Choosing how to structure your Buy to Let investment, whether in your own name or via a limited company, is one of the most significant financial decisions a landlord can make.
Your choice will depend on your personal income, long-term goals, and how you plan to grow or pass on your property portfolio.
But with tax rules and market conditions constantly evolving, it’s essential to think not just about what works now but what will still work five, ten, or twenty years down the line.
Since 2017, tax changes have reshaped the landscape for individual landlords. Section 24 of the Finance Act 2015, fully implemented by April 2020, removed the ability to deduct full mortgage interest from rental income for personal investors.
Instead, landlords now receive a flat 20% tax credit, regardless of their actual tax bracket. This shift has had a major impact:
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Higher tax bills for many landlords, especially those with large mortgages.
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Some lower rate taxpayers pushed into higher brackets.
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Reduced profitability, making some portfolios financially unsustainable.
In contrast, limited companies can still deduct full mortgage and finance costs, making this structure more appealing, particularly for higher rate taxpayers and those with larger portfolios.
The pros and cons of investing via a limited company
Pros:
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Full mortgage interest relief: All finance costs are deductible.
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Lower tax rates: Corporation tax (currently 25%) is often lower than personal income tax.
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Estate planning: Easier to pass on property wealth tax-efficiently.
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Portfolio management: Streamlined for landlords with multiple properties.
Cons:
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Upfront costs: Transferring properties may trigger Stamp DUty Land Tax (SDLT) and Capital Gains Tax (CGT).
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Mortgage rates: Company Buy to Let loans can be pricier and harder to secure.
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Ongoing admin: More paperwork, accountancy fees, and compliance.
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Dividend tax: Income is taxed again when drawn from profits.
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Limited flexibility: Reversing the structure later is complex and costly.
What’s right for you?
There’s no universal answer. The best structure depends on:
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Your current income and tax position.
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How long you plan to hold the property.
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Whether you’re building a portfolio.
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Your plans for passing on property wealth.
If you’re unsure which route suits your goals, speaking with a local property expert or financial adviser can help clarify your options. A well-informed decision today could save you thousands, and set your investment up for long-term success.
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The Reeds Rains Content Marketing Team
