Should you hold investment property personally or as a company?

The world of property investment has undergone significant changes in recent years, making this decision more relevant than ever. From evolving tax rules to tighter regulations, landlords are feeling the squeeze. Let’s dive into what’s changed and why our clients are asking these questions.

Owning investment property has become more challenging due to these factors:

• Tax shake-ups

Say goodbye to the tax perks of the Furnished Holiday Let Regime. These changes have evened the playing field across property types, but they’ve also removed a major incentive.

• Rising energy standards

By 2027, rental properties will need an EPC rating of C, and by 2030, a B rating. This means you may need to invest in costly upgrades to stay compliant.

• Soaring insurance costs

With climate change driving more frequent floods, insurance premiums are spiking.

• High interest rates

Mortgages for buy-to-let properties now come with higher costs, cutting into your profits.

• Reduced mortgage interest relief

Higher and additional-rate taxpayers are no longer eligible for full tax relief on mortgage interest payments.

• Increased Capital Gains Tax (CGT)

Selling a commercial property? Expect CGT rates of 18% to 24%.

• Stamp Duty blues

The surcharge for second homes has climbed from 3% to 5%.

All these factors have led to a decline in private landlords and a rise in institutional investors, shrinking rental supply and driving up rents. Now, more people are rethinking how to structure their property investments.

Here’s why some landlords choose the company route:

✅ Lower Tax rates: Companies pay Corporation Tax at 19%-25%, compared to personal Income Tax rates of 20%-45%. However, don’t forget—you’ll be taxed on any dividends you draw from the company.

✅ Succession planning: Want to pass properties to the next generation? A company structure makes it easier, though you might miss out on some Capital Gains and Inheritance Tax reliefs.

✅ Liability protection: As a company owner, your personal assets are generally shielded from business risks.

✅ Flexible ownership: Companies allow you to divvy up ownership shares creatively.

⚠️ Increased compliance: Running a company isn’t all sunshine and rainbows. You’ll face added paperwork and administrative requirements.

On the flip side, personal ownership avoids the complexity of running a company. But there’s a catch:

⚠️ Higher Income Tax: You’ll pay personal Income Tax on rental income, which can add up quickly if you’re in a higher tax bracket.

⚠️ Capital Gains hit: Selling property directly often means higher Capital Gains Tax (CGT) rates.

Still, for those with smaller portfolios or straightforward goals, personal ownership might be the simpler choice.

There’s no universal answer to whether a company structure or personal ownership is better—it all depends on your unique situation. Consider factors like:

• Your current and future tax bracket

• Long-term investment goals

• Succession plans

• Risk tolerance

• Your willingness to handle corporate compliance

Deciding how to hold your investment property isn’t just a financial decision—it’s a strategic move that could impact your portfolio for years to come. That’s why getting professional advice early is critical. A tailored approach can help you avoid costly mistakes and maximise your investment’s potential.

Need help figuring out the best path for your property investments? We’re here to help. Our team of experts specialises in guiding property investors like you through the complexities of tax, compliance, and financial planning, get in touch.