Limited Company vs Personal Name – Which Is Best for Property Investment?

Investing in UK property is exciting — but before you even choose the location, there’s one big decision to make:

Should I invest in my personal name or through a limited company?

If you’re new to property investing, you’ve probably heard mixed opinions. Some swear by limited companies for tax efficiency, while others prefer the simplicity of buying in their own name. And the truth? It depends on your goals, your income, and your long-term plans.

In this guide, we’ll walk through the pros and cons of each option — using real examples, tax breakdowns, and practical insights to help you decide what works for you.

What’s the Difference Between Buying Personally vs Through a Limited Company?

In simple terms:

• Personal name: You own the property. Rental income is taxed as personal income.

• Limited company: A separate legal entity owns the property. Income is taxed as business profit under corporation tax.

Mortgage Differences: Buy-to-Let vs Residential Mortgages

One of the first things new investors notice is how mortgages vary based on ownership.

Residential Mortgage (Personal Name)

• Used for your main home, not rental properties.

• Requires smaller deposits – sometimes just 5% to 10% (especially with first-time buyer schemes).

• Offers lower interest rates due to less perceived risk.

• Comes with first-time buyer benefits like SDLT relief.

Buy-to-Let (BTL) Mortgage (Personal or Company)

• Higher deposit required – typically 25% or more.

• Interest rates are higher, especially for limited companies.

• Stress testing by lenders is more strict (e.g., ensuring rental income covers 125–145% of mortgage interest).

• Fewer lenders offer BTL mortgages for companies, which limits your options.

Example:
You want to buy a £250,000 rental property.

• Personal BTL mortgage: 25% deposit = £62,500

• Residential mortgage (main residence): Could get away with 10% deposit = £25,000

• Company BTL mortgage: Also 25% deposit, but rate might be 0.5%–1% higher

So, while buying through a company might help with tax planning, it costs more upfront and may reduce your borrowing power.

Rental Income Tax: The Section 24 Problem

Section 24 restricts the amount of mortgage interest relief available to individual landlords.

In a Limited Company

• You can deduct all mortgage interest before calculating profit

• You pay corporation tax (currently 25%) on profits

• You control how and when to withdraw profits (e.g., dividends)

In Personal Name

• You can’t fully deduct mortgage interest

• You only get a 20% tax credit, regardless of your tax band

• Rental income adds to your total income, which could push you into the higher-rate tax bracket

SDLT: Stamp Duty Benefits for Individuals

Buying in your own name has another benefit: Stamp Duty Land Tax reliefs.

Personal Name:

• First-time buyers pay no SDLT up to £300,000

• Second-home buyers pay a 3% surcharge

Limited Company:

• Always pays the 3% surcharge

• No relief for first-time buyers

Selling the Property: Main Residence Relief

If you live in the property as your main home, you may qualify for Private Residence Relief and avoid Capital Gains Tax when you sell.

This only applies if you own the property personally. A limited company won’t qualify — and you may face:

• Corporation tax on the gain

• Personal tax when extracting the proceeds (e.g., via dividends)

Risk, Control & Asset Segregation

Let’s talk about risk management - something that’s often overlooked.

Buying Through a Company:

• Your personal assets are legally separate

• If a legal claim arises (e.g., tenant injury, damage claims), only company assets are at risk

• Useful for landlords with multiple properties

Buying Personally:

• You’re personally liable

• All your assets (including your home, car, etc.) could be at risk in extreme legal cases

• You can mitigate with landlord insurance, but it’s not the same as legal segregation

Pro Tip:
If you’re planning a large portfolio, a company structure helps contain risks and keeps personal wealth ringfenced.

Transferring a Property Into a Company: Not So Simple

Some landlords think: “I’ll just move the property into a company later.”

But this can be costly.

Taxes When Transferring:

1. Stamp Duty Land Tax — calculated on full market value

2. Capital Gains Tax — applies as if you sold it, even if you didn’t

3. Mortgage restructuring — could trigger early repayment charges

Example:

You bought a property for £200,000 that’s now worth £300,000:

• CGT may be due on the £100,000 gain (after allowances)

• SDLT charged on £300,000 (plus 3% surcharge)

• Plus solicitor fees, refinance costs, admin

So while company ownership is attractive, it’s better to set it up correctly from the start — not try to switch later.

When a Limited Company Makes Sense

Here’s when buying through a limited company can be a smart move:

• You’re a higher-rate taxpayer

• You’re building a portfolio of multiple properties

• You want to reinvest profits instead of drawing them

• You’re comfortable with extra admin/accountancy

• You want asset separation for risk management

When Personal Ownership Works Better

Buying personally is often better if:

• You’re a first-time buyer

• You plan to live in the property (at least short term)

• Your rental income is modest and stays under the basic-rate threshold

• You want the simplest, lowest-cost setup

• You want better mortgage rates and more lender options