One decision cuts across every strategy: do you own property personally or through a limited company (usually a Special Purpose Vehicle, or SPV)? It is not automatically "companies are better" — it depends on your income, goals and how long you will hold. This guide explains the trade-offs and how to set it up, so you can make the call before you buy.
Step 1 — Understand why the question exists
The main driver is Section 24: personally-held landlords can no longer fully deduct mortgage interest, and instead get only a 20% tax credit — which pushes higher-rate taxpayers into effective tax that can exceed their real profit. Companies are unaffected: they deduct interest in full and pay Corporation Tax on the net profit. For a geared, higher-rate investor, that difference can be decisive.
Step 2 — Weigh the trade-offs
- Personal: simpler and cheaper to run, you can use your CGT allowance on sale, but Section 24 hits mortgage interest and rental profit is taxed at your marginal Income Tax rate.
- Company (SPV): full interest deductibility, potentially lower tax on retained/reinvested profit, easier to bring in partners or pass on shares — but you pay Corporation Tax and then tax again to extract money (double tax), plus accountancy and admin costs.
- Financing: company BTL mortgages are widely available now but can carry slightly higher rates and often require personal guarantees.
- Moving later is costly: transferring personally-owned property into a company is a sale — triggering SDLT and CGT — so decide early.
There is no universal answer
A basic-rate taxpayer with one low-geared property may be better off personally. A higher-rate taxpayer building a geared portfolio to reinvest is often better in a company. Model your own numbers with an accountant before committing.
Here is the difference in numbers for a higher-rate taxpayer with a geared property: £12,000 rent and £6,000 of mortgage interest. Personally, Section 24 means the interest is not a full deduction — you are taxed on the whole rent and only get a 20% credit. In a company, interest is fully deductible before tax. The gap is what drives so many landlords into an SPV.
Worked example — higher-rate landlord, £12k rent, £6k interest
Annual tax on the same geared property
The company figure is before you take money out — extracting profit as dividends is taxed again, which is why the answer still depends on whether you reinvest or spend the income.
Step 3 — Decide based on your situation
Ask: What is my income tax band? How much will I borrow (how exposed am I to Section 24)? Will I keep profits in the business to reinvest, or take them as income now? How long will I hold? Am I building a portfolio to pass on? Your answers point toward one structure. This is genuinely worth paying an accountant to model for your specific case.
Step 4 — Set up the company (if you choose it)
- Incorporate an SPV limited company at Companies House, using the SIC codes lenders expect for property (e.g. 68209 / 68100 / 68320).
- Set up a business bank account and appoint a property-savvy accountant.
- Arrange company (rather than personal) BTL mortgages — expect personal guarantees.
- Keep proper company accounts, file annually at Companies House and with HMRC, and run everything through the company.
Step 5 — Apply it consistently across your strategy
Once chosen, buy new property under that structure from the start to avoid costly transfers later. The same structure question runs through every strategy — buy-to-let, HMO, BRRR and development — so getting it right early shapes your whole portfolio. Revisit it with your accountant as your income and goals change.
Ownership-structure mistakes to avoid
- Defaulting to personal ownership as a higher-rate, geared landlord and quietly overpaying tax for years under Section 24.
- Rushing into a company for a single low-geared property, where the admin and double-tax outweigh the benefit.
- Buying personally then trying to move into a company later — that is a sale, triggering SDLT and CGT.
- Ignoring the second tax layer: profit is cheap inside a company but taxed again when you extract it as dividends.
- Setting up the SPV with the wrong SIC codes or no property-savvy accountant, causing mortgage and filing problems.