The National Residential Landlords Association (NRLA) has issued a caution to landlords who have established limited companies for their property ventures, highlighting the necessity to demonstrate a minimum of 20 hours of weekly management to qualify for anticipated tax advantages.

A significant number of landlords have transitioned their properties to company ownership, attracted by superior tax concessions, such as those on mortgage interest, and the prospect of lower capital gains tax compared to individual owners, though exceptions exist.

Chris Norris, the NRLA’s head of policy, pointed out the widespread confusion regarding the criteria for a landlord’s company to be eligible for incorporation relief. He said:

“If you are a landlord and want to qualify for the relief, you have to demonstrate that you spend at least 20 hours a week managing the business.

“There are landlords who may have overestimated the time they spend or are not able to demonstrate that time.”

Additionally, there are concerns that some landlords may have received poor guidance from unreliable consultants, promoting schemes that seem overly advantageous.

An HMRC spokesperson said:

“This is routine activity – each year we send out thousands of reminder letters on various areas of tax. The vast majority of people pay the correct amount of tax on time.”

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