Setting Up A Limited Company For Property | Explained

Five years ago, the vast majority of landlords bought property in their own names. Now? They’re setting up a limited company for property quicker than you can say “mortgage interest relief”. What changed?

Tax changes happened. Big ones. And they’ve made setting up a property company UK far more appealing than it used to be.

The Tax Bit That Made Everything Different

It was the government that brought in Section 24 all those years ago, back in 2015. Sounds boring, right? But for landlords, it was a game changer. Until the introduction of Section 24, if you owned property in your own name, then you could deduct all of the mortgage interest from rental income before calculating tax. That ceased after Section 24 was fully implemented in 2020.

Nowadays, if you own property in your name as an individual, you will only be able to claim back 20% tax relief on your mortgage interest. So if you are a taxpayer paying 40% tax on income, you’re losing out massively. You owe tax on money you never saw because it went directly to the mortgage company.

Limited companies are not burdened by this limitation. They can still deduct the full amount of mortgage interest when calculating tax. That’s real money saved, especially if you have big mortgages.

What Corporation Tax Actually Costs In 2025

At the moment there’s sense in setting up a limited company for property tax because of the way corporation tax operates. The rates are as follows, effective November 2025:

• 19% for profits up to £50,000
• 25% for profits over £250,000
• Something in between if you’re making £50,000 to £250,000 (they call it “marginal relief”)

Compare that with income tax rates: 20%, 40% or 45%, depending on your overall earnings. If you’re someone who’s doing quite well for themselves already and your rental profits take you into the 40% bracket, then the concept of paying that at either 19% or 25% through a company starts to look attractive.

For example, your rental properties earn £60,000 profit each year. On 40% tax, as an individual, you’d pay £24,000. In a company at 25%, you would pay £15,000. That’s £9,000 saved. Every single year.

How Setting Up A Limited Company For Property Online Actually Works

The process isn’t as complicated as people think. You can do most of it online through Companies House’s website, and it costs about £12 if you do it yourself. Here’s what happens:

• You pick a company name. Check it’s available and not too similar to existing companies. Something like “Your Name Property Investments Ltd” usually works fine.
• Then you need a registered office address. This gets published publicly, so loads of people use their accountant’s address rather than their home. Your call.
• You’ll need at least one director (probably you) and at least one shareholder (also probably you, unless you’re including your spouse or kids for tax planning reasons).
• You choose an SIC code – that’s just telling Companies House what your business does. For property rental, it’s usually code 68209.
• Submit everything online, pay your £12, and within 24 hours you’ll have a company. Properly mental how quick it is.

The Mortgage Headache Nobody Mentions

Here’s where things get tricky. Getting a mortgage for setting up a company to buy property UK isn’t as straightforward as getting one personally.

Fewer lenders offer buy-to-let mortgages to limited companies. The ones that do usually charge higher rates – often 0.5% to 1% more than personal mortgages. They’ll also want larger deposits, sometimes 25% instead of 20%.

Worse, many lenders will ask for personal guarantees. That means if your company can’t pay the mortgage, you’re personally on the hook anyway. So the “limited liability” protection isn’t as protective as it sounds.

That said, if you’re building a decent-sized portfolio, the tax savings usually outweigh the higher mortgage costs. You just need to do the maths for your specific situation.

The Benefits Of Setting Up A Limited Company For Property Investment

Beyond the tax advantages, there are other reasons investors go this route:

Your personal assets are separate from the company’s assets. If something goes wrong with the property business, your personal stuff is protected (unless you’ve given personal guarantees, which brings us back to the mortgage issue).

It’s easier to bring in business partners. You just give them shares in the company. Way simpler than co-owning properties personally with all the legal faff that involves.

You can retain profits in the company and reinvest them without paying personal tax first. So if you want to grow your portfolio fast, you’re not constantly taking money out and getting taxed on it.

When you eventually want to pass the business on to your kids, it’s more straightforward. You can gift shares gradually, potentially reducing inheritance tax.

What Nobody Tells You About The Admin

Setting up a property company UK means more paperwork. A lot more. You’ll need to:

• File annual accounts with Companies House every year. Miss the deadline and you get fined.
• Submit a corporation tax return to HMRC. Different deadline from the accounts, which catches people out.
• Do a confirmation statement annually, telling Companies House nothing’s changed (or what has changed).
• If you pay yourself a salary, you’ll need to run payroll and submit RTI returns to HMRC.
• Keep proper records of everything. Who owns what shares, when directors were appointed, and company decisions made. It’s all got to be documented.

Most people hire an accountant to handle this stuff. Costs anywhere from £500 to £2,000 yearly depending on how complicated your property business is. That’s another cost to factor in.

When It Doesn’t Make Sense

Setting up a limited company for property rental isn’t right for everyone. If you’re only buying one or two properties and you’re a basic-rate taxpayer, the admin hassle and extra costs probably aren’t worth it.

If you already own properties personally, moving them into a company means selling them to your company. You’ll pay stamp duty again (ouch) and potentially capital gains tax if they’ve gone up in value. For many people with existing portfolios, the cost of transferring properties kills any future tax savings.

And if you want to live in one of your properties eventually, that’s complicated through a company. The company owns it, not you. You’d be renting from your own company, which creates weird tax situations.

The Practical Stuff Nobody Explains

Once your company’s set up, you need a business bank account. Don’t mix company money with personal money – that’s asking for trouble with HMRC.

You’ll probably want to take some money out for yourself eventually. You can do this through dividends (tax-efficient but you need profits first), salary (less efficient but creates pension contributions), or director’s loans (complicated and has tax implications if not done right).

Stamp duty still applies when your company buys property. You’ll pay the standard rates plus the 3% surcharge for additional properties, the same as individuals.

Your company’s details are public. Anyone can look up who the directors are, where the registered office is, and what profits you’re making. Some people don’t like that level of transparency.

Where Things Stand In November 2025

Corporation tax rates are locked in until at least April 2026. The government has confirmed they’re not changing them in the next budget. So if you’re setting up a limited company for property now, you know what tax rates you’ll pay for the next year and a bit.

The mortgage market for limited companies has actually improved over the past year. More lenders are offering company buy-to-let products, which means better rates and more choice than there were a few years back.

Interest rates generally are still higher than they were pre-2022, but they’ve come down from their peak. If you’re planning to borrow heavily, that’s worth considering in your calculations.

Should You Actually Do It?

Setting up a limited company for property makes sense if:

• You’re a higher or additional rate taxpayer
• You’re building a portfolio of multiple properties
• You want to retain profits and reinvest them
• You’re comfortable with extra admin (or paying someone to handle it)

It probably doesn’t make sense if:

• You’re only buying one or two properties
• You’re a basic-rate taxpayer
• You already own properties personally and the transfer costs are massive
• You can’t stand paperwork and don’t want to pay for an accountant

The tax savings can be substantial, but they’re not automatic. You need to actually run the company properly, keep records, file returns on time, and make sure you’re taking money out in the most tax-efficient way.

Most property investors who’ve done this say they wish they’d started sooner. But plenty of small landlords with one or two properties reckon it’s more hassle than it’s worth.

Work out your own numbers. Talk to an accountant who actually understands property tax (not all of them do). Then make a decision based on your situation, not what someone on a property forum reckons you should do.

The rules are complicated. The benefits are real. Whether it’s right for you depends entirely on what you’re trying to achieve and how much money you’re making from property. There’s no one-size-fits-all answer, which is annoying but true.

Tags: Corporation TaxHMRCMortgageProperty TaxSetting Up A Limited Company For PropertySetting Up A Limited Company For Property InvestmentSetting Up A Limited Company For Property OnlineSetting Up A Limited Company For Property Rental

James Carter

I’m James Carter, a seasoned content writer with over 5 years of experience working at The London Wire. My background in marketing and passion for compelling storytelling guide me in crafting articles that both inform and engage — across news, culture, and commentary. Writing isn't just work to me—it’s a process of curiosity, clarity, and connection. From the first piece of research to the final edit, I aim to deliver content that’s accurate, thoughtful, and genuinely enjoyable to read. Over my time at The London Wire, I’ve honed my voice, explored diverse viewpoints, and pushed myself to evolve with each piece. My goal is to create writing that matters—whether that means enlightening readers, inspiring them, or simply offering something new to think about.

Read more