Questions and Answers
Why would I buy a property through a company?
I want to expand my investment in property with a view to making it my main job. I am wondering whether setting up a company to do this would be more tax efficient. Is this true?
Last updated 9 Apr 2026 | First published 27 Mar 2024
By Helen Wood, CA 4 min read
Landlords
There are pros and cons of buying a property through a company, and it may be that there is no clear answer one way or the other.
There are pros and cons of buying a property through a company. In recent years lots of tax and regulatory changes have affected landlords, such as:
- the main corporation tax rate has risen to 25%
- property specific taxes such as stamp taxes have changed several times
- relief for mortgage interest has reduced
- the proposed new property income tax from April 2027
Therefore, there is no clear answer to the sole trader vs. limited company question, but there should be a clearer answer when considering your individual circumstances.
The decision will come down to several factors, including:
- How much income and profits you’ll make from the properties
- How much you personally need each month as income
- How many properties you already own
- Whether the properties are mortgaged or owned outright
- Whether you have other (non-property) income and how much
As well as knowing the advantages and disadvantages below, it is always worthwhile having a discussion with a professional. Your accountant will be able to sit down with you and go through your individual circumstances and provide some bespoke tax estimates to help you decide.
What tax liabilities do companies and individuals pay?
While the main corporation tax rate at 25% is lower than the higher (40%) and additional (45%) rates of income tax, you will still be personally liable to income tax and potentially National Insurance Contributions (NICs) on the income you take from the company, as either a salary or dividend. Therefore overall, your tax liability may not be lower when owning a property through a company.
Furthermore, the income and any profits will be the company’s and not your own. You cannot spend company money however you wish, as a limited company is a separate legal entity to you as a director and shareholder. There are processes to follow under company law and tax legislation in order to withdraw funds legitimately, so if you are hoping to use rental profits as your main source of income then a limited company business structure may not be your best option.
If you are investing in the longer term and do not require the income from the properties for your everyday expenses, keeping it invested in the company will mitigate your income tax liability as income tax will only be due when you take money from the company e.g. as salary, bonus or dividends. By owning the properties personally, you will be taxed on all profits as they arise.
What tax relief is available for finance costs?
When owning property personally, you are unable to claim mortgage interest as a deduction against income for tax purposes and can only claim a 20% tax reducer (equivalent to basic rate tax relief). When owning a property through a limited company, mortgage interest is 100% allowable.
Is accessibility to mortgages different for companies and individuals?
Owning a property personally may give you access to a greater choice of mortgages. Generally, it is harder to get a mortgage on a property being acquired by, or already owned by, a limited company. Lenders consider lending to a limited company to be a higher risk than a personal mortgage. Interest rates will usually be higher, and companies may be offered lower borrowing limits. Typically, it becomes easier to get mortgages as a limited company with higher turnover and profits.
If renovations are required before a property can be let, a limited company may need a bridging loan until it receives rental income from which the mortgage can be paid.
What stamp taxes do companies pay?
When owning a property through a company, you may pay higher rates of stamp taxes on purchase. Currently companies pay different stamp taxes depending on which nation within the UK the property is located.
England – a 17% higher rate of Stamp Duty Land Tax (SDLT), and the company may be liable to Annual Tax on Enveloped Dwellings (ATED) if it holds two or more properties and the property is valued at £500,000 or more.
Scotland – Land and Building Transaction Tax of up to 12% plus the Additional Dwelling Supplement of 8%, even if it is the only property held by the company.
Wales – higher rates of Land Transaction Tax (up to 17%).
How are capital gains taxed?
If you sell a property that is not your main home as an individual, you will generally pay Capital Gains Tax (CGT) on the gain you make – currently 24% for a higher or additional rate taxpayer.
If a company sells a property, the gain is taxed to corporation tax – currently 25% - meaning it is a more tax efficient way to make capital gains on property sales.
How do I change property ownership?
If you already own several properties personally, it is not simple to move them into a company. You will need to sell them to the company, incurring fees including stamp taxes, legal fees and potentially a CGT liability.
Read our article for further tips for managing multiple rental properties.
TaxAssist Accountants can help you with your property portfolio
TaxAssist Accountants are experts in tax and we deal with landlords who own their properties in a variety of ways. Call us today to arrange a free consultation on 01494 778900 or use our online contact form.
Frequently Asked Questions
If you have sold a property, or are thinking of selling a property, you may need to report this to HMRC and pay Capital Gains Tax (CGT). Properties used solely as your main residence are unlikely to have a CGT liability and the sale probably won't need to be reported to HMRC. However, if the property was rented out you may need to take action. If you are a UK resident and there is a CGT liability on the property sale you will need to report this to HMRC within 60 days of completion. If you are non-UK resident, you will need to report the sale to HMRC within 60 days of completion whether there is a CGT liability or not. Speak to an accountant who can calculate your CGT liability, look at tax reliefs and prepare your return to HMRC.
Yes, if you lived in the property as your main residence and let it out, you can claim both Private Residence Relief and Letting Relief.
There is no right or wrong answer and there are pros and cons of operating as a sole trader or a private limited company. Sole traders have less admin and reporting requirements, and the finances are simple to administer. A private limited company may be more tax efficient and make it easier to get loan finance but will mean more admin and reporting requirements and less privacy.
Yes, you can typically claim mileage or travel costs when travelling for property management purposes, such as inspections or repairs.
This depends on your time, expertise, and proximity to the properties. Letting agents may reduce workload but come at a cost.
Landlords are affected by many recent and proposed tax changes including the higher rates of SDLT, reduced rates of CGT, year on year reduced starting points to pay ATED.
If you have sold a property, or are thinking of selling a property, you may need to report this to HMRC and pay Capital Gains Tax (CGT). Properties used solely as your main residence are unlikely to have a CGT liability and the sale probably won't need to be reported to HMRC. However, if the property was rented out you may need to take action. If you are a UK resident and there is a CGT liability on the property sale you will need to report this to HMRC within 60 days of completion. If you are non-UK resident, you will need to report the sale to HMRC within 60 days of completion whether there is a CGT liability or not. Speak to an accountant who can calculate your CGT liability, look at tax reliefs and prepare your return to HMRC.
Yes, if you lived in the property as your main residence and now let it out, you can claim both Private Residence Relief and Letting Relief.
Last updated 9 Apr 2026 | First published 27 Mar 2024
This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.
Helen Wood, CA
Helen is a qualified chartered accountant (CA) and joined TaxAssist in 2025 following three years as a freelance content writer for clients in the tax and accounting publishing sector. Prior to this, She spent 17 years at Big Four and Top 10 accountancy firms. Helen writes clear and helpful articles on tax and accounting for businesses and individuals.
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