Hello and welcome to the site. Thank you for your question.
You are not correct in your thinking that compensation payment to your company would be tax free.
A lump sum payment to the landlord in lieu of dilapidationsi taxable in the accounts of the landlord... HMRC view on this is covered in their Property Manual PIM2020 and in summary:
- If the landlord subsequently disposes of the property, or takes occupation, he is treated as having received a capital receipt. The payment is compensation for the landlord being required to take back his property in a dilapidated condition;
- If the landlord lets the property out again, the payment is “likely to have the effect of filling a hole in the landlord’s profits” and reflects the lower rent that will have to be charged. In short, it is compensation for lost profits and is taxed as income;
- However, if the landlord himself carries out the repairs and the tenant’s payment is a contribution towards those costs, the landlord can obtain a revenue deduction, on the net cost.
More information on this can be found here
There is useful information you can find in this article here
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