital gains timing
For disposals on or after 6 April 2025, CGT on UK residential property is 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. You must report and pay within 60 days of completion. Accurate, date‑stamped records save stress and penalties.
Practical tip: Automate rent feeds, categorise transactions as they arise and schedule CGT estimates in advance. It’s a textbook example of accounting for different property businesses, improving both compliance and cashflow.
Property developers: Timing income and VAT
Revenue recognition
Under FRS 102, work in progress is valued at cost plus directly attributable expenses until a legally enforceable sale occurs. Mis‑timing profit can distort corporation tax – currently 25% for profits above £250,000, 19% below £50,000, with marginal relief in between.
Land and buildings transaction tax
Purchases in Scotland attract Land and Buildings Transaction Tax (LBTT), whereas in Wales Land Transaction Tax (LTT) applies. Code them separately in your chart of accounts.
VAT on new builds and conversions
Most new‑build homes are zero‑rated, while eligible conversions attract a reduced 5% rate on labour and many materials. File separate VAT codes so that zero‑rated inputs do not inflate your reclaim. Remember the £90,000 registration threshold applies to taxable, not exempt, turnover – a frequent pitfall.
CIS deductions
Subcontractor payments often suffer 20% withholding. Reconciling CIS deductions suffered with your PAYE account each month protects cashflow and keeps your gross‑profit reports accurate.
Practical tip: Create project‑specific cost centres and track budgets line by line. Good accounting for different property businesses lets you spot overspends early and defend margins in a rising‑cost environment.
Estate agents: Balancing commissions and overheads
Recognising commission
Income is earned when a contract becomes unconditional, not when cash lands. Deferred income codes stop premature profit and smooth seasonal peaks.
Client money protection
Separate ring‑fenced client accounts avoid co‑mingling funds. Daily reconciliations, supported by property‑specific references, protect both you and your vendors.
VAT and disbursements
Agency fees are standard‑rated, but advertising placed as agent of the vendor can sometimes be treated as a disbursement. Clear narration in your ledger ensures you reclaim input VAT only where allowed.
Payroll and auto‑enrolment
High‑street agencies rely heavily on negotiators. Salary, commission and bonus structures must feed cleanly into payroll so you calculate National Insurance correctly. For 2025/26, the employer (secondary) threshold sits at £9,100.
Practical tip: Dashboards that compare pipeline value against fixed monthly overheads help agency owners make hiring and marketing decisions grounded in data – another area where specialised accounting for different property businesses pays dividends.
Cross‑cutting tips: Systems, software and compliance
- Cloud bookkeeping – Choose a platform that handles MTD VAT and will handle MTD IT. Automated bank feeds, receipt capture and CIS modules can cut admin time by up to 70%.
- Digital workflows – Approvals, e‑signatures and paperless document storage speed up lender requests and due diligence checks.
- Cashflow forecasting – Scenario tools model rent gaps, build delays or sales fall‑throughs, letting you put funding in place early.
- Regular health checks – Quarterly reviews uncover mis‑codes, missing invoices or approaching thresholds. We run these automatically for our property clients.
With the right setup, accounting for different property businesses turns numbers into insight rather than a compliance chore.
Choosing the right adviser
You need accountants who speak the language of property every day – whether that means structuring an SPV for a new development, advising on incorporation relief for a portfolio or guiding an estate agency through a VAT inspection. Our dedicated property team at the Cottons Group combines sector knowledge with user‑friendly tech. Together we’ll shape a service plan that fits your goals, not someone else’s template.
Looking for solutions? We’re here for you
Accounting for different property businesses calls for steady attention, regular tweaking and a willingness to invest in robust systems. Landlords must keep an eye on interest relief, rolling rent reviews and CGT deadlines. Developers juggle ever‑shifting build costs, CIS cashflow and the tax impact of phased completions. Estate agents need tight client‑money controls, clear commission cut‑offs and real‑time insight into their sales pipeline.
Yet the rewards for getting it right are tangible: healthier margins, fewer HMRC surprises and the headspace to focus on growth rather than firefighting. Modern cloud software now automates much of the heavy lifting, from bank feeds and digital receipt capture to quarterly MTD submissions. Add sector‑specific expertise and you turn routine bookkeeping into live intelligence that shapes pricing, finance and investment decisions.
If you are ready to strengthen your accounting for different property businesses, we would love to help. Contact us today and tap into tailored advice, smart technology and a cheerfully proactive team that puts your goals first.
