Not sure whether to buy through a limited company or in your personal name? Here is what actually matters — tax, mortgages, and the question most landlords get wrong.
Most landlords are asking the wrong question. It is not "limited company or personal name?" — it is whether they understand enough about both to make the decision at all.
Until 2017, landlords could offset 100% of their mortgage interest against rental income before paying tax. That relief has since been phased out for individual landlords and replaced with a basic rate tax credit — worth just 20%, regardless of what rate you actually pay.
For higher and additional rate taxpayers, this was seismic. If you are paying 40% or 45% tax on your income, you are now paying income tax on rental income that your mortgage interest is consuming. The mortgage cost no longer reduces your taxable income — it only earns you a 20p credit for every pound of interest.
That single change is why limited company structures became the dominant conversation in buy-to-let — and why the question of which structure to use is now one of the most consequential decisions a landlord makes.
When HMRC phased out mortgage interest relief for personal landlords
A limited company pays corporation tax on its profits — currently 25% for most businesses, with a lower rate for smaller profits. Crucially, mortgage interest remains fully deductible as a business expense inside a company. For higher rate taxpayers carrying meaningful mortgage debt, that difference can be very significant.
There is also a compounding argument. If you are building a portfolio rather than drawing income, profits left inside the company are taxed at corporation tax rates, not income tax rates. That makes reinvesting and compounding returns more tax-efficient over time.
The lender landscape has kept pace. The panel of lenders offering limited company buy-to-let mortgages has grown considerably, and whilst rates have historically been slightly higher than personal name mortgages, that gap has narrowed as the market has matured.
The question is not which structure sounds better on paper. It is which structure fits your tax position, your timeline, and the mortgage picture that comes with it.
Personal ownership is simpler, cheaper to set up, and comes with fewer ongoing obligations. No company accounts to file, no corporation tax returns, no director's responsibilities, no accountancy fees for a separate entity.
The personal buy-to-let mortgage market is also larger and more competitive. Rates have historically been slightly lower, and lenders can be more flexible on income assessment — particularly useful if your income picture is complex.
If you are a basic rate taxpayer and expect to remain one, the tax advantage of a company structure is substantially smaller. The added complexity and cost may simply not be worth it.
There is a capital gains dimension too. When you eventually sell a property held personally, you benefit from a higher personal capital gains tax allowance than a company holds. Companies pay corporation tax on gains with no annual exempt amount.
Transferring an existing property from personal ownership into a limited company is treated as a sale for both stamp duty and capital gains tax purposes. That can create a substantial tax bill — sometimes making the transfer uneconomical even if the ongoing structure would be more efficient. For existing portfolios, the practical answer is often: keep what you have where it is, and use a company for anything new going forward.
If you are unsure of the answers — or you would like a second opinion on what the mortgage picture looks like on each side — I am happy to talk it through. No obligation. No jargon. Just an honest conversation about what actually makes sense for your situation.
Lawes Financial Limited (FCA No. 1046161) is an appointed representative of Andrew Charles Consulting Ltd, authorised and regulated by the Financial Conduct Authority. This article is for information purposes only and does not constitute financial or tax advice. Always seek professional advice tailored to your individual circumstances.
I can show you what the mortgage picture looks like on both sides — rates, lender options, how your income will be assessed — so you can make the decision with the full picture in front of you, not half of it.