When buying a rental property, you can own it personally or through a limited company. Each option affects how much tax you pay and how your profits are handled.

Personal Ownership

• Property is in your name.
• Rent is paid to you directly.
• Rental profits are taxed at 20%, 40%, or 45%, depending on your income. These tax rates will increase by 2 percentage points at each level from April 2027
• Mortgage interest relief is limited to 20%.
• If you sell, gains above the £3,000 allowance may face 18% or 28% CGT.
  Simple and easy to manage.
  ✘ Can be expensive for higher-rate taxpayers.

Limited Company Ownership

• A company owns the property; you act as director/shareholder.
• Company pays 19%–25% corporation tax on profits.
• Full mortgage interest can be claimed as an expense.
• You pay dividend tax when you take money out (8.75%, 33.75%, or 39.35%). These tax rates will increase by 2 percentage points at each level from April 2026
  Often more tax-efficient for bigger portfolios.
  ✘ More admin and accounting.

Which Is Better?

• Personal ownership: Best for first-time or small landlords.
• Limited company: Better for higher-rate taxpayers or those planning multiple properties.