HMO accountants for multi-let and student landlords
If you run an HMO, a student let or a small mixed-use building, your tax position looks nothing like a single buy to let. Rent arrives per room, the bills sit with you rather than the tenant, licensing and fire safety work runs alongside ordinary repairs, and a shop on the ground floor pulls a second set of rules into the same return. Four questions come first: which conversion, fire safety and licensing costs are revenue and which are capital, whether your common parts and non-dwelling space carry a capital allowances claim, how council tax or business rates are landing on the building, and whether the profit is better held personally or in a company. Those four are written up against your own figures, and our team prepares the returns. Licensing rules differ by council, but the review itself runs by video call, phone and email for HMOs anywhere in the UK.
What lands on your desk
HMO tax planning: costs, bills and structure
Which HMO costs are revenue and which are capital
This line decides your bill, and HMO work sits right on it. Replacing a worn fire door like for like is normally a repair against this year's rent. Fitting fire doors, an alarm system and a protected escape route into a house that never had them, as part of turning it into an HMO, is improvement expenditure that goes to your capital base and waits for a sale.
Bills-included rent and what you can deduct
Multi-let rents are usually quoted with gas, electricity, water, broadband and sometimes cleaning built in. The whole rent is taxable income, and the bills are deductible where they are incurred wholly and exclusively for the rental business, so you are taxed on the margin rather than the headline. Two things catch people out: once rooms are empty you still carry the utilities and the council tax on the whole building, and any part you or your family occupy comes out of the claim. The portfolio profitability calculator runs the real numbers before you set next year's room rates.
Council tax and business rates on an HMO
Since 1 December 2023 an HMO in England is treated as a single dwelling for council tax, with one band and one bill, and the liability sits with you as owner rather than with the tenants. Older per-room bandings stay on the list until reviewed. Because the bill is yours, void-period council tax is a genuine deductible cost. Where a building has a real commercial element, that part can fall into business rates instead, a separate assessment with its own reliefs.
Capital allowances on common parts and mixed-use space
Plant inside a dwelling-house is barred from capital allowances in a property business by CAA 2001 s.35. HMOs and mixed-use buildings are the exception worth checking. Plant in the common parts, such as a communal boiler, a lift or stair lighting, can qualify, and so can integral features in space that is genuinely not a dwelling: a ground floor shop, office or commercial unit. From April 2026 the main pool writing-down allowance is 14%, the special rate pool stays at 6%, and the Annual Investment Allowance is £1m. Size a claim with the capital allowances calculator, and the mechanics sit in the s.35 common parts guide.
Whether a company suits a high-yield portfolio
HMOs are geared and yield-heavy, so the Section 24 finance cost restriction bites hard. As an individual you do not deduct mortgage interest from rental profit; you get a basic rate reducer instead, 20% for 2026/27 and rising to the new 22% property basic rate from 2027/28. A company deducts interest in full before corporation tax. That is not the whole answer: incorporating triggers capital gains tax and stamp duty land tax unless a relief applies, and companies under common control share one set of corporation tax limits rather than a full £50,000 band each. The rental income tax calculator gives the personal side first.
How we help
What we review for an HMO landlord
A review of conversion and refurbishment spend
A specialist works through the invoices behind each building and splits them into repairs, improvements and qualifying plant, with a note against each judgement, documented at the time rather than reconstructed later if HMRC asks.
A capital allowances position for non-dwelling space
Where a building has communal plant, integral features or a commercial unit, a specialist identifies the qualifying expenditure and checks the s.35 boundary, and on a commercial purchase checks whether a s.198 fixtures election was agreed inside the two-year window.
A structure comparison before you commit
A specialist models personal ownership against a company on your actual rents, interest and drawings, and prices the move itself: capital gains tax, stamp duty land tax, and the corporation tax limits shared across associated companies.
Returns, accounts and quarterly filings prepared
Our team of HMO and multi-let accountants prepares the self assessment or the company accounts and corporation tax return, keeps licensing fees and running costs in the right period, and sets up the digital records Making Tax Digital for Income Tax needs before your start date.
Not sure which of these applies to you? A free consultation sets out where you stand, with no obligation.
Book a free consultationFAQ
Frequently asked questions
No. Mandatory licensing applies to an HMO occupied by five or more people forming two or more households, anywhere in England. Below that, a licence is needed only where your local authority has designated an additional scheme for smaller HMOs, or a selective licensing area covering all private rentals. Around seventy authority areas operate selective licensing. Wales, Scotland and Northern Ireland run separate regimes, so a portfolio spread across borders is checked authority by authority.
Yes. A licence fee is a running cost of the rental business and is deductible as a revenue expense. Fines and civil penalties are not. From 1 May 2026 the civil penalty for a licensing offence is capped at £40,000 per offence, and a tenant or the local authority can apply for a rent repayment order covering up to two years of rent where a property was let unlicensed.
You do, as the owner. An HMO in England is treated as a single dwelling with one band and one bill, and the liability regulations put that bill on the owner rather than the residents. Because it is your cost, council tax you pay during voids is deductible against rental profit. If every occupant is a full-time student the property can be exempt, but a mixed household of students and non-students is not.
It depends on your gearing, your other income and how long you intend to hold. Companies deduct mortgage interest in full, which matters more for HMOs than for low-yield lets, but the transfer is a disposal for capital gains tax and usually a stamp duty land tax charge, and associated companies share one set of corporation tax thresholds. Model both positions on your own figures before deciding.
It changes several things at once. The commercial part can open up capital allowances the flats above cannot, it may be assessed for business rates rather than council tax, rent from it can carry VAT where the property is opted to tax, and buying the whole building may fall under the mixed-use stamp duty land tax rates rather than the residential rates.
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