Tax Pros and Cons of Purchasing Property Through a Limited Company – Is It Still Worth It in 2025?
Abdelrahman Abdeltawab
Trainee Solicitor
The UK’s buy-to-let market continues to show resilience, even as regulatory changes and tax reforms squeeze individual landlords’ profit margins. One strategy growing in popularity is purchasing property through a limited company structure.
Given these changes, is it still tax-efficient in 2025?
Below is a clear overview of the tax advantages and disadvantages of limited company ownership for property investors, along with a few essential updates for this year. We will explain how it works as purchasing property through a limited company.
What Is Buy-to-Let?
Buy-to-let involves purchasing residential property with the intention of renting it out for income. These investments differ from owner-occupied homes and are typically subject to specific lending and tax rules.
Buying Estate Through a Limited Company
Purchasing estate through a limited company is perfectly legal and offers limited liability, which can shield personal assets from business-related losses or claims (excluding negligence or fraud). The company becomes the legal owner of the asset, and investors act as directors or shareholders.
Why Use a Limited Company?
Following the Section 24 mortgage interest relief restrictions introduced between 2017–2020, individual landlords can no longer fully deduct mortgage interest from their rental income. By comparison, limited companies still can.
Additional benefits include:
- Structuring flexibility with multiple shareholders
- Tax efficiency for higher-rate taxpayers
- Greater scope for reinvesting profits without immediate tax exposure
Key Tax Advantages in 2025
- Full Mortgage Interest Deduction
Companies can deduct 100% of mortgage interest as an allowable expense. - Corporation Tax
Profits are taxed at 19% (small profits rate) for companies earning under £50,000. A 25% rate applies to profits over £250,000, with marginal relief in between. - Profit Withdrawal Flexibility
Directors can extract profits via salary, dividends, or pension contributions, offering tax flexibility. - Capital Gains
Companies pay corporation tax on gains rather than personal Capital Gains Tax (CGT). However, there is no CGT annual allowance for companies. - Inheritance Planning
In certain cases, limited companies may qualify for Business Property Relief (BPR), reducing inheritance tax. Note: this typically applies to trading businesses. Passive property investment companies may not qualify. As inheritance tax rules and eligibility criteria can be complex and subject to interpretation, it is always best to seek advice from a qualified tax or legal professional. At GOOD LAW INTL, we specialise in property and estate planning matters and can guide you through the most effective and compliant structures for your investments.
Drawbacks of Company Ownership
- Fewer Mortgage Products
Specialist lenders offer company buy-to-let mortgages, often with higher rates and fees. - Double Taxation Risk
Profits taxed in the company and again upon extraction (dividends), unless profits are reinvested. - Administrative Burden
Annual accounts, company tax returns, and filings at Companies House increase complexity and cost. To simplify this process, we work closely with Good Accounts UK, our trusted accountancy firm, who can manage these compliance requirements efficiently and ensure your company remains fully up to date with its obligations. - No CGT Allowance
Individuals benefit from a tax-free CGT allowance. Companies do not.
Transferring an Existing Property into a Company
While some landlords consider transferring existing properties into a company, this can trigger:
- Capital Gains Tax
- Stamp Duty Land Tax (SDLT)
- Mortgage redemption/arrangement fees
- Legal and administrative costs
In many cases, the cost outweighs the benefit – unless the investor includes it as part of a long-term restructuring strategy.
When Is It Worth It?
Limited company ownership often becomes more tax-efficient at higher income levels or when investors reinvest profits instead of withdrawing them. Additionally, it suits those planning to build a portfolio or involve family members in a structured way.
Final Thoughts
Using a limited company to purchase rental property can offer significant tax advantages, particularly for higher-rate taxpayers and long-term investors. However, it’s not without its drawbacks.
As always, the decision should be guided by:
- Your tax bracket
- Investment horizon
- Profit extraction plans
- Succession and inheritance goals
How Can GOOD LAW INTL Help?
If you’re considering investing in UK property through a limited company, it’s essential to choose the right structure and understand the tax implications from the outset. Our team is here to guide you through the legal, financial, and strategic considerations involved.
We offer comprehensive support with all aspects of property investment and structuring, including:
- Advising on the most tax-efficient ownership structure based on your goals.
- Reviewing the legal implications of buying property through a limited company.
- Assisting with company incorporation and governance.
- Coordinating with accountants and tax advisors to ensure compliance.
- Supporting inheritance planning and succession strategies.
- Liaising with lenders, agents, and HM Land Registry on your behalf.
- Providing ongoing legal advice throughout your property portfolio journey.
Get in touch with us today to discuss how we can support your investment with clarity and confidence.
For specialist advice and support. Please get in touch with our Property solicitors in London by contacting the GOOD LAW INTL office.
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