For higher-rate taxpayers (income above £50,270) buying new properties, a limited company (SPV) is almost always more tax-efficient in 2025 due to Section 24 — the mortgage interest restriction that doesn't apply to companies. The tax saving is typically £2,000–£5,000/year per property. For basic-rate taxpayers, the company advantage is smaller and must be weighed against higher mortgage rates (typically 0.5–1% more), additional accountancy costs, and the complexity of extracting profits. Never transfer existing personally-owned properties into a company — the SDLT and CGT costs almost always make this unviable.
Personal ownership vs limited company (SPV) — the key differences
SPV vs personal ownership after-tax profit calculator
Enter the property and income details to see which structure produces better after-tax results for your specific situation.
| Annual rental income | — |
| Running costs | — |
| Mortgage interest | — |
| Section 24 tax | — |
| After-tax profit | — |
| Annual rental income | — |
| Running costs + extra acct | — |
| Mortgage interest (full deduction) | — |
| Corporation tax | — |
| Retained profit | — |
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Section 24 — why it drives the personal vs company decision
Section 24 of the Finance Act 2015 (fully in force from April 2020) is the single biggest reason higher-rate taxpayers are moving to limited company structures. Understanding exactly how it works — and doesn't work — for different taxpayers is essential for making this decision.
| Scenario | Rental income | Running costs | Mortgage interest | Taxable profit | Tax bill | Net profit |
|---|---|---|---|---|---|---|
| Personal — basic rate (pre-2017) | £28,800 | £11,500 | £10,500 | £6,800 | £1,360 | £5,440 |
| Personal — basic rate (2025, Section 24) | £28,800 | £11,500 | £10,500* | £17,300 | £3,460 − £2,100 credit = £1,360 | £5,440 |
| Personal — higher rate (2025, Section 24) | £28,800 | £11,500 | £10,500* | £17,300 | £6,920 − £2,100 credit = £4,820 | £1,980 |
| Limited company (2025, full deduction) | £28,800 | £11,500 + £1,200 acct | £11,970 (ltd co rate) | £4,130 | £1,033 (25% CT) | £3,097 retained |
*Under Section 24, mortgage interest is not deducted from profit — but a 20% tax credit is applied. Tax bill = 40% × £17,300 − 20% × £10,500. Running costs: £11,500. Mortgage interest: £10,500 (personal 5%) / £11,970 (ltd co 5.7%). Corporation tax: 25%.
For a basic-rate taxpayer, Section 24 is effectively neutral — the 20% tax credit equals what the deduction would have been. For a higher-rate taxpayer, Section 24 costs an additional £3,460/year on this deal compared to the pre-2017 position. The limited company outperforms the higher-rate personal position by £1,117/year in retained profit — even after paying higher mortgage rates and extra accountancy costs.
Extracting profits from a limited company — the full picture
The retained profit figure for a limited company is not the same as money in your pocket. To access retained profits as personal income, you must extract them — and this creates additional tax. The three main routes:
1. Salary
Pay yourself a salary from the company. The company deducts this as an expense (reducing corporation tax), but the salary is subject to income tax and national insurance contributions — your personal marginal rate. Most director-landlords pay themselves a small "optimal" salary (typically £12,570/year — the personal allowance) to preserve access to the state pension and other NI-linked benefits, then extract remaining profits via dividends.
2. Dividends
Retained profits after corporation tax can be extracted as dividends. Dividends are taxed at preferential rates: 8.75% (basic rate band), 33.75% (higher rate band), 39.35% (additional rate). There is a £500/year tax-free dividend allowance (reduced from £2,000 in 2023). For a higher-rate taxpayer extracting dividends, the combined tax load is approximately: 25% corporation tax on profit, then 33.75% dividend tax on the remainder — an effective combined rate of approximately 50%. For landlords who do not need to extract income immediately and can leave profits in the company for reinvestment, this double tax is deferred or avoided entirely.
3. Pension contributions
Company pension contributions are deductible as a business expense and avoid both corporation tax and dividend tax. For director-landlords with a long investment horizon, maximising pension contributions is often the most tax-efficient extraction route — though annual pension contribution limits apply (currently £60,000/year).
If you don't need the income now: Retained profits can be reinvested in further properties without triggering personal tax. The company's after-corporation-tax profit (75p in every £1 at 25% CT) is available to fund deposits on new purchases. Over a 10-year accumulation period, the compound effect of reinvesting 75p rather than 60p per pound of profit (after higher-rate income tax) significantly outperforms personal ownership.
If you are approaching retirement: Extracting profits in a lower-income year (e.g. when salary income stops) at basic-rate dividend tax rather than higher-rate substantially reduces the extraction cost.
Transferring existing properties into a company — almost always too expensive
A transfer of property from personal ownership to a limited company is treated as a sale from you personally to the company at current market value. This triggers full SDLT at BTL rates (5% surcharge on all bands) on the market value, and Capital Gains Tax at 24% on any gain since purchase.
Example — £280,000 property with £60,000 of capital gain:
SDLT at BTL rates: £18,000. CGT (24% of £60,000): approximately £14,400. Legal fees: £1,500. Total transfer cost: approximately £33,900 — representing nearly a decade of potential tax saving from the company structure.
The general conclusion: transfer only makes sense in specific circumstances (very large portfolios with very high gains still to come, or where professional restructuring advice identifies a legitimate route that reduces the transfer cost). For most landlords, the right strategy is: leave existing personal properties as they are, and structure all new purchases into a limited company from this point forward.
Frequently asked questions
At what income level does a limited company become worthwhile?
As a rough rule, the limited company structure becomes clearly worthwhile for landlords paying higher-rate income tax (40%) — i.e. total income above £50,270 in 2025/26. For basic-rate taxpayers, the company tax saving is smaller (Section 24 is broadly neutral at 20%) and may be outweighed by the higher mortgage rates and accountancy costs. The break-even point for basic-rate taxpayers varies by deal — use the calculator above to model your specific situation. The answer also depends on whether you need income now (extraction tax reduces the benefit) or can leave profits to compound in the company.
Do I need a separate SPV for each property?
No — you can hold multiple properties in a single SPV. Many landlords use one SPV for their entire portfolio. Some choose to use multiple SPVs to: separate properties for liability purposes; structure a portfolio so different family members own different companies; or facilitate future sale of individual properties via share sales rather than property sales (which can be more tax-efficient in some cases). There is no requirement to use separate companies per property, and the administrative overhead of running multiple companies usually outweighs the benefits for most investors.
Does a limited company need a specific SIC code for property investment?
Yes — most BTL mortgage lenders require the company to have an appropriate SIC code (Standard Industrial Classification). The most commonly accepted codes are: 68100 (Development of building projects), 68209 (Other letting and operating of own or leased real estate), and 68320 (Management of real estate on a fee or contract basis). If you are setting up a new SPV for property investment, register it with SIC code 68209 for a straightforward buy-to-let portfolio, or seek broker advice on the most appropriate code for your specific strategy. Using a trading company with an unrelated SIC code will typically be declined by BTL mortgage lenders.
What are the accountancy costs for a property limited company?
A limited company requires annual accounts filed with Companies House, a corporation tax return, and typically a director's self-assessment return. Specialist property accountancy firms typically charge £1,200–£2,500/year for a straightforward property SPV with 1–5 properties, depending on complexity. This compares to £300–£700/year for personal BTL accounting. The additional annual cost is approximately £800–£1,800 — a genuine cost that should be included in the company vs personal comparison for any specific deal.
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