Property development can feel a bit like laying bricks in a North-East winter – every decision counts and mistakes cost double. The good news? The tax code offers more reliefs than many builders realise, and most of them boil down to smart timing, tidy records and knowing the allowances inside out. This post sets out practical tax saving tips for property developers, focusing on the 2025/26 rules. We draw on what we see daily with clients across County Durham and beyond, so you get real-world insight, not textbook theory.
Why should you care? Corporation tax is now 25% for profits above £250,000, and even the 19% small-profits rate only applies up to £50,000. For a typical site turning a £500,000 gain, a well-planned claim can mean tens of thousands kept in your business rather than heading to HMRC. At a time when construction output prices are up 6.4% year-on-year (ONS, 2025), every pound saved protects margin and cashflow. We’ll cover allowances, reliefs and VAT quirks, with live examples from our files. And we’ll do it the way we talk ow’r a cuppa – straight, plain and to the point.
Why structure matters for property profits
How you set up the deal decides which taxes bite. Develop through a limited company and you face corporation tax first, dividends later. Hold through an LLP and the profit sits on your personal return immediately. We often steer clients toward a group company with separate development subsidiaries:
- Asset protection: Each project ring-fences risk.
- Cash extraction: Dividend planning across the group lets you pick the most tax-efficient year.
- Stamp duty land tax: Transferring finished units to a group investment company can qualify for group relief, saving up to 5% on residential rates.
The Office for Budget Responsibility reckons corporation tax receipts will hit £110 billion in 2025/26 (OBR, 2024). Don’t add more than you need to that pot – get the structure right first.
Land remediation relief – 150% upfront deduction
Many North-East plots come with contaminated soil, Japanese knotweed or derelict works. Land remediation relief (LRR) lets companies claim a 150% deduction on qualifying clean-up costs, or a cash credit at 16%. Typical qualifying spend includes:
- Removing asbestos: Surveys, disposal and labour.
- Breaking up concrete foundations: Plant hire and tipping fees.
- Dealing with harmful organisms such as knotweed: Treatment and monitoring.
HMRC paid out £60 million through LRR in 2023/24 (HMRC, 2024). To nail the claim, segregate costs in your ledgers from day one and insist subcontractors label invoices clearly. We can review your cost reports before year-end to make sure nothing is missed – gan on, send them over.
Tax saving tips for property developers: Smart use of capital allowances
Plant and machinery bought for a site – from site cabins to cherry pickers – now qualifies for full expensing. That means a 100% write-off in year one for companies until 31 March 2026. For fixtures inside new builds (lifts, ventilation, security systems), the 3% structures and buildings allowance (SBA) also chips away each year.
Quick wins:
- Temporary electrics: Claim as moveable plant, not as part of the building.
- Show-home fit-out: Carpets, blinds and certain furniture count as plant.
- Hard landscaping: Qualify for SBA when it forms part of the fixed site infrastructure.
Blend full expensing and SBA and you could shelter the lion’s share of your first-year profit – keeping cashflow strong enough to bid on the next plot.
Maximising VAT relief on conversions
Convert offices to flats or turn a single house into two and you may qualify for the 5% reduced VAT rate on labour and many materials. Get the certificate wording right and issue it to contractors before work starts – contractors applying 20% by default is still the norm on site. Remember:
- A dwelling empty for two years qualifies for 5% on refurbishment.
- The sale of a newly-created dwelling can be zero-rated, meaning you recover input VAT on the build.
- Retain evidence: council tax records, utility statements, photos and sworn statements all help if HMRC asks.
We’ve had multiple reviews waved through after pre-emptively giving HMRC a tidy bundle of proof. It saves headaches – and keeps you on the right side of a cash-sapping VAT assessment.
Timing is everything – losses, carry-backs and overlap profits
If a scheme goes sideways and you book a loss, you can now carry it back three years, setting it against earlier profits taxed at up to 25%. A £400,000 loss relieved against a year taxed at 25% recovers £100,000 in cash – money better in your account than sat as an unused deferred tax asset.
Partnership developers who switch to companies sometimes forget about overlap profits trapped in their earlier accounts. We can calculate those and set them off under the basis period reforms that take full effect this tax year. The goal: smooth taxable income over the transition and avoid a spike.
Working with us for sharper cashflow
At For The Trade we don’t just crunch numbers – here are three practical steps we follow with every developer:
- Quarterly reviews: Spot reliefs while choices can still be made.
- Job-costing walkthroughs: Tag remediation and plant costs properly.
- Exit modelling: Line up hold/sell decisions with your personal tax plan.
Clients tell us this hands-on approach saves headaches and hard cash. If you want that level of care, have a yarn with us.
Next steps to boost your property margins
Tax doesn’t need to be a cold call from the taxman. With the right tax saving tips for property developers, you turn allowances and reliefs into working capital, protect profit and speed up growth. Whether it’s squeezing the last drop from capital allowances, pushing for the 5% VAT rate or reclaiming past losses, every move adds another brick to your financial wall.
We’re here – sleeves rolled up, ready to graft alongside you – to make sure HMRC only gets what the rules demand. If you’re planning a new site or wrestling with a current one, give us a ring and we’ll show you how much tax you could still claw back with our tax saving tips for property developers. Let’s keep more of your hard-earned cash building homes, not Treasury coffers.