With the number of limited company landlords on the rise, you might be asking yourself, “Should I be joining the trend?”. It’s a fair question that many landlords are currently weighing up.
Buying property through a limited company can benefit buy-to-let investors by easing the financial burden and saving money. But it doesn’t suit everyone. If you only plan to rent out one or two properties, the additional tax liabilities, complex mortgage process, and extra admin may outweigh the benefits.
In this blog, our experts uncover the pros and cons of buying investment property through a limited company vs. in your personal name. Understand your motivations and which pathway is better for you.
Need more advice for a future property investment? Simmonds Mortgage Services has access to the entire mortgage market, offering a range of specialist mortgage services for limited company buy-to-let investors and those looking to purchase in their own name. Contact us today to learn more.
Buying property in your personal name
When you buy property in your name, you are committing to taking on the financial liability. You’ll have to pay Income Tax on any rental income as well as Capital Gains Tax when you eventually come to sell the property. However, you do have a Capital Gains Tax allowance of £3,000 (2025/2026).
If it is a personal purchase and you live in the property as your main home, then you’ll get certain tax benefits when you sell, such as Private Residence Relief (PRR), which exempts you from paying Capital Gains Tax.
When renting out property you own in your name, you’ll receive the rental income through your personal bank. If you’re a basic rate taxpayer from employment or self-employment earnings, then the additional income from renting property could push you into a higher tax band. Below shows the government tax rates for all taxable income (2025/2026).
| Band | Taxable Income | Tax Rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 to £50,270 | 20% |
| Higher Rate | £50,271 to £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Benefits of buying property personally
- Access to better interest rates
- Easier mortgage application process
- Simpler taxes
- Less financial admin
Drawbacks of buying property personally
- Personally liable for debts and legal disputes
- Income Tax and National Insurance payments are higher for higher earners
- Capital Gains Tax liabilities
- Unable to deduct the entire mortgage interest payments from rental income
Buying property through a limited company
Buying property through a limited company separates your personal finances and assets from the property. Instead, the company is responsible for the mortgage and any taxes due.
When setting up a rental business this way, you’ll pay Corporation Tax instead of Income Tax, which, depending on your total profits, usually works out to be lower. This is why many landlords choose a limited company setup, especially if they want to grow their rental business. By paying Corporation Tax as a limited company, you free up your Income Tax allowance, making space for employment income.
Benefits of using a limited company to purchase property
- Protection for personal finances, assets, and legal issues
- Corporation Tax instead of Capital Gains Tax
- Tax relief for mortgage interest payments and other financing costs
- Reduce the Inheritance Tax burden
- Better for growing a property portfolio
- Transfer funds from other Limited Companies you own for the deposit (Intercompany loans)
Drawbacks of using a limited company to purchase property
- Higher costs for basic rate taxpayers
- Stamp Duty Land Tax surcharge
- Additional tax on dividend income
- Additional legal responsibility and administrative tasks with Companies House
- Complex mortgage process
When to buy investment property in a limited company
Buying rental property through a limited company offers substantial tax savings for high earners and helps with tax planning for long-term wealth. It’s also a smart move if you’re planning to reinvest profits into future property purchases, as it reduces further tax obligations.
But timing is key. If you’re early on in your journey or only looking to buy one or two properties, purchasing in your own name is likely more cost-effective. Plus, you’ll have less legal admin. On the flip side, if you’re looking to grow your property portfolio or have noticed your taxable income creeping up into the higher tax bands, then it could be time to consider a limited company setup.
Can I transfer my personally owned property to a limited company?
If you already have property in your personal name and want to transfer it over to a limited company, you can do so, but it may come with some tax implications. Buying property directly through a limited company is usually cheaper and has less administrative hassle.
It’s always a good idea to get advice from your accountant before transferring property. They will advise you on your tax liabilities and personal circumstances.
Learn more about how to set up a limited company as a landlord.
How Simmonds Mortgage Services can help you with buy-to-let property
Simmonds Mortgage Services helps individual and limited company buy-to-let investors find perfect mortgages. With our extensive knowledge and professional relationships with specialist buy-to-let lenders, we’ll help you find competitive deals and prepare mortgage applications for a swift process.
Call us today on 01184 693037 or book a meeting online to talk to a mortgage broker.
Frequently asked questions about buying investment property
Would purchasing a property through a limited company preclude me from first-time buyer benefits?
First-time buyer benefits are intended for individuals rather than companies to help them get onto the property ladder. Rental income is used to asses the maximum loa. You can be considered a first-time buyer when buying investment property through a limited company, but you will still have to pay Stamp Duty and may face higher interest rates from lenders.
How does mortgage interest relief work in a limited company?
Buying and renting property as a limited company means you can deduct mortgage interest from your taxable income, reducing the total amount and resulting in a lower tax bill.
