Limited Company vs Personal Buy to Let:The Complete UK Guide

Key Findings

• Personal buy-to-let works best for basic-rate taxpayers with modest rental income.
• Limited company (SPV) ownership is usually more tax-efficient for higher and additional-rate taxpayers, and for landlords planning to build a portfolio.
• Corporation Tax (around 19–20% for smaller companies) is lower than higher personal tax bands (40–45%), and SPVs allow full mortgage interest deduction.
• Mortgage rates for SPVs are typically about 1% higher than personal buy-to-let rates, but tax savings often outweigh this.
• Deposit requirements are usually 20–25%, with slightly more flexible stress tests for SPVs.
• Transferring properties into an SPV counts as a sale, triggering potential stamp duty and capital gains tax.
• Inheritance planning can be easier with SPVs by adding family members as shareholders.
• First-time landlords can use SPVs, though lenders prefer applicants who already own their own home.
• Specialist advice from a property accountant and mortgage broker is essential before deciding.

When you’re looking to buy a rental property in the UK, one of the biggest questions is: Should you buy in your own name, or through a limited company (SPV – Special Purpose Vehicle)? The answer depends on your income, tax position, and long-term goals as a landlord. Let’s break it down.

When Personal Ownership Makes Sense

Buying in your own name is often the simplest option if you’re a basic-rate taxpayer with modest income.

• Lower admin costs.
• Cheaper mortgage rates (usually).
• Straightforward accounting.

Example: Sarah earns £28,000 a year and expects £6,000 rental profit. She stays within the basic-rate band, so personal ownership is more cost-effective than setting up a company.

When a Limited Company (SPV) is Worth Considering

For higher earners or those planning to build a property portfolio, an SPV is usually more tax-efficient.

• If your income plus rent tips you into the 40% or 45% tax bands, the tax difference can be significant.
• Portfolio landlords often set up SPVs from the start, as moving properties later can trigger stamp duty and capital gains tax.
• If you want flexibility (e.g., to retain profits inside the company for reinvestment), a company can work better.

Example: James earns £65,000 salary and £12,000 rent. Personally, he’d pay higher-rate tax on much of the rental income. Through an SPV, he pays Corporation Tax (around 19–20% for smaller companies) and can deduct mortgage interest in full.

Tax Advantages: SPV vs Personal Ownership

Here’s a simple illustration based on £12,000 rental income and £5,000 mortgage interest:

Key Points

• Personal ownership – mortgage interest is no longer fully deductible. You only get a 20% tax credit.
• SPV ownership – mortgage interest is fully deductible.
• Corporation Tax – typically 19–20% for small companies, much lower than 40–45% personal tax rates.
• Profits – can be retained in the company without triggering dividend tax until you take them out.

⚠️ This is a simplified example. Always seek tailored advice before making a final decision.

Are Interest Rates Higher for Limited Company Mortgages?

Traditionally, yes. Limited company mortgages often carry around 1% higher interest rates than personal buy-to-lets. But for many landlords, the tax savings outweigh the extra cost of borrowing, which explains why SPVs are becoming more popular.

How Much Deposit Do You Need for an SPV Mortgage?

• Typically 20–25% deposit.
• Lenders apply a “stress test” to check affordability. For SPVs, stress testing can be slightly more flexible, meaning you may sometimes need a smaller deposit compared to buying personally.

Do Lenders Require a Personal Guarantee?

Yes, almost always.

• SPV mortgage – you’ll be asked to give a personal guarantee.
• Personal mortgage – you’re already personally liable.

So, in practice, there isn’t much difference.

What Documents Do You Need for an SPV Mortgage?

The paperwork is very similar to a personal buy-to-let:

• Proof of income.
• Bank statements.
• Identity verification.
• Company registration documents (with the correct SIC codes, usually 68100 or 68209).

Lenders focus more on your personal financials than on the company’s track record.

Can You Use a Trading Company Instead of an SPV?

In most cases, no. Lenders prefer a clean Special Purpose Vehicle set up solely for property investment. That said, some newer lenders now consider trading companies, but this is less common. Get professional advice if you’re considering this route.

How Long Must the Company Be Trading Before Applying?

None. In fact, many lenders prefer a newly incorporated SPV with zero trading history, as it’s a blank canvas. They mainly look at your personal credit and income.

Can You Transfer a Personal Buy-to-Let into an SPV?

Yes, but it’s treated as a sale.

• Stamp duty (including the 5% surcharge) may apply.
• Capital gains tax may be triggered.
• You’ll need to refinance into a limited company mortgage.

It can still be worthwhile, but professional tax planning is essential.

Case Study

A client was a day-rate contractor with an annual income of £50,000. His wife earned £60,000 as a permanent employee, plus a £40,000 bonus per year. If they moved to a let-to-buy arrangement, it would have cost them £6,600 in taxes every year on £18,000 annual rental income. By moving the property to an SPV, their tax dropped to £2,000 per year, saving £4,600 each year.

Can First-Time Landlords Use an SPV?

Yes. In fact, around 80% of new buy-to-let purchases today are made via limited companies. However, most lenders prefer that you already own your own residential home before buying through an SPV.

Does an SPV Help with Inheritance Tax Planning?

Potentially, yes. Many landlords gradually add children as shareholders or directors. This can create inheritance tax efficiencies, but the best structure depends on your family situation. Always seek specialist advice before making changes.

Do You Need a Specialist Accountant for SPVs?

Strongly recommended. A general accountant may overlook property-specific allowances and structures. A specialist property accountant ensures:

• Correct SIC codes at Companies House.
• Full mortgage interest deductibility.
• Proper treatment of retained profits and dividends.
• Compliance with HMRC rules.

At WIS Accountancy, we regularly guide clients through this process.

Conclusion: Is a Limited Company Buy-to-Let Right for You?

• If you’re a basic-rate taxpayer with one rental, personal ownership may be simpler.
• If you’re in the higher tax bands or plan to build a portfolio, an SPV can save significant tax.
• Remember, while interest rates are higher, the tax benefits often outweigh the cost.
• Always factor in stamp duty, capital gains tax, and accounting fees before making the switch.

Next step: Speak to a specialist mortgage broker and property accountant before committing. Every landlord’s situation is unique, and professional advice is essential to get it right.

Please watch our detailed video that covers the subject in more detail: Watch Video

Important FCA Warning
As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.

*Important Information- Your home may be repossessed if you do not keep up repayments on your mortgage.
This guide is for general information purposes only and does not constitute financial or mortgage advice. Always seek independent, regulated advice based on your individual circumstances. Product availability, eligibility criteria, and terms may change. Information is correct as of September 2025*