How to Set Up a Limited Company for Property Investors

To set up a limited company for property investment, you register a private company limited by shares at Companies House. You also give the company an activity code that matches what it does: 68209 for letting property, or 41100 for developing building projects. Each individual director, and each individual person with significant control, verifies their identity with Companies House. The company then buys and owns the property in its own name and pays Corporation Tax on its profits.

Buying through a company rather than in your own name is one of the early decisions when you work out how to start a property portfolio.

Article updated: October 2026

What is a Property Company?

A property company is an ordinary limited company that owns property, such as a buy-to-let or a development site. You own shares in the company, and the company owns the property.

Under the Companies House guidance on incorporation and names, a company is a legal entity with an identity separate from the people who own or run it. The deeds, the mortgage and the rent are all the company's. Setting one up is called incorporating.

Why Set Up a Property Company?

A property company changes three things: how the rental profit is taxed, whether profits can stay in the business to fund the next purchase, and how ownership is shared or passed on. It also adds costs and limits.

Buying a new investment property in a company's name from day one is a different job from moving properties you already own into one. The second is normally treated as a sale at market value for tax.

Key Considerations for Landlords

Here are twenty points to weigh up when choosing between owning through a company and owning in your own name.

Income Tax and Corporation Tax Advantages

A company pays Corporation Tax on its rental profit, while a landlord who owns in their own name pays Income Tax on it. For a 12-month accounting period from 1 April 2026, HMRC's Corporation Tax rates are 19% on profits of £50,000 or less and 25% on profits over £250,000. Between the two, the main rate applies less marginal relief. Both limits are reduced in proportion when the accounting period is shorter than 12 months, and shared between associated companies, such as others under the same control.

A close investment-holding company pays 25% on all profits, with no 19% rate or marginal relief. A company that mainly lets property commercially to people it isn't connected with can fall outside that definition.

On the personal side, a landlord in England, Wales or Northern Ireland pays Income Tax on rental profit at 20%, 40% or 45% in 2026-27; Scotland sets its own rates. Separate property income rates of 22%, 42% and 47% are legislated to apply from 6 April 2027, under sections 6 and 7 of the Finance Act 2026. Scottish taxpayers stay on Scottish rates, and the Act lets Wales set its own property rates from a later year.

Taking money out has its own tax. There are four main ways money reaches you:

• Salary. The company registers as an employer and takes Income Tax and National Insurance off the pay. A salary for running the letting business is an allowable cost for the company.
• Dividends. Paid from profit after Corporation Tax, and never more than the company's available profits. From 6 April 2026 the dividend tax rates are 10.75% at the basic rate, 35.75% at the higher rate and 39.35% at the additional rate, after a £500 dividend allowance.
• Repaying money you lent the company. The company pays no Corporation Tax on money you lend to it, and getting your own money back isn't treated as borrowing from the company. Interest on the loan is taxable income for you.
• Borrowing from the company. A director's loan still unpaid 9 months after the accounting period ends can trigger a section 455 company tax charge, 35.75% on loans made from 6 April 2026.

Capital Gains Tax Advantages

Whether a company comes out ahead on a sale depends on the gain and what happens to the money afterwards. A company's gain on selling an investment property is taxed as Corporation Tax, with no annual exempt amount.

An individual selling a rental property pays Capital Gains Tax at 18% or 24% from 6 April 2026, after a £3,000 annual exempt amount. The company's tax is due whether or not it pays the cash out, and a later dividend adds a second layer.

Moving properties you already own into a company has costs, and the relief that can help has conditions:

• A transfer to a company you're connected with is normally treated as a sale at market value for Capital Gains Tax.
• In England and Northern Ireland, the company normally pays Stamp Duty Land Tax on at least the market value unless a relief applies. Incorporation relief is a Capital Gains Tax relief and doesn't reduce SDLT.
• Incorporation relief can put off the gain when a whole business moves to a company as a going concern, with all its assets except cash, in exchange for shares, if it meets HMRC's conditions. Letting isn't automatically a business: HMRC looks at the degree of activity, not the number of properties.
• For transfers on or after 6 April 2026, incorporation relief needs a claim; for a 2026-27 transfer the deadline to claim is 31 January 2029. A claim doesn't change the separate 60-day deadline to report and pay any Capital Gains Tax on a UK home.
• A personal mortgage doesn't move with the property, so the company usually needs its own lending.

Ability to Offset Mortgage Interest Costs Against Income

A company can deduct the interest on borrowing for its letting business under the loan relationship rules, which an individual letting homes can no longer do. That covers interest, not capital repayments.

Section 24 of the Finance (No. 2) Act 2015 replaced the deduction for individuals letting homes with a basic-rate tax reduction, 20% in 2026-27. HMRC's property income manual caps it by the property profits and total income, and unused amounts carry forward. For a higher-rate taxpayer outside Scotland, that is relief at 20% on interest that used to save 40%. Scotland's higher rate is 42%. The reduction is legislated to move to 22%, the new property basic rate, from 6 April 2027, under the Finance Act 2026.

Cash Flow Advantages

Profits can stay in the company to fund the next purchase. Corporation Tax is still paid on them, and dividend tax falls on dividends you receive, so the personal tax is delayed, not removed.

Restricted Mortgage Availability

Each lender sets its own rules on which companies it will lend to. One lender's published criteria, for example, accept only companies set up solely to buy, let and sell property. They exclude a company with a company shareholder, or one that holds shares in another company.

You can work out the loan-to-value of a deal with our LTV Calculator here.

Higher Mortgage Costs

Company mortgages are priced and assessed differently from personal buy-to-let mortgages, and rates and fees vary by lender and product, so there's no single difference to quote.

Requirement for Personal Guarantees

Lenders can ask directors for a personal guarantee, and one lender's published criteria require personal guarantees from all directors in all cases. A personal guarantee means the lender can come to you if the company can't repay, so limited liability doesn't cover that loan.

Buying a Property Through a Limited Company Stamp Duty

When buying a property through a limited company in England or Northern Ireland, the company pays the higher rates of Stamp Duty Land Tax on a home costing £40,000 or more, even on its first purchase. These are the higher residential rates from 1 April 2025, each applying only to the part of the price in its band:

A flat 17% on the whole price can apply when certain companies buy a home for more than £500,000, under HMRC's guidance on SDLT for corporate bodies. Reliefs with conditions, such as for a home used in a rental business, can take a purchase out of that flat rate, leaving the higher rates. Non-UK residents pay a further 2%.

In Scotland, a company pays Land and Buildings Transaction Tax plus the Additional Dwelling Supplement at 8% of the price on each home it buys for £40,000 or more, its first included. Reliefs can lift the supplement, such as for six or more homes bought together. In Wales, companies pay the Land Transaction Tax higher rates, from 5% up to 17%.

Anywhere in the UK, a company owning a home valued at more than £500,000 also falls within the yearly Annual Tax on Enveloped Dwellings, from £4,600 for 2026-27 where the value is up to £1 million. The value is taken on 1 April 2022, or on the purchase date for a home bought after that. A home let commercially to unconnected tenants can qualify for ATED relief, but a nil charge still needs a Relief Declaration Return.

Additional Conveyancing Costs

There's no standard extra conveyancing cost for a company purchase; only a quote for the actual deal gives a reliable figure.

Estate Planning and Inheritance Tax Benefits

A company lets you pass on property by passing on shares, but it brings no automatic Inheritance Tax saving.

Business Relief can't be claimed for a business that mainly deals in land or buildings or holds investments. That generally rules out an ordinary letting company. A gift of shares to family can also count as a sale at market value for Capital Gains Tax.

Pension Benefits

A property company can pay into a registered pension scheme for its directors. Employer contributions it actually pays can be deducted: as a management expense where they're made for its letting business, or from trading profits where they're paid wholly and exclusively for the trade. A Small Self Administered Scheme (SSAS) can own commercial property. If a scheme like this acquires a home, both the member and the scheme face heavy tax charges.

Flexibility when Buying and Selling

The owners can sell the company's shares instead of the property, so the property stays in the company's name. The buyer usually pays a 0.5% tax on shares instead of the tax on buying property. The company's debts and past tax stay with it and affect what the shares are worth, so they get checked first; the lender's consent may also be needed.

The Opportunity to Collaborate

A company can have several shareholders with different-sized holdings, so partners can own a project together. More owners also means agreeing how decisions and profits are shared.

The Benefits of Limited Liability

Under limited liability, if the company can't pay its debts, a shareholder generally loses no more than they paid, or still owe, for their shares. A personal guarantee, covered above, is the exception.

The Opportunity to Spread and Reduce Risk

Owning each property or project in a separate company keeps their ownership and debts apart, within limits. A personal guarantee, a loan secured on several properties or money moved between companies can carry a problem across to the others, or to you.

Higher Set Up and Running Costs

A company pays fixed Companies House fees: since 1 February 2026, £100 to register online or through software (£124 on paper) and £50 a year for the confirmation statement online (£110 on paper).

Accounts and a Company Tax Return are due every year too. HMRC closed its free joint filing service on 31 March 2026, and the return is now normally filed through commercial software. Paper filing is allowed only with a reasonable excuse, or for a return filed in Welsh.

Record Keeping Obligations

A company has more paperwork, with five deadlines the directors are responsible for:

• Annual accounts: the first set is due 21 months after registration, then 9 months after each financial year ends.
• Corporation Tax payment: 9 months and 1 day after the accounting period ends.
• Company Tax Return: 12 months after the accounting period ends.
• Confirmation statement: at least once a year, filed within 14 days after the review period ends.
• Telling HMRC the company is active: within 3 months of its first accounting period starting. Receiving rent counts.

Records have to be kept for 6 years from the end of the last financial year they relate to, and longer in some cases. Directors can be fined £3,000 by HMRC or disqualified for not keeping accounting records.

Reduced Confidentiality

On the Companies House register, anyone can see most details of a company's directors and people with significant control, and its filed accounts. Small companies can leave the profit and loss account out of the accounts they file.

Companies House has confirmed that from April 2028 every company will have to file accounts through software, but the plan to make small companies file a profit and loss account is paused. A landlord owning in their own name reports rent on a tax return, which isn't published.

Impact on Personal Tax Situation

Dividends, share sales, gifts of shares and company loans each have their own personal tax treatment. Dividends are added to your other income to set the tax band, so a large one can push you into a higher band.

Exposure to Future Changes in Legislation

Tax rules for companies and landlords can change, and taking a property back out of a company later has tax costs of its own.

What Type of Property Limited Company Should I Use?

The main types of property company structure are a special purpose vehicle (SPV), an existing trading company, a holding company with SPVs beneath it, and a limited liability partnership (LLP). This is how they differ:

• SPV. An ordinary private company limited by shares that only buys and lets property. "SPV" is a description, not a legal form.
• Trading company. A company you already run can own property alongside its business, because under section 31 of the Companies Act 2006 a company's objects, what it is allowed to do, are unrestricted unless its articles restrict them. The property and the business then share one set of debts, and some lenders won't lend to it.
• Holding company. A company that owns the shares in several SPVs. The SPVs share the Corporation Tax thresholds, and some lenders won't lend where a company holds the shares.
• LLP. In a limited liability partnership, each member is taxed on their share of the profits. An individual member pays Income Tax on it, not Corporation Tax, so the finance-cost restriction for individuals applies to them on residential letting. One lender's published criteria don't accept LLPs.

A company limited by guarantee has guarantors instead of shareholders, so there are no shares to own or pass on. This page covers companies limited by shares.

How to Set Up a Property Company

Setting up a limited company for buy to let takes six steps:

1. A name, a registered office and an email address. The registered office must be in England and Wales, Scotland or Northern Ireland. The address can change later, but only to another address in the same one of those three. The company also gives a registered email address, which isn't published.
2. Directors, shareholders and people with significant control. You need at least one director aged 16 or over, and at least one must be an individual. You also need at least one shareholder, who can be the director. You then name each person with significant control: usually anyone with over 25% of the shares or votes, or who can appoint or remove most directors.
3. Identity checks. Since 18 November 2025, every individual director and individual person with significant control has to verify their identity with Companies House. Verifying is free through GOV.UK One Login and gives you a personal code. Each director's code goes in when the company is registered. A person with significant control gives theirs when added to the register, or within 14 days, whether that is at registration or later. Someone in both roles gives the code for each role. Corporate directors and officers of corporate PSCs verify later.
4. An activity code. Companies House asks for a SIC code. 68209 covers letting your own property, 68100 buying and selling your own property, and 41100 developing building projects.
5. The memorandum, articles and shares. The memorandum of association is a statement signed by the first shareholders agreeing to form the company. The articles are its rules; model articles can be used. You also set out the shares: how many, their value, who holds them and their rights.
6. Registration and the fee. Registering online costs £100 and usually takes about 24 hours.

There is no legal need to write "SPV" or a property purpose into the articles. You can register it yourself or through a formation agent or accountant.

A property development company is set up the same way. The activity code and the tax follow what the company does: HMRC treats profit from developing land to sell as trading profits, while buying property to let is an investment.

Once registered, the company usually opens a bank account, keeps its own records and arranges company lending before it buys.

Internal Structure of a Property Limited Company

A property company has two kinds of people: directors, who run it, and shareholders, who own it. One person can be both.

Limited Company Directors

Directors are legally responsible for running the company and making sure its accounts and reports are properly prepared.

An accountant can do the work, but the directors stay responsible. A private company doesn't need a company secretary.

Limited Company Shareholders

Shareholders own the company, but they don't run it unless they're also directors.

Dividends aren't automatic: they're paid only from available profits, when the company decides, in line with each share's rights. If one person holds one share and another holds three, all with the same rights, a £10,000 dividend pays £2,500 and £7,500.

So, Should the Company's Shareholders and Directors be People or Entities?

Both can be people or other bodies, but at least one director must be an individual.

A trust is not a legal person, so shares held for a trust are held by its trustees.

Share Structure for Property Limited Companies

A property company can have a single class of ordinary shares, or several classes with different voting and dividend rights, sometimes called alphabet shares (A shares, B shares and so on).

Under the rules on share capital, a share's rights cover votes, dividends, what its holder gets back when capital is paid out, including on winding up, and whether the share can be redeemed (bought back and cancelled by the company). With more than one class, each holder's dividends, and the tax on them, can differ.

What are Ordinary Shares Exactly?

Ordinary shares usually carry one vote each and a right to dividends. The exact rights are recorded in the company's statement of capital.

This article is general information about setting up a property company, not financial or tax advice. The tax outcome changes with each landlord's income, borrowing and plans, and a qualified accountant or tax adviser can work through the figures for a specific case.

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