Limited Company vs Personal Name for Buy-to-Let: Full Comparison
Should you hold buy-to-let properties in a limited company or personal name? Tax implications, mortgage options, costs, and when each structure makes sense.
The Latch Team
Editorial
One of the most important decisions a UK landlord faces is whether to hold rental properties personally or through a limited company. Since Section 24 restricted mortgage interest relief for individual landlords, the limited company route has become increasingly popular — but it is not the right choice for everyone.
The answer depends on your tax band, mortgage size, whether you need to extract profits, your long-term plans, and how many properties you own. Getting this decision wrong can cost tens of thousands of pounds in unnecessary tax, Stamp Duty, and professional fees.
This guide provides a full comparison of personal versus limited company ownership for buy-to-let property in the UK, covering Corporation Tax versus income tax, mortgage interest treatment, Capital Gains Tax, incorporation options, and the practical administrative burden. Latch supports both individual landlords and limited company portfolios.
Tax Treatment: The Fundamental Difference
The core difference between personal and company ownership is how rental profits are taxed:
- Personal ownership: Rental profits are added to your other income and taxed at your marginal income tax rate (20%, 40%, or 45%)
- Limited company: Rental profits are subject to Corporation Tax (25% main rate, or 19% for companies with profits under £50,000, with marginal relief between £50,000 and £250,000)
However, this comparison is incomplete. With a limited company, profits are taxed twice: first through Corporation Tax when earned, then through income tax when extracted as salary or dividends. The total tax burden depends on how much you extract and in what form.
Income Tax vs Corporation Tax Rates
| Profit Level | Personal (Income Tax) | Company (Corporation Tax) |
|---|---|---|
| £0 - £12,570 | 0% (Personal Allowance) | 19% (small profits rate) |
| £12,571 - £50,270 | 20% (basic rate) | 19% (small profits rate) |
| £50,271 - £125,140 | 40% (higher rate) | 25% (main rate, with marginal relief) |
| Over £125,140 | 45% (additional rate) | 25% (main rate) |
Small profits rate: Companies with taxable profits under £50,000 pay Corporation Tax at 19%. Between £50,000 and £250,000, marginal relief applies, resulting in an effective rate between 19% and 25%. Above £250,000, the full 25% rate applies.
Mortgage Interest: The Key Advantage
This is where the limited company structure has a clear advantage. Section 24 restricts individual landlords to a 20% tax credit on mortgage interest. Limited companies can deduct mortgage interest in full as a business expense.
| Scenario | Personal (Higher Rate) | Limited Company |
|---|---|---|
| Rental income | £20,000 | £20,000 |
| Allowable expenses (excl. mortgage) | -£4,000 | -£4,000 |
| Mortgage interest (£8,000) | Not deductible | -£8,000 |
| Taxable profit | £16,000 | £8,000 |
| Tax on rental profit | £6,400 (40%) | £1,520 (19%) |
| Less: 20% tax credit on £8,000 | -£1,600 | N/A |
| Tax at entity level | £4,800 | £1,520 |
| Saving in company | £3,280 |
But wait: The £3,280 saving is at the entity level only. If you extract the £6,480 profit from the company as dividends, you will pay additional income tax. The net saving depends on your personal tax position and how much you need to extract.
Extracting Profits: Salary, Dividends, or Retain
Money earned by a limited company is not yours personally. To access it, you must extract profits, and each method has tax consequences:
Salary
Paying yourself a salary is tax-deductible for the company but triggers income tax and National Insurance. Most accountants recommend a small salary up to the NI threshold (£12,570 in 2025/26) to preserve your Personal Allowance and NI contribution record.
Dividends
Dividends are not tax-deductible for the company (paid from post-tax profits) but are taxed at lower rates than salary for the individual:
| Tax Band | Dividend Tax Rate (2025/26) |
|---|---|
| Basic rate | 8.75% |
| Higher rate | 33.75% |
| Additional rate | 39.35% |
The dividend allowance for 2025/26 is £500, meaning the first £500 of dividends is tax-free regardless of your tax band.
Retained Profits
If you do not need the rental income for living expenses, you can leave profits in the company. They are taxed at the Corporation Tax rate only, with no additional personal tax until extracted. This is ideal for landlords reinvesting in further properties.
Latch tip: Latch tracks your company income and expenses separately, generating reports that make it easy for your accountant to prepare Corporation Tax returns and dividend calculations.
Capital Gains Tax Implications
How property disposals are taxed differs significantly between personal and company ownership:
Personal Ownership
- Capital Gains Tax at 18% (basic rate) or 24% (higher/additional rate) on residential property gains
- Annual exempt amount of £3,000 (2025/26) per person
- Must report and pay within 60 days of completion
- Can use spousal transfers to double the annual exemption
Limited Company
- No CGT — the gain is subject to Corporation Tax at up to 25%
- No annual exempt amount
- Indexation allowance was frozen at December 2017 values
- Extracting the proceeds from the company triggers further personal tax (dividend tax or CGT via company liquidation)
For a single property sale, personal ownership often results in less total tax due to the annual exempt amount and lower CGT rates. For a portfolio, the Corporation Tax rate can be competitive, especially if proceeds are reinvested rather than extracted.
Incorporation: Transferring Personal Properties to a Company
If you already own properties personally and want to move them into a company, this is called incorporation. It is not a simple process and can be expensive:
Costs of Incorporation
- Stamp Duty Land Tax: The company purchasing properties from you triggers SDLT at the higher rates (including the 5% additional property surcharge). On a £300,000 property, this could be over £20,000.
- Capital Gains Tax: You are disposing of the property personally, which triggers CGT on any gain since purchase.
- Legal fees: Solicitor costs for transferring title, new mortgage documentation, and company formation.
- Mortgage costs: Your existing residential BTL mortgage must be replaced with a commercial BTL mortgage in the company name. Rates are typically 0.5-1.5% higher.
- Accountancy fees: Additional ongoing costs for company accounts and Corporation Tax returns (typically £500-£2,000+ per year).
Section 162 Incorporation Relief
Section 162 of the Taxation of Chargeable Gains Act 1992 may allow you to defer Capital Gains Tax when transferring a business (not just individual assets) to a company. The conditions are strict:
- You must be transferring a business as a going concern, not just individual properties
- All assets of the business must be transferred
- The consideration must be wholly or partly shares in the new company
- HMRC increasingly scrutinises these claims, particularly for small portfolios
Warning: Section 162 relief does not defer the SDLT liability. Even if CGT is deferred, you still pay Stamp Duty on the transfer, which can be substantial. There is also no guarantee HMRC will accept that your property rental constitutes a business for Section 162 purposes.
SDLT on Transfer to Company
When a company purchases property (even from its own director), full SDLT is payable. The rates for residential property (including the 5% additional property surcharge for companies) are:
| Property Price Band | Standard Rate | Additional Property Rate |
|---|---|---|
| £0 - £125,000 | 0% | 5% |
| £125,001 - £250,000 | 2% | 7% |
| £250,001 - £925,000 | 5% | 10% |
| £925,001 - £1,500,000 | 10% | 15% |
| Over £1,500,000 | 12% | 17% |
For a property valued at £250,000, the SDLT including the 5% surcharge would be £15,000 (£6,250 standard + £8,750 surcharge equivalent). This is a significant upfront cost that must be factored into any incorporation decision.
Mortgage Availability and Rates
Mortgage options differ between personal and company ownership:
| Factor | Personal BTL Mortgage | Ltd Company BTL Mortgage |
|---|---|---|
| Interest rate | Typically 1-2% above base rate | Typically 1.5-3% above base rate |
| Product range | Wide choice of lenders | Fewer lenders, but growing market |
| Arrangement fees | Standard | Often higher |
| LTV available | Up to 75-80% | Up to 75% (sometimes 80%) |
| Personal guarantee | Not required | Usually required from directors |
| Stress testing | Based on personal income | Based on rental income and company accounts |
The limited company mortgage market has expanded significantly in recent years. Most specialist BTL lenders now offer company products, though rates remain slightly higher than personal equivalents.
Administrative Burden and Costs
Running a limited company involves more administration and compliance than personal ownership:
| Requirement | Personal Ownership | Limited Company |
|---|---|---|
| Annual tax return | Self Assessment (SA100 + SA105) | Corporation Tax return + personal Self Assessment |
| Annual accounts | Not required | Statutory accounts filed at Companies House |
| Confirmation statement | Not required | Annual filing at Companies House (£13-£34) |
| Accounting costs | £200-£500/year | £500-£2,000+/year |
| Bank account | Can use personal account | Must have business bank account |
| Public record | Not disclosed | Accounts publicly available at Companies House |
| RTI/payroll | Not required | Required if paying salary |
Privacy note: Limited company accounts are publicly available. Anyone can look up your company at Companies House and see your turnover, profit, and assets. Personal rental income is private.
When Personal Ownership Is Better
Personal ownership is generally preferable when:
- You are a basic rate taxpayer and Section 24 has minimal impact
- You own properties mortgage-free or with small mortgages
- You need all rental income for living expenses (avoiding double taxation)
- You plan to sell properties and want to use the CGT annual exemption
- You want to keep administration simple and costs low
- You are close to retirement and want straightforward inheritance planning
When a Limited Company Is Better
A limited company structure is generally preferable when:
- You are a higher or additional rate taxpayer with significant mortgage interest
- You do not need to extract all profits (reinvesting in further properties)
- You are buying new properties (no SDLT or CGT cost of transfer)
- You have a growing portfolio and want to retain profits tax-efficiently
- You want to bring in investors or business partners in the future
- Your spouse or family members can be shareholders for dividend planning
Full Comparison Summary
| Factor | Personal Ownership | Limited Company |
|---|---|---|
| Tax on rental profits | 20% / 40% / 45% income tax | 19-25% Corporation Tax |
| Mortgage interest | 20% tax credit only (Section 24) | Fully deductible expense |
| Extracting profits | No additional tax | Dividend tax or salary tax on extraction |
| CGT on sale | 18% or 24% | Corporation Tax, then tax on extraction |
| Annual exempt amount | £3,000 per person | Not available |
| Admin burden | Low | Higher (accounts, CT return, Companies House) |
| Annual costs | £200-500 accountancy | £500-£2,000+ accountancy |
| Privacy | Private | Public record |
| Mortgage rates | Lower | Higher (0.5-1.5% premium) |
| Inheritance planning | Direct ownership transfer | Share transfer (can be more flexible) |
| Section 24 impact | Full impact | Not affected |
| Loss relief | Carry forward against property income | Carry forward against all company profits |
How Latch Supports Both Structures
Whether you own properties personally or through a company, Latch provides the tools you need:
Individual Landlords
Track income and expenses by property, calculate net rental profit, separate mortgage interest for the Section 24 tax credit, and generate SA105-ready reports.
Self Assessment ready
Limited Companies
Record company income and expenses, track Corporation Tax liabilities, manage multiple properties in a single portfolio view, and export data for your accountant.
Corporation Tax ready
Portfolio Overview
See the performance of every property at a glance — rental yield, void periods, expense ratios, and net profit — regardless of ownership structure.
Full visibility
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Get Started with LatchDisclaimer: This guide is for informational purposes only and does not constitute tax, legal, or financial advice. The choice between personal and limited company ownership depends on individual circumstances and should be made with professional guidance. Tax rates, reliefs, and rules are subject to change. Always consult a qualified tax adviser, accountant, and solicitor before changing your property ownership structure. Last updated February 2026.
