Gravita property bulletin – Q3 2026

Gravita property bulletin – Q3 2026

The proposed mansion tax and its implications

By Thomas Adcock, Tax Partner

From April 2028, owners of properties that are valued at greater than £2 million in April 2026 will face an additional council tax payment ranging from £2,500 to £7,500 per year depending on the valuation bracket the property falls into.

Curiously the top bracket is any property worth over £5 million; lumping together the large homes in the home counties and medium sized flats in Central London, with much larger homes in the home counties and larger flats in Central London – not many properties seemingly fall in this bracket outside of these areas.  It is estimated that 90% of all properties effected by this new tax are in the South East and London.

The tax will be collected by the local council and then distributed around the country – much like Income Tax, National Insurance, VAT – well every other tax really.  So, it is not like Council Tax at all which is a municipal tax that funds local services in the area in which the property sits.  It is like every other tax which central government decide how the money raised is spent.

Many are seeing this as yet one more raid on the wealth of the South East and London where the costs of everything, not just property, are greater than anywhere else in the country.  With a new Prime Minister in place, and much already written about what he may do in respect to taxing property in the UK, we will see if this new tax actually comes into effect.

Why power resilience now matters in property investment

By Daniel Rose, Audit Partner

Securing planning permission does not guarantee that a development will have access to the power it needs over the life of the asset. An existing connection may only reflect usage and may not support future expansion, electrification, EV charging or a change of tenant.

This matters because grid capacity is under growing pressure and connection applications are being reassessed around deliverability and strategic need. For investors, developers and lenders, that creates a risk that projects could be delayed, costs could rise or an asset’s intended use could be restricted. Traditional due diligence can miss the problem, as planning records, network capacity maps, utility bills and technical reports are often reviewed separately rather than as one picture.

A power resilience assessment brings these strands together. It can test current demand, assess the firmness of a connection, identify likely constraints and set out practical options for mitigation. These may include battery storage, solar generation, private wire arrangements or changes to the way power is procured and managed.

For property owners, the benefit is not limited to reducing risk. Better energy resilience can support operational continuity, strengthen the investment case and protect long-term asset value. It can also create opportunities to use underutilised space, such as car parks; for battery storage, while giving landlords and tenants greater control over power supply.

Gravita can help assess the wider financial implications. This may include capital allowances on qualifying expenditure, cash flow modelling, funding requirements and projected long-term savings. Where power constraints or major investment could affect business operations, our audit team can consider any implications for going concern.

Guest article: Mortgage rates and why it pays to plan ahead

By Jaime Harris, Director, Partnerships at SPF

Andy Burnham has been welcomed into Number 10 following an interesting rise through Labour’s ranks and the country is hopeful (if not a little tired of the political drama). Despite talk around moving some civil servants to Manchester and starting a ‘Number 10 of the North’ or ‘Manc-a-Lago’ as one commentator called it, Burnham has started to work his way through the alphabet of policies – buses, electricity, hospitality… are houses next? Whatever decisions he makes, let’s hope he can ease some of the burden for borrowers and movers, which is a little more complicated.

Cheerily, there has been talk of potential rises to the Bank of England base rate – although this may not impact mortgage rates directly (unless you are on a tracker), it certainly sends a message to the rate setters at the banks. We believe this will, if at all, happen after September’s meeting. Currently, SWAP rates (the rates that most banks base their fixed rates on) are around 4.3%, increasing slightly since the re-escalation between Iran and the US and placing fixed rates just above this after the lender’s margin.

Given the volatile rate environment at the moment, we are advising clients to speak to us up to six months in advance of their current mortgage deal ending. Our brokers are able to reserve a rate now to mitigate any further increases. Equally, should rates drop in this time, we are able to switch you onto a cheaper rate or a more attractive product.

Rates aside, seeking proper professional and impartial advice is more important than ever. Whether you are buying your first home, releasing equity from a portfolio or investing into a pub, or anything else land or property related – getting expert advice from someone who understands your circumstances and can work with your other professional advisers should be a priority.

Register of Overseas Entities compliance for UK property owners

By Taha Bahadur, Associate Director, Company Secretarial

The Economic Crime (Transparency and Enforcement) Act 2022 has resulted in an enforced drive to increase transparency by requiring overseas entities that own, buy or sell UK land to register details of their beneficial owners with Companies House.

Companies based outside the United Kingdom wishing to acquire freehold property, or a lease granted for more than seven years, must generally register on the Register of Overseas Entities (ROE) before the transaction can be completed. Once registered, overseas entities are required to maintain their registration and submit an annual update statement, even where there have been no changes to beneficial ownership.

Failure to comply with the legislation can carry significant consequences with the corporate entity and its officers subject to criminal penalties. Restrictions may also be placed on the property title, preventing future sales and transfers. Lenders, investors and professional advisers are therefore paying close attention to ROE compliance as part of their due diligence processes.

For existing overseas investors who have registered with Companies House, maintaining accurate beneficial ownership records and meeting annual filing obligations is now an essential part of owning and managing UK property assets. Transparency is no longer simply a regulatory expectation, but a key component of effective property and corporate governance.

Capital Goods Scheme changes for commercial property

By Sandy Cochrane, VAT Partner

For commercial property owners,  there are forthcoming changes to the Capital Goods Scheme (CGS), which is a VAT adjustment regime that applies to certain high-value property assets. The reforms are intended to simplify the rules and reduce the administrative burden associated with long-term VAT monitoring.

For investors and developers considering significant refurbishments, redevelopments or acquisitions, now may be an opportune time to review planned expenditure and existing VAT recovery positions to determine whether the new rules could provide compliance savings or improve future VAT outcomes.

From 29th July 2026, the Capital Goods Scheme threshold for land, buildings and civil engineering works increases from £250,000 to £600,000 (plus VAT), whilst computers are removed from the regime altogether. As a result, many smaller property refurbishments and improvement projects will no longer be subject to the Scheme’s 10-year VAT adjustment requirements, reducing compliance obligations for property investors and businesses undertaking capital expenditure projects.

Making Tax Digital requirements for landlords

By Charlene Griffith, Tax Director

One of Gravita ‘s main client sectors is property–related clients, both individual and corporate.

Individual landlords have seen many changes in recent years from the end of the Wear and Tear Allowance to the restriction of mortgage interest. The latest change is the introduction of Making Tax Digital for Income Tax (MTD ITSA). This also affects individuals with self-employment income.

Who is impacted?

From 6th April 2026, if your gross share of rental and/or self-employment income exceeds £50,000, you may be required to report your income and expenses to HMRC quarterly. This is in addition to your annual Self-Assessment Return.

If you crossed the £50,000 threshold within your 2024-25 Return, HMRC should have written to you already. There are a limited number of exemptions and deferrals which can apply.

What do I need to do?

• Register – sign up for MTD ITSA on HMRC’s website
• Software – choose software compatible with online filing
• Quarterly reporting – the first quarter (6th April 2026 to 5th July 2026) has ended and needs to be filed by 7th August 2026
• Penalties – there will be an initial ‘soft-landing’ period but only for the first year so don’t delay – deal with this today!

If you need help, please email us: [email protected]

Could incorporation support your property tax planning?

By Michaela Lamb, Tax Partner

We are often approached by landlords with growing property portfolios to look at incorporating those portfolios. Limited company ownership can offer significant tax, reinvestment and succession benefits, not only because of lower tax rates and the ability to deduct mortgage interest in full. This alone can make incorporation attractive to higher-rate taxpayers, particularly where the plan is to reinvest and grow the portfolio further.

However, transferring an existing portfolio into a company is not simply an administrative exercise and can be fraught with tax liabilities, for example Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT).  There are also the potential costs of transferring existing mortgages or refinancing, sometimes triggering higher borrowing costs. Then there are the legal and professional fees….

There are occasionally reliefs available to reduce the immediate tax cost – Incorporation Relief can defer CGT but only under very particular circumstances, and if the business is transferred in exchange for shares. SDLT relief may also be available for some qualifying partnerships. But in both cases, HMRC will scrutinise the transaction and may disallow the reliefs if the circumstances are not quite right, or they apply anti-avoidance provisions.

Longer term, although a company may pay less tax on retained rental profits, there can be effectively a double tax charge or national insurance to pay where money is extracted through salary or dividends. In addition, if property is sold, there may be another tax charge when proceeds are withdrawn. And from an Inheritance Tax perspective, all you have really done is exchange the value of your properties for an equally valuable share in a company, achieving very little, without further planning.

Incorporation can support portfolio growth and sometimes make it easier to pass it on to future generations, but it is not a solve all solution. If you are considering incorporation for any reason, it is important to take detailed plans before starting the process.