Development costs along with other costs such as legal fees and mortgage interest will be taken into account in working out your trading profit. Not to allow development costs would terminate the construction industry overnight.
As you will read here, if you put the property into a company, you will make a capital gain if it is worth more than you paid for it. That will certainly be the case if you intend to build a portfolio of rental properties in which case the company will not be treated as a proper trading company, more as an investment company. If, however, you start out as a sole trader property developer and incorporate, you can claim incorporation relief which means that you get shares in the limited company in exchange for the property and there is no immediate capital gain. Profits from developing and selling property will be charged to corporation tax at 20%. The rate will come down to 19% and then to 18% by 2020. Take a look here for information on incorporation relief.
The problem with a company is getting the money out tax efficiently. Dividends can be heavily taxed as you are a 40% taxpayer. If you don't need to draw an income, you can leave the money in the company to develop more properties or at some stage in the future, close it down using a formal liquidation process so that you can withdraw the case as capital, not dividend, claim entrepreneurs' relief and pay CGT at 10% instead of at 18% or 28% or a combination of the two. Obviously, tax rules can and do change so relief avaialbel now may not be in the future. Take a look here for information on entrepreneurs' relief.
If you develop the property as a sole trader, then you will be pay income tax and national insurance contributions on your profit which will be higher than 20% corporation tax.
I hope this helps but let me know if you have any further questions.