Should I Own My Property Portfolio Personally or Through a Limited Company?
Discover the pros and cons of holding your property portfolio personally or via a limited company. Expert tax insights from Frank’s Accountants.
If you’re a landlord or property investor, you’ve probably wondered whether it’s more tax-efficient to hold your properties in your own name or through a limited company. With changes to mortgage interest relief and increasing pressure on personal tax allowances, it’s a question more people are asking.
In this guide, we’ll walk you through the key differences, pros and cons, and help you decide what’s best for your long-term goals.
What’s the Difference?
- Personal Ownership means you own the property in your name and report income via Self Assessment.
- Company Ownership means the property is held in a limited company, and profits are taxed under corporation tax.
Each structure has its benefits, depending on whether you’re focused on short-term income or long-term wealth planning.
Key Tax Differences: Personal vs Company
| Factor | Personally Owned | Limited Company |
|---|---|---|
| Tax on Profits | Income tax (20%–45%) | Corporation tax (19%–25%) |
| Mortgage Interest Relief (Residential) | Only 20% deductible | Fully deductible as an expense |
| Capital Gains Tax on Sale | CGT rates (18%/24%) | Corporation tax on gains |
| Extracting Income | Direct to owner, taxed as income | Dividends taxed + corporation tax |
| Inheritance Tax Planning | More limited options | Greater flexibility using shares |
| Stamp Duty on Purchase | 3% surcharge on additional homes | 3% surcharge + possible 15% for high-value homes |
| Succession Planning | Complex – transferring property | Shares can be transferred easily |
| Risk Protection | Unlimited liability | Limited liability for shareholders |
Real-World Scenario
Case: A landlord with 5 buy-to-let properties, £60K profit annually
- In their own name: Pays higher rate tax (40%) on rental profits. Mortgage interest relief restricted.
- Through a company: Pays 25% corporation tax. Leaves profits in the company for reinvestment or draws dividends with careful planning.
Outcome: The company route results in lower immediate tax, with more flexibility for future planning.
When Might a Limited Company Make Sense?
- You’re a higher-rate taxpayer.
- You want to keep profits in the business to reinvest.
- You’re thinking long-term: IHT planning, succession, or exit strategy.
- You want to deduct full mortgage interest (residential properties).
When Personal Ownership Might Be Better
- You only own one or two properties and plan to withdraw all profits.
- You’re a basic-rate taxpayer.
- You want a simpler structure with fewer admin and accountancy costs.
Other Considerations
- Cost of Incorporating: You may face Capital Gains Tax or Stamp Duty Land Tax when transferring properties to a company—though some reliefs may apply if you’re running a genuine property business.
- Funding: Companies allow director loan repayments, which can be a tax-efficient way to extract money later.
How Franks Accountants Can Help
We help landlords and investors across Yorkshire and beyond understand the tax impact of different ownership structures. Whether you’re looking to restructure your portfolio or just starting out, we’ll guide you through every option with your future in mind.
Book a free consultation today. Let’s find the most tax-efficient path for your property income.
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