landlords · tax
Should landlords use a limited company?
Bowker Accountants Team
When a limited company can help landlords — and when personal ownership still makes more sense after tax, mortgages and Stamp Duty.
Incorporating a buy-to-let portfolio is one of the most common questions we hear from landlords. A company is not automatically better — it depends on your tax band, gearing and how long you plan to hold the properties.
Why people consider a company
Individually owned residential lets are subject to the Section 24 restriction on mortgage interest relief. Higher-rate and additional-rate taxpayers often keep less of each pound of rent after finance costs than they used to.
A limited company can still deduct mortgage interest as a business expense against Corporation Tax. That difference alone can make incorporation attractive for geared portfolios held by higher-rate taxpayers — especially for new purchases.
Costs and friction that get overlooked
Moving existing property into a company usually triggers Stamp Duty Land Tax (or the Welsh/Scottish equivalent) and can crystallise Capital Gains Tax. Mortgage lenders also price and underwrite company buys differently; rates and arrangement fees are often higher.
Running a company means statutory accounts, Corporation Tax returns and Companies House filings every year. Extracting profit as salary or dividends has its own tax cost. Those fees and taxes need to sit in the same model as the interest relief saving.
A better question than “should I incorporate?”
Ask: for this purchase or this portfolio, does a company leave you better off after tax, mortgage cost and ongoing compliance — over the period you actually expect to hold the assets?
We model that on your numbers before recommending a structure. If you are weighing personal versus limited company ownership, get in touch and we will talk through the trade-offs plainly.