HM Revenue & Customs (HMRC) is increasing its focus on the property sector, with the potential tax at stake for major real estate businesses rising sharply over the past year.
International law firm BCLP estimates that HMRC is currently considering up to £645 million in additional tax from the property industry. That represents a 40% increase from the £461 million recorded for 2024/25.
The figures are based on information from HMRC’s Large Business Directorate (LBD), which works with around 2,000 of the UK’s largest businesses, including major companies operating in the property sector.
HMRC Increasing Compliance Activity
The figure described as ‘tax under consideration’ represents the maximum potential additional tax liability identified by HMRC in individual cases. It does not mean that the full amount will necessarily be collected.
BCLP believes the increase is largely connected to the expansion of HMRC’s compliance operations.
HMRC recruited more than 1,600 additional compliance officers during 2025/26 and has plans to increase its compliance capacity by a further 5,500 officers by 2030.
As a result, the growing amount of tax under consideration may reflect greater scrutiny of taxpayers rather than a significant increase in tax non-compliance.
Elizabeth Bradley, a partner at BCLP, says the property sector is facing a more demanding compliance environment as HMRC puts greater resources into reviewing transactions and financial arrangements.
The increased use of data analysis is also allowing HMRC to identify more transactions for detailed investigation as it continues efforts to reduce the UK’s tax gap.
HMRC Raises More Than £50bn From Compliance
The increased focus appears to be producing significant results for HMRC.
During 2025/26, the tax authority generated more than £50 billion in compliance yield for the first time.
For the property sector, capital allowances and Stamp Duty Land Tax (SDLT) are among the areas receiving particular attention.
BCLP says the amount of tax under consideration relating to capital allowances increased from £483 million to £762 million over the past year. The figure linked to SDLT also rose, increasing from £77 million to £100 million.
Although these figures cover more than just large property businesses, BCLP says they highlight the areas where HMRC is currently concentrating its compliance resources.
For landlords, investors and property companies, this suggests that transactions involving SDLT and capital allowances could face closer examination.
Property Firms Facing Greater Uncertainty
The increased level of scrutiny is not the only issue affecting the property industry.
BCLP says HMRC is also becoming less willing to provide advance certainty over the tax treatment of transactions.
This can create difficulties for businesses planning significant property disposals, company reorganisations or financing arrangements, where understanding the likely tax position before completing a transaction can be important.
Figures obtained through a Freedom of Information request show that 41% of requests for HMRC confirmation of tax treatment were rejected during 2025/26.
This was the highest rejection rate recorded over the previous five years.
Corporation Tax Requests Face High Rejection Rates
The situation is particularly noticeable for Corporation Tax.
During 2025/26, HMRC rejected 63% of requests relating to Corporation Tax, with 105 out of 168 applications turned down.
That compares with a historical rejection rate of roughly 25% to 30%, meaning the latest figure is more than twice the level seen previously.
Requests relating to SDLT have also increased considerably.
The number of applications seeking clarification on SDLT transactions more than doubled during the year, rising from 53 to 122. At the same time, 47% of these requests were rejected, significantly higher than the historical rate.
For property businesses considering complex transactions, the combination of greater scrutiny and reduced access to advance guidance could make tax planning more difficult.
What Does This Mean for Property Investors?
The latest figures highlight a changing compliance environment for the property sector.
HMRC now has more resources available to investigate transactions, while its use of data and analytics means businesses may face more detailed questions about how deals have been structured and financed.
The increase in tax under consideration should not automatically be interpreted as evidence that property businesses are becoming less compliant. Instead, it appears to reflect HMRC’s increased ability and willingness to identify potential areas for investigation.
However, the reduced availability of advance guidance could make it harder for businesses to obtain certainty before completing transactions.
Bradley warns that this could discourage taxpayers from engaging with HMRC proactively. If businesses ask for clarification but cannot obtain a definitive answer, they may find it harder to proceed with confidence.
A More Challenging Tax Environment
For property companies, investors and other businesses involved in real estate, the message is clear: tax compliance is receiving greater attention.
SDLT, capital allowances, Corporation Tax and the structure of property transactions are all areas where businesses may need to expect closer scrutiny.
At the same time, the growing reluctance from HMRC to provide advance confirmation means professional tax advice and careful transaction planning may become increasingly important.
With HMRC continuing to expand its compliance operation, the property sector is likely to remain firmly on its radar as the tax authority looks for further opportunities to close the tax gap.
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