Since the restriction on mortgage interest relief for personal landlords (Section 24), an increasing number of investors have moved their portfolios into limited companies. The logic is straightforward: a company pays corporation tax at 19–25% on rental profits, while a personal landlord can face effective rates above 40% once the mortgage interest restriction is applied. For higher-rate taxpayers with leveraged portfolios, the difference is significant.
But incorporation is not a free win. There are real costs and trade-offs that don’t appear in the comparison tables you find online. Transferring existing property into a company triggers SDLT on the market value and potentially CGT on the gain. Mortgage products for limited companies are fewer, more expensive, and the arrangement fees are higher. Extracting profits from the company — whether through salary, dividends, or director’s loans — creates a second layer of tax that needs careful planning. And once you’ve incorporated, it’s not easily reversible.
Done right, incorporation can improve your tax position materially over the life of a portfolio. Done wrong, it can create a tax bill that wipes out years of returns. Before advising on incorporation, we model SDLT exposure on transfer, latent CGT, financing costs and lender consent, corporation tax on projected profits, extraction strategy (salary, dividends, pension contributions), and expected holding period. You get a clear written recommendation: yes, no, or not yet.
We prepare a detailed comparison: personal ownership versus limited company, modelling SDLT on transfer, CGT deferral or crystallisation, mortgage refinancing implications, corporation tax liability, dividend extraction costs, and the break-even point. You get a clear written recommendation based on your specific portfolio.
Moving property into a company triggers SDLT and potentially CGT. We calculate the exact cost before you commit, and identify any available reliefs (incorporation relief, group relief) that could reduce it.
We register the company, set up the accounting structure, and handle annual accounts, corporation tax returns, and confirmation statements. Everything filed on time, every year.
The most tax-efficient way to get money out of your company depends on your personal income, other directorships, and future plans. We advise on salary, dividends, pension contributions, and the interactions between them.
If you’re buying new property rather than transferring existing, a Special Purpose Vehicle (SPV) avoids the transfer costs entirely. We set these up and advise on the optimal structure.
Schedule a free 30-minute consultation to discuss your personal tax compliance.
