Should You Buy Property in Your Own Name or Through a Company?

Landlords and property investors face a crucial decision: Should I hold property personally or through a limited company? The answer isn’t always straightforward.

With major tax changes, including the April 2025 Stamp Duty Land Tax (SDLT) update, and the impact of Annual Tax on Enveloped Dwellings (ATED), the decision can significantly affect your cash flow, tax liability, and long-term return on investment.

Here's a clear breakdown to help you weigh up the best route for your circumstances.

1. Income Tax vs Corporation Tax on Rental Profits

Individuals:

• Taxed under income tax rules:

  • 20% basic rate

  • 40% higher rate

  • 45% additional rate

• Profit includes rental income minus allowable expenses

  
  

Companies:

• Pay Corporation Tax:

  • 19% (profits under £50,000, tapered up to 250k)

  • 25% (main rate)

• All running costs, including mortgage interest, are fully deductible

Key benefit for companies:

Full mortgage interest relief and lower tax on retained profits

Key drawback:

Profits withdrawn personally are taxed again as dividends or salary

2. Mortgage Interest Relief

Since 2020:

Individuals:

• Can no longer deduct mortgage interest in full

• Receive a 20% basic rate tax credit instead

• This means that individuals subject to tax at the higher rate (40%) will have tax to pay.

  
  

Companies:

• Can still deduct 100% of mortgage interest

A significant advantage if your portfolio is financed by borrowing

3. Capital Gains Tax (CGT)

 Individuals: 

• Pay CGT when selling a buy-to-let:

  • 18% (basic rate band)

  • 28% (higher/additional rate)

• Can use the £3,000 CGT annual exemption (2025/26)

  
  

Companies:

• Pay Corporation Tax on chargeable gains at up to 25%

• No CGT allowance

• No access to reliefs like Private Residence Relief

• No Indexation allowance - was abolished in 2018

Transferring property to a company can trigger both CGT and SDLT, so timing is crucial and always seek advice from a professional before making any decision.

4. Annual Tax on Enveloped Dwellings (ATED)

If a company owns a UK residential property worth £500,000 or more, it may be subject to ATED even if it's rented out.

2025/26 ATED charges:

Property Value	Annual ATED Charge
£500,001 – £1 million	£4,400
£1m – £2 million	£9,000
£2m – £5 million	£30,550
£5m – £10 million	£71,500
£10m – £20 million	£143,550
£20m+	£287,500

Reliefs exist if:

• The property is let to third parties on a commercial basis

• Used for property development

• Held as part of a rental business

*** However, even if relieved, an ATED return must still be submitted annually to HMRC.

5. Stamp Duty Land Tax (SDLT) – Company vs Individual

April 2025 Update – Reduced Thresholds

From 1 April 2025, SDLT thresholds fall back to pre-September 2022 levels.

Standard residential rates (individual’s first home):

Portion of Price	Rate
£0 – £125,000	0%
£125,001–£250,000	2%
£250,001–£925,000	5%
£925,001–£1.5m	10%
£1.5m+	12%

Additional Property (e.g. Buy-to-Let) — Individual:

• Above rates plus 3% surcharge

  
  

Companies:

• Flat 3% surcharge on top of the normal residential rates (applies to all purchases)

• Additional 15% SDLT applies to residential properties over £500,000, unless the company qualifies for relief (e.g. rental business)

Example	Property Value: £600,000
Individual (second home)	£38,000 SDLT
Company (no relief claimed)	£90,000 (15% flat rate)
Company (rental relief claimed)	£38,000 (same as individual second home)

Key Point: Companies buying residential properties >£500,000 must claim an SDLT relief to avoid the punitive 15% rate.

6. Withdrawing Profits from a Company

A company may pay less tax on rental income, but profits aren’t automatically yours.

Dividends (2025/26):

• Taxed at:

  • 8.75% (basic)

  • 33.75% (higher)

  • 39.35% (additional)

• First £500 tax-free allowance

  
  

Salary:

• Can be paid through PAYE

• Could Trigger Income Tax + National Insurance

If you don’t need to access the profits immediately and want to reinvest, a company structure is often more efficient.

7. Inheritance Tax (IHT) Planning

• Personally held property: Full market value included in estate

• Company shares: May allow for gifting strategies, trust planning, and gradual transfer of wealth

• Still subject to complex anti-avoidance rules — specialist advice required

  
  

Summary: Company vs Individual Property Ownership

Area	Individual	Limited Company
Income Tax on rent	Up to 45%	19–25% Corporation Tax
Mortgage interest relief	20% tax credit only	Fully deductible
Capital Gains Tax	18–28%, £3k allowance	25%, no allowance
SDLT (Buy-to-let)	Standard rates + 3% surcharge	Same + 3%, or 15% over £500k without relief
ATED	Not applicable	Applicable over £500k unless relieved
Withdrawing profits	Immediate	Taxed again via dividends/salary
Admin & compliance	Simpler	More complex – accounts, ATED, filings
IHT planning flexibility	Limited	More scope (but complex)

Summary

A limited company may be more tax-efficient if:

• You're a higher-rate taxpayer

• You plan to grow a portfolio

• You want to reinvest profits

• You're comfortable with extra admin and compliance

  
  

Personal ownership may be simpler and better if:

• You only own 1–2 properties

• You need rental income now

• You want to avoid ATED and high SDLT rates

  
  

Need Help Deciding?

At MW Tax, we specialise in helping landlords and investors choose the most tax-efficient route. Whether you're just getting started or restructuring a multi-property portfolio.

We provide:

✔️ Expert advice on company vs individual ownership

✔️ ATED and SDLT compliance

✔️ Capital gains and IHT planning

✔️ Fixed, competitive fees

📞 Book a free discovery call today and let’s explore what’s best for you.