Personal Name vs Limited Company for Next Purchase
Written by Scott Jones, founder of PropertyKiln · Last updated
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For the next purchase you are not "optimising" an existing mistake, you are choosing the tax and lending track you will sit on for the next 10-20 years. In 2026, with Section 24 fully in, MTD coming, and corporation tax tiered, the split is simple: basic-rate and low gearing can still buy personally; higher/additional-rate and growth plans usually point to a company.
The decision in one line
If you are basic-rate with modest other income and you only see yourself with 1-2 properties, buying in your own name is usually cheaper and simpler.
If you are higher or additional-rate and you expect to build a portfolio and reinvest, a company is usually more tax-efficient, even after higher mortgage rates and running costs.
Snapshot: personal vs company for a new BTL (2026)
| Question | Buy in your own name | Buy through a limited company (SPV) |
|---|---|---|
| Tax on rent | Income tax at 20/40/45% on taxable profit, then a 20% Section 24 credit on mortgage interest. | Corporation tax at 19% on small profits, up to 25% if profits exceed GBP 250,000, with marginal relief in between. |
| Mortgage interest | You cannot deduct it in full, you get a 20% tax credit instead (Section 24). Hurts at 40/45%. | Fully deductible as a finance cost before corporation tax. Section 24 does not apply to companies. |
| Tax on sale | CGT at 18% (basic-rate band slice) and 24% above that on residential property gains. | Company pays corporation tax on the gain at 19-25%, then you pay tax when extracting the money (dividend / salary). |
| Lenders and rates | Wider choice of lenders and products, often slightly cheaper rates. | Fewer lenders, niche BTL specialists, generally higher rates and fees than personal BTL (the gap has narrowed but still exists). |
| Setup and running | No extra setup, just you as individual; Self Assessment only. | Set up SPV company, file CT600, annual accounts, Companies House filings, possibly GBP 500-1,500/year in accountancy fees. |
| Inheritance planning | Property sits in your estate; IHT planning usually via wills, gifts, trusts. | Shares can be gifted or structured more flexibly, easier to pass control/value in stages, but still subject to IHT rules. |
| Best suited to | Basic-rate, small/medium portfolio, lower LTV, wants simplicity and personal income now. | Higher/additional-rate, long-term hold, higher leverage, wants to reinvest profits and build a portfolio. |
Worked example: GBP 200k purchase, GBP 150k mortgage
Use the same property, same rent and interest, and just change the tax band.
Assumptions:
- Purchase price: GBP 200,000.
- Mortgage: GBP 150,000 interest-only at 5% = GBP 7,500 interest per year.
- Rent: GBP 950/month = GBP 11,400/year.
- Other running costs (repairs, insurance, agent, etc): GBP 1,400/year.
Step 1: underlying profit (same for both)
"Economic" profit before tax and before Section 24: Rent 11,400 - costs 1,400 - interest 7,500 = GBP 2,500.
That GBP 2,500 is the true pre-tax cash profit.
A. Basic-rate taxpayer
A1. Buy in personal name
For income tax, Section 24 applies:
- Taxable rental profit: 11,400 - 1,400 = GBP 10,000.
- Income tax at 20%: GBP 2,000.
- Section 24 credit: 20% of 7,500 = GBP 1,500.
- Net tax: 2,000 - 1,500 = GBP 500.
Cash after tax: Underlying cash profit 2,500 - tax 500 = GBP 2,000 in your pocket.
A2. Buy through a company
Inside the company:
- Profit (same as economic): GBP 2,500 (full interest deducted).
- Corporation tax at 19% (small profits): 0.19 x 2,500 = GBP 475.
- Company net profit: GBP 2,025.
If you leave profits in the company to fund future purchases: The company is slightly better than personal (GBP 2,025 vs GBP 2,000).
If you take all profits out as dividends:
- Dividend tax at 8.75% basic-rate (ignoring allowance): about GBP 177 on 2,025.
- After corporation tax and dividend tax you are left with roughly GBP 1,848.
So at basic rate and modest gearing:
- Personal: about GBP 2,000 after tax.
- Company with full extraction: about GBP 1,850.
Take-away for basic rate: For a single GBP 200k BTL with 75% LTV, buying personally is at least as good and usually better once you include company running costs. The only advantage of a company here is long-term planning and reinvestment, not immediate tax savings.
B. Higher-rate taxpayer
Now your marginal income tax rate is 40%.
B1. Buy in personal name
- Taxable rental profit: 11,400 - 1,400 = GBP 10,000.
- Income tax at 40%: GBP 4,000.
- Section 24 credit: 20% of 7,500 = GBP 1,500.
- Net tax: 4,000 - 1,500 = GBP 2,500.
Cash position:
- Economic profit is GBP 2,500.
- Tax is GBP 2,500.
- So you are at GBP 0 cash profit after tax.
You collect rent, pay your costs and interest, then send the whole GBP 2,500 to HMRC. This is exactly what Section 24 was designed to do.
B2. Buy through a company
Inside the company:
- Profit: GBP 2,500.
- Corporation tax at 19%: GBP 475.
- Company net profit: GBP 2,025.
If you leave profit in the company: Company has GBP 2,025, versus GBP 0 if you held personally.
If you take all out as dividends:
- Dividend tax at 33.75% (higher-rate) on 2,025 = GBP 683.
- Net to you: 2,025 - 683 = GBP 1,342.
So higher-rate, same property:
- Personal: GBP 0 after tax.
- Company with full extraction: about GBP 1,350.
- Company with profits retained: GBP 2,025 for reinvestment.
Take-away for higher rate: For the same BTL, a company is materially better. Section 24 has eaten your personal profit, while the company still keeps 80%+ of the true profit to reinvest.
C. Additional-rate taxpayer
Assume marginal income tax at 45%.
C1. Buy in personal name
- Taxable profit: GBP 10,000.
- Income tax at 45%: GBP 4,500.
- Section 24 credit: 20% of 7,500 = GBP 1,500.
- Net tax: 4,500 - 1,500 = GBP 3,000.
Cash position:
- Economic profit is GBP 2,500.
- Tax is GBP 3,000.
- You are down GBP 500 per year in cash on this property after tax. You are effectively subsidising your own BTL.
C2. Buy through a company
Inside the company (same as above):
- Profit: GBP 2,500.
- Corporation tax at 19%: GBP 475.
- Net profit in company: GBP 2,025.
If you extract everything as dividends:
- Dividend tax at 39.35% (additional rate) on 2,025 = GBP 797.
- Net to you: = GBP 1,228.
So additional-rate, same property:
- Personal: -GBP 500 cash after tax.
- Company with full extraction: GBP 1,200+ profit.
- Company with retained profits: GBP 2,025 building up.
Take-away for additional rate: Buying personally at high LTV is usually a terrible idea. Section 24 plus 45% tax destroys cashflow. A company almost always makes more sense if you are going to hold and grow.
CGT on exit: personal vs company
You also need to hit what happens when you sell.
Personal name
- You pay Capital Gains Tax at 18% on the part of the gain in your basic-rate band, and 24% on gains above that, for residential property.
- You get the (shrinking) annual CGT allowance, then pay on the rest.
- You must report and pay within 60 days of completion.
Company
- Company pays corporation tax on the gain at 19-25%.
- If you then pull that cash out, you pay income/dividend tax as a shareholder.
- Alternatively, you can sell shares in the company to a buyer, which is a separate CGT calculation on your shares rather than the property.
In practice:
- For small gains on one or two properties, CGT in your own name at 18/24% can be competitive.
- For big portfolios held in a company, many landlords structure their exit around selling shares, using entrepreneurs' relief / BADR or other planning. That is specialist advice territory, which is why you link to your incorporation and corporation tax guides.
Lenders, rates, and costs
You need to flag the practical lending and cost differences.
Personal BTL:
- More lenders, more choice on LTV, fix lengths, products.
- Historically cheaper rates; recent data still shows a premium for company BTL, though the gap has narrowed.
- Lower arrangement and legal costs on average.
Company BTL:
- Fewer lenders, but plenty for standard SPV deals.
- Slightly higher rates and fees, and underwriters will scrutinise both you and the company.
- You need company accounts and tax returns, so allow GBP 500-1,500/year for a decent property accountant.
In your BTL mortgage guide you can show a simple table: "typical rate and fee ranges personal vs company at 60/75% LTV".
Decision criteria to hammer
1. Current tax band and wider income
Basic-rate now and likely to stay there: Personal ownership is simpler and often just as good or better for a single BTL. If this BTL pushes you into higher-rate, that is when a company starts to look better for future purchases.
Higher or additional-rate, or close to the threshold: Section 24 will eat your cashflow on personally owned, geared BTL. A company lets you keep interest fully deductible and keep more profit inside the structure.
2. Existing portfolio
If you already own a few BTLs personally, the usual pattern is:
- Keep them in your own name for now.
- Buy new properties in a company.
- Review full incorporation of the old stock separately.
If you are just starting and expect to own 5+ properties, many accountants now lean towards starting in a company even at basic rate, because you will quickly move up tax bands.
3. Holding period
If you are likely to sell within 5-7 years, personal ownership can be fine, especially at basic rate and/or lower gearing.
If you are building a 10-20 year portfolio, the compounding inside a company (and ability to manage CGT/IHT via share sales and planning) becomes more important.
4. Buying with someone else
Joint personal ownership is simple but can be messy if circumstances change.
A company lets you hold shares in agreed proportions, change shareholdings over time, and manage income between spouses/partners (subject to proper advice).
5. Future plans and exit
If your plan is to live off rental income personally soon, personal ownership makes sense for early units, especially at basic rate.
If your plan is to grow a sizeable portfolio and exit later (by selling properties or shares), a company gives more tools, but you must accept the admin.
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