Buy-to-let

Buy-to-let in your personal name vs a limited company

How you hold a buy-to-let property, in your own name or through a limited company, has significant tax and mortgage implications. The right structure depends on your tax position, how many properties you hold, and your long-term plans. This is one to take proper advice on, including from an accountant, because the wrong choice is expensive to unwind.

Holding in your personal name

Owning a buy-to-let personally is simpler and usually has lower mortgage rates and fees. The catch is tax: since the phasing out of full mortgage interest relief, individual landlords can no longer deduct mortgage interest as a straightforward expense. Instead you get a basic-rate tax credit, which can push higher-rate taxpayers into a much less favourable position. Rental profit is taxed at your personal income tax rate.

Holding through a limited company

Owning through a limited company (often a special purpose vehicle, or SPV) means rental profit is subject to corporation tax rather than income tax, and mortgage interest is generally a deductible business expense. This can be more tax-efficient for higher-rate taxpayers and buy to let property portfolio landlords. The trade-offs: limited company buy-to-let mortgages often have higher rates and fees, there is more administration and accountancy cost, and extracting profit from the company has its own tax implications.

Which tends to suit whom

Basic-rate taxpayers with one or two properties: personal ownership is often simpler and fine
Higher-rate taxpayers: the limited company route is frequently more tax-efficient, but not always
Buy to let property portfolio landlords building a larger holding: a company structure often makes more sense
Those planning to reinvest profits rather than draw them out: company structure can be efficient
Those wanting maximum simplicity and lowest rates on a small holding: personal ownership

Why advice matters here

This decision sits at the intersection of mortgage and tax, and the numbers vary a lot by individual circumstance. The mortgage rate difference, the tax difference, the cost of running a company, and your long-term plans all feed into it. We work alongside your accountant so the mortgage structure and the tax structure line up. Getting this right at the outset saves a great deal later.

Important. Tax treatment depends on individual circumstances and may change. This is general information, not tax advice. Always consult a qualified accountant or tax adviser before deciding how to hold a buy-to-let property. Your property may be repossessed if you do not keep up repayments on a mortgage secured against it.

Not sure which is right for you?

That is exactly what we are here for. A quick conversation with an adviser will give you a clear answer based on your situation.

Discuss my buy-to-let options Speak to a mortgage adviser

Major Money Matters Ltd is an appointed representative of Sesame Ltd. The FCA does not regulate some forms of buy to let mortgages.

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