Holding Property in a Limited Company – Is It Worth It?
- Brian Pusser
- Sep 27
- 3 min read
More and more buy-to-let landlords are choosing to hold their mortgages and property investments within a limited company. But is this the right route for you? Before making the move, it’s important to weigh up both the advantages and disadvantages of using a corporate structure.
Advantages of Using a Limited Company
1. Protection of Personal Assets
A limited company is a separate legal entity. This means your rental properties would be owned by the company, not you personally. If the business runs into debt or legal claims, your personal assets are generally protected.
2. Potential Tax Efficiency
Rental income earned by an individual is taxed at their personal rate of income tax, which could be as high as 40% or 45% for higher earners.
By contrast, company profits are taxed at Corporation Tax rates – currently 19% for small profits, rising to 25% for larger profits (from April 2025).
But remember: if you want to take money out of the company for personal use, you’ll pay additional tax on dividends. Whether you’ll save tax overall depends on your income level, rental profits, and long-term strategy. It’s important to run the numbers for your own situation.
3. Inheritance Tax (IHT) Planning Opportunities
Owning property through a company can make it easier to plan for passing assets on to the next generation, using shares as part of estate planning strategies.
4. Full Deduction of Mortgage Interest
Since 2017, individual landlords can only claim a 20% tax credit for mortgage interest. Higher-rate taxpayers end up paying tax on part of their finance costs. Limited companies, however, can deduct the full amount of mortgage interest as a business expense, reducing taxable profits.
Disadvantages of Using a Limited Company
1. More Administration
Running a limited company comes with extra paperwork: annual accounts, Corporation Tax returns, and Companies House filings. This means more time – or higher accountancy costs.
2. Higher Finance Costs
Lenders often charge higher interest rates and fees to companies compared with individual landlords. This can eat into the tax savings.
3. Upfront Tax Costs of Incorporation
If you already own property, transferring it to a company usually means you’re “selling” it to the company. This can trigger:
Stamp Duty Land Tax (SDLT) on the transfer
Capital Gains Tax (CGT) on any gains since purchase
These costs can be significant, so it’s vital to check whether the long-term savings justify the short-term tax hit.
Other Property-Related News: Council Tax on the Rise
In the June Spending Review, Chancellor Rachel Reeves confirmed that Council Tax is expected to rise by 5% each year. While local councils technically set their own rates, the government’s forecast assumes all will raise tax to the maximum.
With councils under intense financial pressure, landlords should plan for higher ongoing costs in the years ahead.
Final Thoughts
Holding property through a limited company can be beneficial – particularly for higher-rate taxpayers and those planning long-term property portfolios. But the decision isn’t straightforward. For some landlords, the tax benefits will be outweighed by higher costs and compliance obligations.
Before you decide, make sure you:
Run detailed forecasts based on your rental profits and tax position.
Weigh up the upfront costs of incorporation.
Take advice on how it fits into your long-term property and estate planning goals.
Need advice? At B R Pusser & Co, we help landlords assess the numbers and make informed decisions about property ownership. Get in touch to discuss your situation.
