Property Company Accounting Requirements: What HMRC Expects

Running rental property through a limited company swaps one tax regime for another, and a far heavier compliance load. A personal landlord files a Self Assessment return once a year. A property company has to keep statutory books, prepare accounts to a recognised standard, file a CT600 with HMRC and a set of accounts with Companies House, pay corporation tax on a separate timetable, and keep the director's loan account clean enough to survive a check. Get the mechanics right and the company structure does what it is meant to do. Get them wrong and the penalties, the section 455 charges and the lost reliefs quickly outweigh the saving that made you incorporate in the first place.

This guide sets out what HMRC and Companies House actually expect from a property company or special purpose vehicle (SPV), where a single-property SPV differs from a multi-company portfolio, and the points that catch new directors out most often.

What HMRC expects from a property company: the four obligations

Strip away the detail and a property company has four standing duties. It must keep proper accounting records and statutory books. It must prepare statutory accounts each year. It must file a corporation tax return (the CT600) and pay the tax. And it must file accounts and a confirmation statement at Companies House. Miss any one and a penalty follows, in most cases automatically and regardless of whether tax was actually due.

The table below shows the obligations and the deadlines that trigger them for a typical 31 March year end. The dates move with your own accounting reference date, but the gaps between them do not.

Obligation	Filed or paid to	Deadline	For a 31 March year end
Pay corporation tax	HMRC	9 months and 1 day after period end	1 January
File CT600 return and accounts	HMRC	12 months after period end	31 March (next year)
File statutory accounts	Companies House	9 months after period end (21 months for a first set)	31 December
File confirmation statement	Companies House	Annually, within 14 days of the review date	On the company's own anniversary

The detail that catches people out is the order. The tax is due before the return that calculates it, so a company can owe corporation tax in January while the CT600 is not due until the following March. You have to work out the liability early, not wait for the filing deadline.

Statutory books and accounting records you have to keep

HMRC and Companies House want two distinct things: the statutory books that record the company's legal structure, and the accounting records that support the numbers in the return.

Statutory books

Every company must maintain its statutory registers and keep them at the registered office or at a single alternative inspection location notified to Companies House:

• Register of members with shareholdings and any share transfers.
• Register of directors and the separate register of directors' residential addresses.
• Register of persons with significant control (PSC), which for most property companies is the director-shareholder.
• Register of charges recording mortgages and other security over the company's property.
• Minutes of board meetings and shareholder resolutions, including dividend declarations.

These are kept indefinitely, not for a fixed retention period, and they have to be available for inspection. A common gap in property companies is the dividend paperwork: if you pay yourself dividends, the board minute and the dividend voucher are what evidence the payment as a dividend rather than as an unauthorised drawing on the director's loan account.

Accounting records

The accounting records have to be detailed enough to show the company's transactions and to let you prepare a correct CT600. For a property company that means, per property where possible:

• All rental income received, including deposits held and rent received in advance, with the period it relates to.
• Allowable running costs (letting agent fees, repairs and maintenance, insurance, ground rent and service charges, professional fees) with the invoice or receipt behind each one.
• Mortgage and loan interest and other finance costs, supported by the lender statements.
• Capital expenditure on acquisition and improvement, kept apart from revenue repairs because the two are taxed completely differently.
• Movements on the director's loan account.
• VAT records where the company is registered.

Keep the underlying records for at least six years from the end of the accounting period (section 12B of the Taxes Management Act 1970 and paragraph 21 of Schedule 18 to the Finance Act 1998). If a property is sold, hold the acquisition and improvement records well beyond six years, because you will need the original cost to compute the gain on disposal.

Corporation tax and the CT600

A property company pays corporation tax on its rental profit and on any chargeable gain when it sells. The headline rates for 2026/27 are not a single number, and the bands are where portfolio landlords lose money they did not expect to.

Profit band (2026/27)	Rate	Statute
Up to £50,000	19% small profits rate	CTA 2010 s.18A
£50,000 to £250,000	26.5% effective marginal rate	CTA 2010 s.18B to s.18D
Above £250,000	25% main rate	CTA 2010 s.3

Two refinements decide what a property company actually pays. First, associated companies. If you hold a portfolio across several SPVs, those companies are associated, so the £50,000 and £250,000 limits are divided by the number of companies (CTA 2010 s.18E). Five single-property SPVs each get a £10,000 small profits limit and a £50,000 upper limit, not the full bands each. That can push otherwise-modest profits into the marginal band sooner than a director planning around a single set of limits would expect.

Second, the close investment-holding company (CIHC) rule. A company whose income is essentially passive investment, rather than commercial letting to unconnected tenants, can be a CIHC and is then taxed at the 25% main rate on all its profits with no access to the small profits rate (CTA 2010 s.18N). Most arm's-length residential letting companies are outside this, but a company holding property occupied by the family or connected parties is at risk, and it is worth checking before you assume the 19% rate applies.

What the CT600 needs from a property company

The return itself reports the company's taxable profit after the corporation tax computation, which takes the accounting profit and adjusts it: adding back disallowable items such as depreciation and entertaining, deducting capital allowances on qualifying plant and machinery, and applying loss relief. Supplementary pages attach where relevant, most commonly the CT600A where there is an overdrawn director's or participator's loan giving rise to a section 455 charge. The computation, not the accounts, is what determines the tax, and the most common error in DIY property-company returns is treating an improvement as a repair or vice versa.

The director's loan account: where small property companies trip up

The director's loan account (DLA) is the running record of money moving between you and the company outside salary and dividends. In a property company it is rarely dormant: you lend money in to fund a deposit or refurbishment, and you draw money out as the rents build up. Two outcomes matter for tax.

If the account is in credit (the company owes you, typically because you funded the purchase), you can draw that balance back out tax-free. For a landlord who incorporated and lent the company the purchase price, this credit is often the most tax-efficient way to take cash in the early years, ahead of dividends. If the account is overdrawn (you owe the company) and still overdrawn nine months and one day after the year end, the company pays a section 455 charge of 33.75% of the overdrawn amount. The charge is refunded once you repay the loan, but the cash is tied up with HMRC until you do, and a balance over £10,000 at any point in the year can also create a benefit-in-kind charge unless interest is paid at the official rate.

None of this is a problem if the account is reconciled every period and the drawings are properly classified as repayment of credit, salary, or declared dividends with the supporting minute. Where property companies fail an HMRC check, an unexplained DLA is one of the most frequent causes. For the full extraction picture, see our guide to extracting money from a property limited company.

One company or multiple SPVs?

How you structure the portfolio drives the compliance load, so it is worth settling early rather than unwinding later.

Consideration	One company, several properties	Multiple single-property SPVs
Compliance volume	One CT600, one set of accounts, one bank account	A full filing set per company
Corporation tax bands	Full £50k / £250k limits	Limits divided across associated companies
Lender appeal	Mixed security, harder to refinance one asset	Clean per-property security many BTL lenders prefer
Selling a property	Asset sale within the company	Can sell the SPV's shares, often a cleaner exit
Risk ring-fencing	All properties exposed together	Each asset isolated

There is no universally right answer. A single company is cheaper and simpler for a small, settled portfolio. Multiple SPVs cost more to run and trigger the associated-company band split, but ring-fence each asset and make a future share sale or a per-property refinance easier. Many investors land on a hybrid: a holding company over several SPVs, which carries its own group accounting and intra-group dividend rules. Our SPV property company guide works through the trade-offs in full.

VAT for property companies

Most residential letting companies never register for VAT, and that is correct: residential rent is an exempt supply, and exempt turnover does not count toward the £90,000 registration threshold (the threshold rose from £85,000 on 1 April 2024). Registration only becomes live where the company has taxable turnover:

• Commercial property where the company has opted to tax, making the rent standard-rated.
• Serviced accommodation or short-term holiday-style letting, which is standard-rated rather than exempt residential rent.
• Property trading or development, where sales may be standard-rated or zero-rated.

A company mixing exempt residential rent with taxable commercial income is partly exempt. That restricts how much input VAT it can recover and means agreeing a partial-exemption method, so the VAT position needs planning before the first commercial acquisition, not after.

Companies House: accounts and the small-company regime

Separate from the HMRC return, the company files statutory accounts at Companies House within nine months of the year end (21 months for a first set, measured from incorporation). Most property companies qualify as small and can file under the small-company regime, with reduced disclosure. The size limits increased for periods beginning on or after 6 April 2025: a company is small if it meets at least two of turnover not over £15 million, a balance sheet total not over £7.5 million, and not more than 50 employees. Many single-property SPVs go further and qualify as micro-entities (turnover under £1 million, balance sheet under £500,000), with the simplest accounts of all.

Filing under the right regime keeps the company's rental income off the public record beyond what the law requires, and keeps the cost of preparation proportionate to a small portfolio. Alongside the accounts, the confirmation statement and the PSC register have to be kept current; these are Companies House obligations distinct from anything HMRC asks for.

Making Tax Digital: where property companies actually stand

There is a persistent myth that property companies fell into Making Tax Digital in April 2026. They did not. Making Tax Digital for Income Tax (MTD ITSA) applies to individuals with property or trading income, phased in from 6 April 2026 for those with qualifying income over £50,000, from 6 April 2027 at £30,000, and from 6 April 2028 at £20,000. A limited company is outside MTD ITSA entirely. Making Tax Digital for Corporation Tax has been signalled by HMRC but has no confirmed start date.

So a property company's digital obligation today is practical, not statutory: keep the records in software that can produce an accurate CT600 and a clean audit trail. Companies already running cloud bookkeeping will absorb MTD for CT with little disruption whenever it lands. If you also hold property personally, the rules differ between your personal letting and your company, which we untangle in MTD ITSA versus limited company.

The advantage that justifies the extra compliance: full interest relief

All of this paperwork buys a real benefit. A company deducts mortgage and loan interest in full against its rental profit before corporation tax. There is no Section 24 restriction inside a company, because Section 24 only bites on individuals, who get finance costs as a 20% basic-rate credit (rising to 22% from 6 April 2027 in step with the new property income basic rate, so no new wedge opens). For a heavily geared higher-rate landlord, full interest relief is usually the decisive factor, though it has to be set against corporation tax on retained profit and the tax cost of getting money out.

It is also why incorporation is a decision to model, not to assume. Transferring property into a company is a disposal at market value for capital gains tax (18% or 24% on residential gains after the £3,000 annual exempt amount) and the company pays the 5% additional-dwellings SDLT surcharge on the way in. Section 162 incorporation relief can defer the gain where a genuine property business is transferred for shares, but only where HMRC accepts the lettings are a business rather than passive investment. The compliance regime described here is the running cost; the entry cost is a separate calculation entirely.

Software and getting the bookkeeping right from day one

Most property companies run cloud bookkeeping (Xero, QuickBooks or FreeAgent are common) for the ledger, the corporation tax computation and the statutory accounts, often paired with a property management tool that handles rent collection, arrears tracking and per-property reporting. The two link so each receipt and expense lands in the right ledger with the document attached, which is exactly what an HMRC check wants to see.

What software does not do is exercise the judgement that drives the tax: capital versus revenue on a refurbishment, how the director's loan account is classified, whether the associated-company limits apply, and whether the company is at risk of CIHC status. That is the line between bookkeeping and accounting, and it is where most of the value of a specialist property accountant sits. A landlord who set up an SPV told us they had run it cleanly for two years before discovering their three companies were associated and had been understating tax on the wrong bands; a single review reset the position before HMRC did.

Common compliance failures and what they cost

The penalties for getting it wrong are mostly automatic, which is what makes them avoidable:

• Late CT600: from April 2026 the fixed penalties doubled, so £200 immediately, a further £200 after three months (£400 cumulative) and £1,000 each if late three years running, then tax-geared penalties of 10% of unpaid tax at six months and again at twelve months.
• Late Companies House accounts: from £150 for a private company, rising with delay and doubling if you file late two years running.
• Overdrawn director's loan: 33.75% section 455 charge on the balance outstanding nine months and one day after the year end, plus a possible benefit-in-kind charge.
• Inadequate records: estimated assessments, inaccuracy penalties, and an extended enquiry window.

For a single-property SPV with modest rents, none of these should ever arise. They are failures of process, not of complexity, and a reconciled set of monthly figures plus the four deadlines in a calendar removes almost all of the risk.

If you are still weighing whether a company is the right wrapper at all, start with our buy-to-let limited company guide and the step-by-step incorporation guide before you commit to the compliance regime above. Getting the structure right at the outset is far cheaper than restructuring a portfolio that has already filed.