Traditionally, most landlords owned property in their personal name. However, changes to tax legislation—particularly the phased removal of mortgage interest tax relief for individuals—have led many to consider incorporating. Here’s why:
1. Tax Efficiency
Companies pay corporation tax on profits (currently 25% as of 2025), which is generally lower than higher rates of personal income tax (up to 45%).
Mortgage interest is fully deductible as a business expense in a limited company.
2. Retained Earnings
You can leave profits in the company to reinvest in more property or use it to pay down mortgages, rather than drawing it all as personal income.
3. Inheritance Planning
Holding property in a company can offer more flexible options for estate planning and passing assets to the next generation via shares.
Step-by-Step: Structuring Your Investment as a Company
Step 1: Set Up a Limited Company
Register your company with Companies House.
Choose a relevant company name.
Appoint at least one director and a shareholder.
Decide on SIC codes (e.g., 68100 for buying/selling real estate or 68209 for letting).
Step 2: Open a Business Bank Account
Keep company finances separate from personal accounts.
This will be necessary for applying for mortgages and receiving rental income.
Step 3: Secure a Limited Company Buy-to-Let Mortgage
Not all lenders offer these, but there are many specialist lenders.
Interest rates may be slightly higher, and personal guarantees are usually required.
Step 4: Purchase Property in the Company’s Name
All property purchases should be made directly through the limited company.
Stamp Duty Land Tax (SDLT) still applies, including the 3% surcharge for second properties.
Step 5: Keep Proper Accounting Records
Submit annual accounts and a confirmation statement to Companies House.
File a corporation tax return with HMRC.
Consider hiring an accountant familiar with property investment.
Key Considerations Before You Incorporate
🔸 Transferring Existing Properties
Transferring a personally held property into a company triggers:
Stamp Duty (as if it’s a sale)
Capital Gains Tax on any increase in value since you bought it
This is why incorporation is often more suitable for new acquisitions rather than existing portfolios—unless you qualify for incorporation relief (e.g., if you’re running a property business, not just managing a few rentals).
🔸 Mortgage Availability
Company mortgages can be more limited and slightly more expensive, though this gap is narrowing as the market matures.
🔸 Dividend Tax
When you take profits out of the company as dividends, you may be liable for dividend tax—so personal tax planning is still important.
Is Structuring as a Company Right for You?
It depends on:
Your income level
Long-term investment goals
Plans to scale your portfolio
Whether you’ll retain or withdraw profits
Whether you’re buying new or transferring existing properties
Always consult a specialist accountant or property advisor before making the switch.
Final Thoughts
Structuring your property investments through a limited company can offer meaningful tax benefits and long-term strategic advantages, especially if you’re planning to grow your portfolio. That said, it’s not a one-size-fits-all solution. With careful planning and the right professional support, you can set yourself up for long-term success in the UK property market.
Need help setting up your property investment company or want advice on your structure? Drop us a message—we’re happy to help you get started.
