Should landlords set up a limited company to manage their property portfolio?
Financial planning
As the tax burden increases, more landlords are choosing limited company structures. Discover the advantages and drawbacks of setting up a company to manage your property portfolio.
According to a report from Paragon Bank (16 March 2026), 43% of mortgaged buy-to-let property purchases in 2025 were through a limited company. This compares to 35% in 2024 and just 7.5% in 2018.
So, as a landlord, is a limited company something you should consider? As always, it will depend on your situation. Weighing up the advantages and drawbacks could help you assess what’s right for you.
The advantages of using a limited company as a landlord
A limited company could separate your property portfolio from your personal assets
When you’ve purchased property through a limited company, it’s owned by the company rather than you. As a result, it could be a useful way to separate property from your personal assets and reduce your personal liability. However, you should note that your personal assets could still be at risk if you’ve used them as security.
A limited company pays tax on profits instead of income
Rather than paying tax on income, a company pays Corporation Tax on its profits. The rate of Corporation Tax could be lower than Income Tax. In 2026/27, the main rates of Corporation Tax are 19% and 25%. The rate your company pays will depend on the total profits. A specialist tax adviser could help you assess how much tax your limited company could pay.
It may be more tax-efficient to pass on assets
Forming a limited company may make sense as part of your overall estate plan. In some cases, you could qualify for Inheritance Tax (IHT) relief by leaving business assets to beneficiaries.
If IHT is a concern, there are often several ways you could reduce a potential bill. So, you might benefit from speaking to a financial adviser to explore alternative options if IHT is a key reason why you’re considering a limited company.
You might be able to access business-specific funding
Lenders provide loans that are only accessible to registered businesses, which might offer more competitive interest rates. Depending on your needs, this could make a limited company an attractive option.
The drawbacks of using a limited company as a landlord
You could end up paying more tax overall
While a company’s profits may be taxed at a lower rate than you’d pay in Income Tax, you may still pay personal tax when drawing an income or receiving dividends. In addition, when selling assets, you wouldn’t benefit from the personal Capital Gains Tax allowance.
So, while a limited company could be tax-efficient, you need to consider your personal circumstances, long-term plans, and income needs.
A limited company may have additional running costs
There will be costs associated with setting up and running a limited company, which might mean it’s not a suitable option for you. For example, you’ll need to complete annual accounts and company tax returns. While it is possible to do these tasks yourself, you might benefit from hiring an accountant to handle them instead.
You may have access to fewer mortgage options through a limited company
If you’ll be using mortgages to buy further properties, you should note that you might have access to fewer options when using a limited company. In addition, mortgages given to a buy-to-let business may have higher fees and interest rates.
Running a business may be more complicated
Compared to operating as a sole trader, running a business is often more complex, and you’ll have more responsibilities. As a result, you might want to consider the time it’ll take to manage a limited company and whether you’d need to pay for additional professional support.
Contact us
As mortgage advisers, we could help you secure a buy-to-let mortgage and potentially save you money with a lower interest rate. Please get in touch if you’d like to talk.
If you’re interested in specialist tax advice, we could refer you to a trusted adviser.
Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
The Financial Conduct Authority does not regulate buy-to-let (pure) and commercial mortgages.
Your property may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
The Financial Conduct Authority does not regulate tax planning or estate planning.