Ltd Company vs Personal Buy-to-Let Calculator
Compare buying a rental property through a limited company vs personally. See the full tax comparison including stamp duty, income tax, and CGT.
Property Details
Management, maintenance, insurance
Salary from employment or other sources
Comparison
Personal
Annual Rent
£18,000
Expenses
-£2,000
Mortgage Interest
-£5,000
Tax on Rental
-£3,346
S24 Credit: £1,000
Net Profit
£7,654
Limited Co.
Annual Rent
£18,000
Expenses
-£2,000
Mortgage Interest
-£5,000
Corp Tax (19%)
-£2,090
Dividend Tax: -£692
Net Profit
£8,218
Annual Tax Difference
£564
Limited company is more tax-efficient
Key Differences
Not deductible (Personal)
Fully deductible (Ltd)
Up to 45% Income Tax
19% Corp + Dividend
Simplified calculation. Consult tax advisor for specific circumstances.
Corporation Tax vs Income Tax
Limited companies pay 25% corporation tax on rental profits (19% for profits under £50k). Higher-rate personal taxpayers pay 40% income tax, making companies more tax-efficient at higher profit levels.
Mortgage Interest Deduction
Limited companies can deduct full mortgage interest from rental income. Personal landlords only get a 20% tax credit, significantly reducing tax efficiency for leveraged properties.
Profit Extraction
Company profits must be extracted via dividends or salary, incurring additional tax. Personal ownership gives direct access to rental income. Factor in extraction costs when comparing structures.
Tax Comparison Examples
| Scenario | Monthly Rent | Personal Tax (40%) | Ltd Tax (25%) | Annual Saving |
|---|---|---|---|---|
| Single Property | £1,500 | £7,200 | £4,500 | £2,700 |
| 3 Properties | £4,500 | £21,600 | £13,500 | £8,100 |
| 5 Properties | £7,500 | £36,000 | £22,500 | £13,500 |
| 10 Properties | £15,000 | £72,000 | £45,000 | £27,000 |
* Simplified example assuming no mortgage interest. Actual calculations depend on mortgage costs, personal tax band, and profit extraction method.
Key Considerations
SPV Mortgage Availability
Not all lenders offer mortgages to Special Purpose Vehicles (SPVs). Those that do often charge higher rates (typically 0.5-1% above personal rates) and require larger deposits (25-30% minimum).
Annual Accounts Costs
Limited companies must file annual accounts with Companies House and submit Corporation Tax returns. Typical accountancy fees are £500-£1,500 per year. Add this to your cost comparison.
Directors' Responsibilities
As a company director, you have legal obligations including maintaining accurate records, filing on time, and acting in the company's best interests. Failure can result in personal liability and disqualification.
Exit Strategy
Selling personally incurs 18%/24% CGT (minus annual exemption). Company sales face corporation tax on the gain, then dividend tax when extracting proceeds - potentially 40%+ effective rate. Plan your exit carefully.
Important: Seek Professional Advice
This is a simplified comparison. The optimal structure depends on your personal circumstances, tax position, investment strategy, and exit plans. Always seek professional tax and legal advice before deciding on ownership structure.
Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.