Over the last few years, more and more UK landlords and developers have asked the same question:
“Should I hold my property in a limited company?”

It’s a smart question — and there’s no one-size-fits-all answer. The rise in mortgage interest restrictions for individual landlords (Section 24), combined with rising property values and tighter tax rules, means getting the structure right is more important than ever.

In this post, we’ll break down the pros and cons of buying property through a limited company — and when it makes sense.

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What Changed?

Since April 2020, individual landlords can no longer deduct mortgage interest from their rental income in full. Instead, they receive a basic rate tax credit — even if they’re higher-rate taxpayers.

This change hit profits for landlords with larger mortgages.

✅ Companies, however, can still deduct mortgage interest as a business expense — making them more attractive for geared portfolios.

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Advantages of Using a Limited Company

1. Full Mortgage Interest Deduction
   Companies can claim 100% of finance costs as an expense, which can lead to significant tax savings.
2. Corporation Tax Rates Are Lower
   As of 2024/25, the main Corporation Tax rate is 25% (or less for smaller companies), compared to 40% or 45% for higher-rate individual taxpayers.
3. Easier Profit Retention and Reinvestment
   You can retain profits inside the company to reinvest into more properties, without triggering personal tax.
4. Estate Planning and Gifting Shares
   It’s generally easier to transfer shares in a company to family members than it is to transfer part of a property held personally.

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Disadvantages and Drawbacks

1. Higher Mortgage Rates
   Company buy-to-let mortgages tend to have higher interest rates and fees compared to personal ones.
2. Additional Compliance Costs
   Limited companies must file annual accounts, confirmation statements, and CT600 Corporation Tax returns — often requiring an accountant.
3. Double Taxation
   When you take profits out of the company (e.g. via dividends), you’ll pay additional personal tax on top of Corporation Tax.
4. Complexity in Exiting
   Selling properties held within a company can be less flexible — especially if you want to sell just one asset from a portfolio.

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When Does a Limited Company Make Sense?

✅ A limited company may be the right option if:

• You plan to build a large portfolio
• You’re a higher or additional-rate taxpayer
• You want to reinvest profits rather than extract income
• You’re buying with mortgages, and interest costs are high
• You’re focused on long-term estate planning

🚫 It may not be worth it if:

• You own only 1 or 2 properties
• You plan to live off the rental income immediately
• You’re on a basic rate of income tax
• You’re buying mortgage-free

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Final Thoughts

Using a limited company can offer powerful tax advantages — but it also introduces cost, complexity, and double taxation. Like all things in property tax, planning is key.

At AXT Accountants in Cheadle, we help landlords and developers structure their investments for growth, flexibility, and long-term efficiency. If you’re weighing up the pros and cons, let’s talk through your plans — before you sign on the dotted line. Contact us for a free consultation today. 0161 989 9560