Should You Buy Property as an Individual or Through a Limited Company?

Buying your first property, either as a long-term living option or as your first investment, is a monumental decision. One of the most crucial decisions you will face is how to structure your purchase: whether to bear the responsibility and buy as an individual, or start a limited company and purchase the property in its name. Both options come with their own set of legal and financial advantages that can ultimately affect the management and profitability of your first property — especially if it is a buy-to-let property in the UK.

 

 

Buying Your Property As A Limited Company

If you’re a first-time buyer, chances are you will be advised to form a limited company to take advantage of the myriad tax benefits. It’s a sound choice. However, be aware that sometimes, this route can complicate matters in the long run. Listed below are a few advantages of buying a property through a limited company:

 

  • Lower Tax Rates: Probably the most compelling reason why many people choose to buy properties through a limited company is the lower tax rate. For example, individuals who own properties through limited companies pay corporation tax rates, which is solely dependent on how much profit the company makes.

 

Profit Margin  Corporation Tax Rate (As of 2025)
Profits under £50,000 (Small Profits Rate) 19%
Profits over £250,000 (Main Rate) 25%

 

 

In contrast, individuals who buy a property under their own name will see a substantial amount of profits cut down as these profits will be considered as income and subjected to the income tax guidelines. These rates are significantly higher than corporation tax rates. 

 

Taxable Income  Tax Rate (As of 2025)
Up to £12,570  0%
£12,571 to £50,270 20%
£50,271 to £125,140 40%
Above £125,140 45%

 

As you can see here, anything above £125,140 is taxed at 45%. From a tax rate perspective, buying a property through a limited company appears more attractive. These properties are also subject to corporation tax when sold or transferred.

 

  • Other Tax Reliefs: As if reduced tax rates weren’t beneficial enough, limited companies can access various other tax reliefs not available to individuals. These include super-deduction, relief for research and development, and special rate first-year capital allowances, to name a few. 
  • No Section 24 Mortgage Interest Relief: This is a major reason behind the growing number of buy-to-let properties being transferred to limited companies in the UK. Section 24 Mortgage Interest Relief reduced the total amount of relief for mortgages for landlords who own properties as an individual. However, this restriction does not apply to limited companies.
  • Limited Liability For Property Owners: Since the property is owned by the company and not the individual, if the company cannot repay a loan, the individual’s personal assets are not affected. Limited companies also offer greater flexibility in distributing profits. In this case, limited companies help not only with asset protection but also with succession planning. 

 

Allowing your property to be owned by a limited company sounds appealing. But what are the disadvantages? One of them is the double taxation on profits that are withdrawn from the company. Although corporation tax is lower, any salary or dividends withdrawn are subject to personal tax. Another issue that most people find when trying to set up a limited company is the complex processes involved when it comes to establishing the company, followed by the responsibility of filing tax statements and annual returns. These processes incur additional expenses. The company can incur a Capital Gains Tax and Stamp Duty Land Tax for transferring existing properties into the company.

 

 

Buying Your Property In Your Name

If a limited company offers so many advantages, why would you consider buying property as an individual? Well, as it turns out, individual ownership comes with a distinct set of benefits often overlooked by property investors. 

 

  • Simplicity: Why is this important? If you’re a first-time buyer or investor, you probably want the process to be as straightforward as possible. Buying a property in your own name is significantly simpler than going through a limited company. There are no extra administrative costs, no complex paperwork for taxes and accounting, and no additional compliance requirements. If you’re starting out with just one or two properties, buying as an individual is less time-consuming and more efficient.
  • Better Mortgage Rates For Individual Property Owners: Individual mortgages in the UK are generally cheaper and easier to obtain compared to mortgages for limited companies. Individual buyers can shop around and pick the most suitable mortgage without restrictions.
  • Capital Allowance and Personal Allowance: Another benefit of individual ownership is access to annual CGT allowances and personal income allowances — options that are not available to limited companies. This can make selling a property more tax-efficient for first-time investors.

 

The downsides of individual ownership mainly include higher tax rates for high earners and reduced mortgage interest relief. These two factors are key reasons why some first-time investors hesitate to buy property in their own name.

 

Of course, the right decision depends on your tax bracket, portfolio size, and long-term goals. Both limited companies and private ownership offer their own set of pros and cons, and your best option depends on what you want to achieve with your investment over time. A well-thought-out strategy can help you make the best decision when it comes to property ownership.

 

 

Our team at Global Phoenix Group is ready to help you make the most informed and ideal decision if you’re finding it hard to decide which path to choose. Want to navigate your options with confidence? Book a free consultation call with us today!


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