---
title: Should You Incorporate? Tax Pros and Cons of Holding Property in a Limited Company
description: Thinking about buying or moving rental property into a limited company? This guide explains the tax benefits and drawbacks to incorporation.
---

## [Talwar Accountants](https://www.talwaraccountants.com/home-page)

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# Should You Incorporate? Tax Pros and Cons of Holding Property in a Limited Company

 26 May 2025

![Picture of Jagdeep Singh](https://www.talwaraccountants.com/hs-fs/hubfs/Logo.png?width=40&name=Logo.png) [Jagdeep Singh](https://www.talwaraccountants.com/blog/author/jagdeep-singh)

More UK landlords are asking: Should I put my rental property into a limited company? With changing tax rules, this decision can affect your income tax, inheritance planning, and long-term profit.

At Talwar Accountant, we work with landlords to make this choice based on numbers — not hype. Here's what you need to know if you're considering a company structure for your property.

## What Does It Mean to Incorporate?

Incorporation means owning property through a **limited company** rather than as an individual. The company becomes the legal owner, receives the rent, pays the expenses — and files its own tax return. This has major implications for tax, administration, and flexibility.

## 5 Key Tax Advantages of Using a Limited Company

1. **Lower Corporation Tax:** 19% (or 25%) vs up to 45% personal income tax.
2. **Mortgage Interest Is Fully Deductible:** Unlike individuals, companies can still deduct all mortgage interest.
3. **Retain Profits for Reinvestment:** Avoid personal tax until withdrawal.
4. **Greater Flexibility on Income Timing:** Control salary vs dividends.
5. **Inheritance Planning Opportunities:** Use shares and trusts to pass property.

## 5 Key Drawbacks of Using a Limited Company

1. **Higher Admin and Accounting Costs:** More filings and fees.
2. **Mortgage Options Are Limited:** Fewer lenders and higher rates.
3. **Capital Gains Tax (CGT) on Transfer:** May trigger CGT or SDLT unless relief applies.
4. **Dividend Tax When Extracting Profits:** Up to 39.35% after corporation tax.
5. **Not Always Worth It for Small Portfolios:** Cost/benefit may not add up.

## Example: Should Raj Incorporate?

Raj earns £18,000/year from one rental. As a 40% taxpayer, incorporation might reduce tax to 19% — but setup fees, dividend tax, and mortgage costs may offset savings. In his case, improving personal tax planning could be more effective.

## When It Might Be Right to Incorporate

- You plan to buy several properties soon
- You want to retain profits for reinvestment
- You’re a higher-rate taxpayer with high mortgage interest
- You’re planning long-term succession

## Our Advice

Don’t rush to incorporate because others are doing it. The best structure depends on **your goals, income, future plans, and current portfolio**.

We help landlords model both scenarios — personal vs company — so you can make a confident decision. Whether you're starting or scaling up, smart structuring saves money long-term.

**Need clarity on incorporating your rental income?**  
Contact Talwar Accountant for a free consultation — we’ll help you weigh up the numbers and stay compliant.

Kind regards,  
Jagdeep Singh ATT  
Talwar Accountants  
[www.talwaraccountants.com](https://www.talwaraccountants.com)

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## Jagdeep Singh

## Comments

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