UK Property Tax Structure Comparison
Limited company vs personal name: when does incorporation pay?
Section 24 forced this question on every UK landlord above 1-2 properties. We model the tipping point with five worked tax examples and the structural costs you can't dodge by switching.
The Section 24 reset
Why this question dominates UK landlord planning
Before April 2017, UK landlords deducted mortgage interest as a normal expense. Section 24 phased that out across 2017-2020. Today, personal-name landlords get only a 20% basic-rate tax credit on mortgage interest. For a higher-rate taxpayer with £20,000 of annual mortgage interest, that's an effective £4,000 per year of additional tax compared to pre-2017 rules.
The result: limited-company (SPV) ownership now dominates new portfolio purchases. By 2024 over 70% of new BTL mortgage applications were limited-company, according to UK Finance. But incorporation isn't a one-way ticket. It costs more upfront, locks profits inside a structure that has its own extraction tax, and adds an SDLT 5% surcharge from the very first property. Below is the full structural comparison and the worked numbers.
The 11-row structural comparison
Side by side
| Factor | Personal name | Limited company (SPV) |
|---|---|---|
| Income tax basis | Rental profit added to your other income, taxed at marginal rate (20%, 40%, 45%) | Corporation tax on company profit (25% main rate; 19% small profits up to £50k) |
| Section 24 (mortgage interest relief) | Restricted to 20% basic-rate tax credit only | Fully deductible as business expense, no restriction |
| SDLT 5% surcharge | Applies if you already own a property | Always applies, from £1, including first acquisition |
| Mortgage availability | 60+ lenders, lowest rates | 30+ specialist lenders, 0.3-0.6% rate premium |
| Setup cost | None | £12-£500 incorporation, £400-£800/yr accountant |
| Ongoing admin | Self-Assessment | Companies House filing, corporation tax return, payroll if directors paid, statutory accounts |
| Profit extraction | Direct (already personal income) | Salary, dividends or director loan, each with tax treatment |
| CGT on sale | 18%/24% personal CGT, £3,000 annual exempt amount | 25% corporation tax on gain (no CGT allowance), then dividend tax to extract |
| Inheritance tax (IHT) | 40% above nil-rate band; rental property fully exposed | Shares may qualify for Business Property Relief in some structures (specialist advice required) |
| Refinancing flexibility | Standard remortgage | More complex, but commercial portfolio products available |
| Best for | Basic-rate taxpayers with 1-2 properties; non-resident with no UK income | Higher and additional-rate taxpayers; portfolio builders; multi-property families |
Worked examples
What this looks like in £
Single £200k Manchester 1-bed BTL. £150k mortgage at 5.5% interest-only, £900/month rent, £1,200 management and maintenance per year, £400 insurance and ground rent.
- Annual rent: £10,800. Annual mortgage interest: £8,250. Other costs: £1,600. Pre-tax cashflow: £950.
- Basic-rate taxpayer (personal): Tax on £9,200 profit (rent minus non-interest costs) = £1,840. Mortgage interest credit £1,650. Net tax: £190. After-tax cashflow: £760.
- Higher-rate taxpayer (personal): Tax on £9,200 profit = £3,680. Mortgage interest credit £1,650. Net tax: £2,030. After-tax cashflow: -£1,080 (loss).
- Limited company (SPV): Tax on £950 profit (rent minus all costs including interest) at 19% = £180. After-tax retained profit: £770. The same outcome regardless of director's personal tax band, until profits are extracted.
On this single-property basis, a higher-rate taxpayer is £1,850/year better off in an SPV. Across a 5-property portfolio that's £9,250/year. The SPV easily covers its £600/year accountant cost above 2 properties for a higher-rate taxpayer; the structure is ROI-positive from property one when held long enough.
The picture inverts for basic-rate taxpayers buying just 1-2 properties: the structural costs (incorporation, accountant, SDLT 5% from £1, slightly higher mortgage rate) typically outweigh the corporation tax saving until incomes rise into higher-rate band.
Frequently asked
Limited company vs personal name FAQ
Related reading
Continue your research
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Model SDLT including the 5% surcharge that applies to all SPV purchases.
ReadFree guide
Personal Name vs Limited Company
- Full side-by-side tax comparison of both ownership structures
- When incorporation actually saves money, and when it costs you
- SDLT, mortgage rate and accountancy cost breakdown
- Section 24, CGT and profit-extraction explained
Next Step
Modelling personal name vs SPV?
Send us your tax band, current portfolio, and 5-year capital deployment plan. We'll model both routes side by side with worked numbers, and introduce you to a specialist BTL tax accountant if needed.
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