Benefits vs disadvantages of setting up a limited company as a landlord

Over the last few years, many landlords have opted for a limited company rather than operating as a sole trader. 

We recently discussed the pros and cons of sole-traders vs limited companies in a recent blog, but there are specifics that are important to consider as a landlord.

When you incorporate a buy-to-let business, you make the company its own legal entity. This has a variety of great benefits for your business and will lead to a better presence and greater financial stability among other things.

It’s a complex topic, and there are pitfalls to watch out for. We’re here to help you make the right decision. 



When you incorporate your property business, you’ll separate the financial risk from you as a landlord. This gives you greater security and the added bonus of appearing more professional to the outside world.

You won’t have to pay any National Insurance on your profits, and your mortgage interest rate (if you have one) will be tax-deductible. 

Profits will be taxed at a corporation rate of 19%, and you can choose how you pay yourself. This is normally a mixture of a typical salary, pension payments or dividends (we cover this in the blog mentioned earlier).

It can’t be understated how much of an effect an incorporated company has to your potential clients – it’s more professional overall, and is a strong face that can be grown into a brand or a recognised organisation in your area.



Of course on the negative side, you’ll have more admin duties – the process of setting up your business with Companies House can be tricky to navigate – so we’d recommend speaking to an adviser before doing so.

When you’re transferring your properties (if you already had some when still operating as a sole trader) you’ll have to pay stamp duty on each one, and in some situations maybe capital gains tax as well.

This technically classes as a repurchase of the existing property – so if the value has increased, the capital gains tax you pay may be as high as 28%.

There is always going to be a larger financial burden on your affairs when starting a limited company, so for many with a smaller portfolio, it might not make sense. 


Get professional help

All of this extra legwork and admin highlights a greater need for the help of an accountant. 

The whole process of incorporating your business can be a costly one, so it’s not worth the risk unless you know that it’s going to be right for you as a landlord.

Get in touch with us today, to find out more about what you need to do to incorporate your business.

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