The Benefits of Buying Property Through a UK Limited Company: An In-depth Guide
Buying residential investment property through a UK limited company (“buy via a SPV / corporate buy-to-let”) has moved from a niche strategy into mainstream for many landlords. Below I explain why investors choose companies, the real tax and commercial advantages, the important extra costs and traps, and a short worked example that shows when a company makes sense — plus a practical checklist if you want to explore this route.
Quick executive summary
Why people use companies: mortgage interest is fully tax-deductible inside a company; profits are taxed at corporation tax rates (lower than higher individual rates); capital can be retained and reinvested efficiently; limited liability and clearer separation of business/personal risks. (UK Landlord Tax, GOV.UK)
Main downsides to watch: punitive Stamp Duty Land Tax (SDLT) for corporate buyers of higher-value dwellings (flat 17% on many purchases over £500k), Annual Tax on Enveloped Dwellings (ATED) for expensive homes, smaller lender pool / higher mortgage costs, extra admin and compliance. (GOV.UK)
Who typically benefits most: higher-rate or additional-rate taxpayers who want to build a portfolio and keep profits inside the company for reinvestment (rather than extracting everything right away). (GOOD LAW INTL)
Why a limited company can be tax-efficient
1. Mortgage interest is fully deductible for companies
Since the Section 24 restriction was introduced, individual landlords cannot fully deduct mortgage interest against rental income; instead they receive a basic-rate tax credit on interest. Companies, however, can deduct 100% of finance costs when calculating taxable profit, which improves taxable profit profiles and cash tax paid inside the business. This is a core reason many landlords incorporate. (UK Landlord Tax, Simply Business UK)
2. Corporation tax is often lower than higher-rate personal tax
Profits taxed inside a company are charged at corporation tax rather than income tax. Contemporary corporation tax main rates (and marginal relief thresholds) mean the headline company rate is materially lower than 40%–45% personal income tax for many investors, which helps if profits are retained and used to buy more property. (Corporation tax rules and rates are set by HMRC/GOV.UK.) (GOV.UK)
3. Retaining profits for growth is cheaper
If you plan to reinvest profits (buy more properties, pay down other debts, or build a business), leaving profits inside a company can be more efficient: the company pays corporation tax, retains the remainder and can use it tax-efficiently for further acquisitions — avoiding immediate personal income tax at a higher marginal rate. (GOOD LAW INTL)
4. Simpler rules for capital gains (company vs individual)
When a company sells a property it pays corporation tax on chargeable gains (subject to the company tax rules) rather than individual Capital Gains Tax rates (for residential property CGT for individuals has historically been 18%/28% bands). Depending on circumstances, the effective tax on a gain inside a company vs personally can favour the company route, especially if proceeds are retained. (The right approach depends on your personal/corporate situation.) (GOV.UK, PwC Tax Summaries)
5. Limited liability and clearer separation
Owning property in a company separates that asset from your personal estate. This helps limit personal exposure to business creditors and can provide a clearer structure for multiple investors, family succession planning, or selling a trading property business as a commercial asset. (But note: personal guarantees for mortgages are still common.)
The important costs, restrictions and compliance you must factor in
1. SDLT: corporate purchases can attract a 17% flat rate for high-value residential property
From late 2024 the government adjusted the corporate SDLT rules: a flat 17% SDLT charge can apply to purchases of residential dwellings over £500,000 acquired by non-natural persons (companies and similar), subject to reliefs for genuine property businesses. This is a major up-front cost to watch and can wipe out some potential tax advantages for higher-value purchases. (GOV.UK, Land Tax Advice)
2. Annual Tax on Enveloped Dwellings (ATED)
If a company owns a UK dwelling worth more than £500,000, it may face ATED returns and charges (banded annual charges apply unless reliefs apply, e.g., if the property is genuinely in a property rental business). ATED compliance and charges are a recurring cost and administrative obligation. (GOV.UK, Blick Rothenberg)
3. Mortgages: availability, rates and portfolio limits
Not all lenders offer limited-company buy-to-let mortgages, and those that do often have smaller product ranges, higher rates, and stricter underwriting (e.g., portfolio size limits or higher deposit requirements). Expect slightly higher lenders’ costs and additional legal work. (Leeds Building Society, Customer)
4. Extraction tax (dividends / salary) when you want cash personally
Companies pay corporation tax on profits — but when you withdraw funds (dividends or salary) you pay personal tax on that extraction. If you extract all profits immediately, the combined company + dividend tax may sometimes be similar to or higher than paying tax personally, depending on your marginal rate and allowances. Dividend rates and allowances have changed in recent years (allowance for 2025/26 is £500). (GOV.UK)
5. Administrative overhead & professional fees
Running a property company brings accounting, Corporation Tax, payroll (if you pay salaries), company secretarial duties, and annual filings — plus costs for tax filings, legal setup, transfers (if you move personally owned properties into a company) and possibly Stamp Duty on the transfer. Factor professional fees into the decision.
A short worked example (real numbers): Illustrates the mechanics
Assumptions
Rental income after basic operating costs (but before interest): £40,000.
Mortgage interest paid: £10,000.
Owner is a higher-rate taxpayer for personal income tax purposes.
Corporation tax used for the example: 25% (current main rate banding).
Dividend allowance: £500; higher-rate dividend tax 33.75%.
Individual (personal ownership)
Section 24 rule: interest cannot be fully deducted when calculating taxable rental profit; taxable profit ≈ £40,000.
Income tax at 40% on £40,000 = £16,000.
Tax credit at 20% of mortgage interest: 20% × £10,000 = £2,000.
Net tax = £16,000 − £2,000 = £14,000.
After tax cash (before interest payments) = £40,000 − £14,000 = £26,000.
After paying mortgage interest £10,000, net cash retained = £16,000.
Company ownership
Profit after interest = £40,000 − £10,000 = £30,000.
Corporation tax 25% on £30,000 = £7,500. Company post-tax profit = £22,500.
If the owner extracts all £22,500 as dividends: £500 allowance tax-free; £22,000 taxed at 33.75% = £7,425 dividend tax.
Net received by owner after company tax and dividend tax = £22,500 − £7,425 = £15,075.
Takeaways from the numbers
In this example where the owner extracts all profit immediately, the individual route produced £16,000 net cash vs £15,075 net cash via a company — slightly better for the individual in this specific extraction scenario.
Where the company shines is when profits are kept inside the company for reinvestment: the company has £22,500 of post-tax capital to deploy, compared with just £16,000 available to the individual to reinvest immediately. That extra retained capital is the key scaling advantage for a growing portfolio. (Worked numbers above use standard rules — see sources for corporation tax, dividend rates and dividend allowance.) (GOV.UK)
Practical rules of thumb — when a company is likely to make sense
You’re a higher-rate / additional-rate taxpayer and plan to build a multi-property portfolio and keep profits inside the business for acquisition. (GOOD LAW INTL)
You want professional, scalable ownership (multiple investors, family shareholding structures, or eventual sale of a trading property business).
You’re ready to accept extra SDLT/ATED exposure for properties above the thresholds (or are buying properties where the corporate SDLT/ATED exposure is mitigated by reliefs because the purchase is for an active rental business). (GOV.UK, UK Property Accountants)
When a company may not be right
You’re a basic-rate taxpayer and intend to extract profits each year as personal income — the company route often brings extra admin and possibly higher effective extraction tax.
You’re buying one-off residential properties below thresholds where the SDLT/ATED penalty isn’t offset by the tax advantages.
You can’t obtain reasonably priced limited-company finance or would face significant mortgage restrictions.
Checklist: next steps if you’re seriously considering a company purchase
Run a numbers model comparing your exact figures (rents, mortgage interest, expected capital sales, extraction plans) — modelling changes the answer.
Check SDLT and ATED exposure for the specific properties you want to buy (price bands matter). (GOV.UK)
Get lender quotes for limited company buy-to-let mortgages — check rates, loan-to-value, portfolio caps and whether personal guarantees are required. (Leeds Building Society, Customer)
Speak to a specialist property tax adviser / chartered accountant to validate structuring and the tax consequences of transfers (moving personally owned properties into a company can trigger SDLT, CGT and other costs).
If proceeding, set up the company correctly (share structure, Articles, directors) and ensure proper bookkeeping and annual filings.
Final words & important caveats
This write-up outlines the typical benefits and trade-offs of buying property through a limited company in the UK and uses up-to-date public sources for tax rates and headline rules. Tax and property rules change (and there are many reliefs/exceptions that may apply to specific deals), so this is not personal tax advice. Speak to a qualified accountant and mortgage broker before you change ownership structures or complete a purchase.
Sources (high-level references used)
HMRC / GOV.UK — corporation tax rates and allowances. (GOV.UK)
HMRC / GOV.UK — SDLT corporate / non-natural person single rate (17% for many purchases over £500k from Oct 2024) and additional property surcharge changes. (GOV.UK, CBRE Residential)
HMRC / GOV.UK and specialist landlord tax guides — Section 24 mortgage interest restriction and company deductibility. (UK Landlord Tax, Simply Business UK)
HMRC / GOV.UK — Annual Tax on Enveloped Dwellings (ATED) basics and thresholds. (GOV.UK)
GOV.UK — dividend tax rules and dividend allowance (2024/25–2025/26 reference). (GOV.UK)
Lender product guides and industry sources — limited company buy-to-let mortgage availability and underwriting. (Leeds Building Society, Customer)
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