Should you hold UK property personally or through a UK limited company? The tax, finance and practical differences, side by side.
One of the questions investors ask most often is whether to buy UK property in their own name or through a UK limited company. Both are possible, and the right answer depends on your income, your plans and where you live.
The question became more important after changes to the taxation of mortgage interest, phased in between 2017 and 2020. Before then, individual landlords could deduct all of their mortgage interest from rental profits. Now they receive only a tax credit at the basic rate of 20%. This affects higher rate taxpayers most, and has led many investors to consider a company structure.
Buying in your own name
Buying personally can still be the better choice, particularly for a single property or for investors in a lower tax band.
Advantages
- A wider choice of mortgages, usually at lower interest rates
- No company accounts or annual filings, so less administration
- Simple to understand and to manage
Disadvantages
- Rental profit is taxed as personal income, at rates from 20% to 45%
- Mortgage interest is not fully deductible; only a 20% tax credit applies
- The effect grows as you add more properties
Buying through a limited company
A company structure often suits investors who plan to build a portfolio, expect strong rental income, or want to reinvest their rental profits.
Advantages
- Mortgage interest is deducted in full as a business cost
- Profits pay corporation tax at 19% to 25%, which can be lower than personal income tax rates
- Profit kept in the company is not taxed again, so it can be reinvested before personal tax
- Shares can make succession planning more flexible
Disadvantages
- Company mortgages are usually more expensive and there are fewer lenders
- Annual accounts, a corporation tax return and accountancy fees every year
- Taking profit out personally means a second layer of tax, through salary or dividends
- Moving a property you already own into a company can trigger Stamp Duty and Capital Gains Tax, so it can be costly
At a glance
| Criterion | Personal name | Limited company |
|---|---|---|
| Tax on rental profit | Income tax, 20% to 45% | Corporation tax, 19% to 25% |
| Mortgage interest | 20% tax credit only | Fully deductible |
| Buying more property | From profit after tax | From profit before personal tax |
| Mortgage choice | Wide, usually cheaper | Narrower, usually dearer |
| Administration | Minimal | Annual accounts and filings |
| Succession | Transfer of the property | Transfer of shares, more flexible |
Investors living in Turkey
Buyers who are not UK resident pay a 2% Stamp Duty surcharge on top of the standard rates, whether they buy personally or through a company. If you plan to keep your rental income in the UK and reinvest it, a company can be an advantage. The UK and Turkey have a double taxation agreement, so your tax position in both countries should be looked at together.
So which is better?
Buying in your own name may suit you if this is your first and only planned purchase, the rental income is modest and you prefer less administration. A company may suit you if you plan several purchases, expect higher income or want to reinvest. The decision is not only about tax rates: your residence, income, goals and future portfolio all matter. We recommend reviewing the options with qualified legal and accounting advisers before you buy, and we are happy to arrange this.
This guide is general information at the time of writing and not tax advice. Rates change with UK budgets.
