Should Landlords Use a Company to Hold Property? Pros, Cons & Tax Guide

Recent tax and market changes have significantly altered the financial equation. With mortgage interest relief restricted and interest rates rising, landlords are asking an increasingly urgent question: should I hold my properties personally, or would it be smarter to transfer them into a company?

This isn’t a decision to take lightly. While a company structure can bring tax efficiencies, the costs of getting there, and the long-term implications, need careful thought.

How has the landscape changed?

Two main forces are squeezing landlords:

• Interest rates have risen sharply, pushing up monthly costs and reducing profitability.
• Mortgage interest relief has been cut back for individuals, meaning landlords can no longer fully deduct finance costs when calculating taxable profit.

For some, this has turned once-profitable rental portfolios into tax-heavy burdens. That’s why many are considering the alternative of holding property within a limited company.

When a Company Structure Makes Sense (and When It Doesn’t)

Personally held properties:

• Pros: Simpler administration, no company compliance obligations.
• Cons: Capped mortgage interest relief, higher income tax bills for many landlords.

Company-held properties:

• Pros: Full finance cost relief is usually available, profits taxed at corporation tax rates of 19-25% (which may be lower than higher-rate income tax), more flexible succession planning. Potentially easier to reinvest post-tax profits inside the company without immediate personal tax.
• Cons: Additional costs such as Stamp Duty Land Tax (SDLT) when transferring properties, possible Capital Gains Tax (CGT) on disposal of existing properties to a company, refinancing challenges, and extra compliance (accounts, filings, reporting). Additional company-related tax implications including potential Benefit in Kind, ATED and loans to participator rules which need to be considered in detail.

The potential benefits are clear - but so are the hurdles.

The three questions every landlord should ask

Involving family members, business partners, and advisers early avoids surprises later. We facilitate these discussions to make sure everyone understands the plan and is aligned.

1. What’s my current tax hit?
   Are rising costs eating into your returns? If mortgage interest relief restrictions are significantly increasing your effective tax rate, a company structure could help.
2. What will it cost to move?
   Transferring property into a company isn’t free. You’ll need to weigh over:
   • Stamp Duty Land Tax (SDLT): Payable on transfers, though exemptions may apply in certain circumstances.
   • Capital Gains Tax (CGT): Potentially due on any increase in value since purchase.
   • Refinancing costs: Mortgages often need to be restructured when moving to a company.
   • Admin and compliance: Company accounts, corporation tax filings, and Companies House obligations.
   • Additional taxes: Annual Tax on Enveloped Dwellings (ATED) may apply, a tax on residential property owned by companies, which does not apply to individuals.
3. Where am I heading?
   This is perhaps the most important. If you’re focused on maximising income today, a company could reduce tax drag and improve cashflow. If your priority is exit and succession planning, then company structures can also help with inheritance tax, family transfers, or future sales; however, relief and tax savings are not automatic, and specific, bespoke advice is required.

How does a company structure create value?

In some scenarios, moving into a company unlocks meaningful advantages:

• Portfolio landlords: Those with multiple properties often see the greatest benefit, as the tax savings outweigh compliance costs.
• Higher-rate taxpayers: If you’re paying 40-45% on rental income, shifting to corporation tax rates can make a big difference.
• Succession planning: Passing shares in a company can be more efficient than transferring properties individually, if structured appropriately, but savings are not automatic.
• Reinvestment strategy: If you plan to reinvest profits rather than extract them personally, corporation tax treatment can be advantageous.

Do the costs outweigh the benefits?

For smaller landlords or those with low borrowings, the case can be weaker. Transaction costs like SDLT and CGT can be substantial. If your income is modest and you’re not in the higher tax bands, the complexity of running a company may not be justified.

How can I mitigate my tax exposure?

Here’s where strategy matters. In the right circumstances, the transaction costs of SDLT and CGT can be mitigated. For example:

• Business incorporation reliefs: provides a deferral of some tax costs; available where the property portfolio is run as a genuine business, not just passive investment.
• Partnership incorporation: can create routes to mitigate SDLT.
• Strategic timing: structuring the transfer at the right point can limit tax exposure.

This is a specialist area where tailored advice is essential.

Formulate an inheritance tax strategy

This may include making lifetime gifts, using Business Relief, or restructuring ownership. Our approach builds this strategy around your overall succession plan to minimise tax exposure.

The long-term view

The real question is not just “what saves tax this year?” but “how do I align my structure with my long-term goals?”

• Do you want regular income?
• Are you planning to sell up in the medium term?
• Is your priority passing property to the next generation?

Each of these goals points to a different structural choice.

In conclusion…

There is no universal right answer. For some landlords, company ownership is a clear win. For others, the transaction costs and compliance burden outweigh the benefits. The smart approach is to model your current position, project the costs of moving, and weigh them against your long-term goals. At Oldfield, we specialise in helping landlords map these decisions, mitigate transaction taxes, and design structures that deliver value both today and tomorrow.

Thinking about transferring your rental portfolio into a company? Speak to Oldfield today for tailored guidance.

Frequently Asked Questions

Q: Why are landlords considering companies now?
A: Because rising interest rates and reduced mortgage relief make personal ownership less tax-efficient.

Q: What are the main costs of moving property into a company?
A: Stamp Duty Land Tax (SDLT), Capital Gains Tax (CGT), refinancing costs, and compliance.

Q: Are there ways to reduce SDLT and CGT?
A: Yes - with careful planning and the right structuring, these costs can often be mitigated or even removed.

Q: Who benefits most from company ownership?
A: Portfolio landlords, higher-rate taxpayers, and those focused on succession planning often see the biggest advantages.

How can Oldfield Accountancy & Advisory help you?

We can help you explore whether holding property through a company is the right move, from understanding potential tax benefits to long-term planning. Every landlord’s situation is different, which is why we always recommend tailored specialist advice before making the switch.

Please note: This article is general information for England & Northern Ireland tax rules as at 2 October 2025. It is not tax, legal or investment advice and does not take account of your circumstances. Tax law changes and reliefs (e.g., TCGA s162 and FA 2003 Sch 15) depend on strict conditions and may not be available. You should contact us before taking any action as a result of the contents of this summary. Tax rules and legislation are subject to change, and their application depends on your individual circumstances. We recommend seeking advice from a suitably qualified tax adviser, and where relevant, an FCA-authorised financial planner. Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.