Quick Summary
- New tax increases on property income — the Budget raises income-tax rates on rental (and other property) income. GOV.UK+2Reuters+2
- Potential savings with a Limited Company (SPV) — holding rental properties in a corporation often means profits taxed at corporation-tax rates (lower than higher-rate income tax), full mortgage interest relief, and easier reinvestment into new properties. property investors network+2Integro+2
- Important downsides — transferring a property to a company triggers Stamp Duty Land Tax (SDL T), possible Capital Gains Tax (CGT), and higher mortgage costs + additional admin/ compliance. NRLA+2Tax Accountant+2
- Who it suits most: landlords with multiple properties and higher-rate tax status, who plan to hold long-term or expand.
1. What’s changed in Budget 2025?
In the latest Budget, the government confirmed a rise in the tax rate on “property income” — the new rules will apply from April 2027. Financial Times+1
That means landlords receiving rental income taxed under standard income-tax rules (as individuals) could face a heavier tax burden — especially if they’re in the higher or additional rate band.
Given this shift, many are re-evaluating whether individual ownership remains the most efficient structure.
2. How Ltd-Company Ownership Can Help
➕ What you gain
- Lower corporation tax vs. high-rate income tax: Rental profits are taxed as business profits — often cheaper if you’re a higher-rate earner. BuyAssociation Group+1
- Full mortgage interest relief: Unlike individuals (where interest relief is limited), companies can deduct full interest as a business expense. property investors network+1
- Better for portfolios: If you plan to buy several properties, interest-rate relief + lower corporation tax can significantly improve cash flow and returns. property investors network+1
- Easier reinvestment: Profits retained in the company can be used for further purchases — without triggering personal tax. BuyAssociation Group+1
🛑 What to check carefully
- Upfront costs on transfer: Moving an existing property to a company triggers SDLT (on market value, not original price), and often CGT on any gain. NRLA+2Starck Uberoi Solicitors & Advocates+2
- Higher lending costs & fewer lenders: Company buy-to-let mortgages tend to carry higher interest rates than individual BTL deals. Starck Uberoi Solicitors & Advocates+1
- Ongoing admin burden: Annual accounts, corporation tax returns, and compliance duties — might be overkill for a single property. Integro+1
- Double-tax on withdrawal: Taking profits out as dividends triggers dividend tax on top of corporation tax, which may erode savings. property investors network+1
3. When It Makes Most Sense to Incorporate
| Scenario | Ltd-Company likely advantageous |
|---|---|
| You’re in a higher income tax band (40 % or 45 %) | ✅ Yes — company tax typically lower than higher-rate income tax |
| You own (or plan to own) 3+ properties | ✅ Yes — interest relief + efficient reinvestment stacks up over a portfolio |
| You want to reinvest profits, buy more properties, scale portfolio | ✅ Yes — profits stay within company, no personal withdrawal needed |
| You want to hold on long-term, maybe exit later via shares | ✅ Yes — easier estate planning via shares than physical property transfer |
4. How to Transfer Property to a Ltd Company — Step-by-Step
- Get a market valuation — stamp duty and CGT are based on current market value, not what you paid.
- Speak to your solicitor & accountant — they’ll check tax position, SDLT, possible reliefs (limited by tight rules these days).
- Notify existing mortgage lender — most need consent; you’ll need a new company BTL mortgage or pay off the old loan.
- Register the transfer & refinance — new company becomes landlord in title deeds and tenancy agreements.
- File annual accounts & taxes — PAYE/NI, corporation tax, dividend distribution if you draw profits.
5. Is There Still a Rollover Option for CGT & SDLT?
Yes — but only if certain conditions apply. If the transfer qualifies as a genuine “business trade” (with multiple properties and active management), Incorporation Relief might defer CGT until you sell the shares — but recent changes have tightened eligibility. PKF Smith Cooper+1
If you’re close to “one-property-owner,” the benefit may not justify the costs.
6. What Landlords Should Do Now
- Run the numbers: Compare expected personal-tax vs company-tax outcome at various rent levels.
- Forecast your portfolio: If you plan future purchases, a company structure may pay for itself over time.
- Get valuations done early: Property values are being revisited — this affects SDLT & CGT on transfer.
- Seek full tax/ mortgage advice: This guide is for information only — we can introduce FCA-authorised advisers who handle company-structure mortgages.
📞 Thinking of Incorporating Your Rentals?
We don’t give regulated tax or mortgage advice — but we can connect you to qualified property-finance and tax advisers who specialise in Ltd-company portfolios.
Click below for a no-obligation consultation: