Is moving your rental property into a company the right move?

Landlords are constantly dealing with several financial challenges. The tax bills keep creeping up, mortgage interest relief has been stripped back, and you are wondering if there is a smarter way to hold your investments.  

Transferring your properties into a limited company is an option to mitigate these problems, but is it worth it?  

Why do landlords go down the company route? 

For many, it is all about tax efficiency.  

Lower tax rates 

If you own property personally, rental profits are taxed at Income Tax rates of 20, 40, or even 45 per cent.  

Companies, however, pay Corporation Tax, currently at 19 per cent for profits under £50,000 and 25 per cent for higher amounts. 

Full mortgage interest relief 

Unlike individual landlords, companies can deduct mortgage interest in full as a business expense. This can be a game-changer for those with large loans. 

Retained profits 

If you don’t need to take all the income out, leaving it in the company allows for reinvestment without the tax hit you would face as an individual. 

Potential estate planning benefits 

Passing down shares in a company can sometimes be more tax-efficient than transferring physical property. 

The tax traps to watch out for 

Sounds good so far, right? However, there are a few hurdles to consider: 

• Stamp Duty Land Tax (SDLT) – Moving a property into a company is treated as a sale, so you will need to pay SDLT, including the five per cent surcharge for additional properties. 

• Capital Gains Tax (CGT) – If your property has increased in value, you may owe CGT on the transfer, and the tax-free allowance is now just £3,000. 

• Getting money out of the company – Corporation Tax may be lower, but extracting profits via dividends or salary still comes with a tax bill. 

Upcoming tax changes to keep in mind 

• SDLT thresholds are falling in April 2025, meaning higher upfront costs for property transfers. 

• The non-dom tax regime is ending, which could impact foreign investors using company structures. 

• Further tax reforms could be on the way, making it important to keep an eye on Government policy. 

So, should you make the move? 

If you own multiple properties, are in a high tax bracket, and want to reinvest profits, a company structure could be a good fit.  

However, if you only have one or two rentals and rely on the income, the costs might outweigh the benefits. 

Before making any big decisions, it is worth running the numbers with an expert.  

Get in touch with our team of accountants today to explore your options.