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Landlord: Limited Company vs Partnership vs Self-Employment
Choosing the right ownership structure for your property portfolio is one of the most important tax decisions you'll make. There is no single right answer — it depends on your circumstances.
Sole Trader / Self-Employment
Advantages
- Simplest to set up
- No incorporation costs
- Lower compliance burden
- Losses can offset other income
Disadvantages
- ✕All rental profit taxed at marginal rate (up to 45%)
- ✕No mortgage interest deduction (20% tax credit only)
- ✕Assets in your personal estate
- ✕NIC not payable on rental income (neither an advantage nor disadvantage)
Best for: Small portfolios with low profits, or landlords with losses to offset.
Limited Company
Advantages
- Pay corporation tax at 19%–25% (vs up to 45% personal)
- Full mortgage interest deductible
- Retain profits in company at lower rate
- Separate legal entity protects personal assets
Disadvantages
- ✕Higher setup and running costs
- ✕Personal use of funds incurs dividend tax + salary costs
- ✕CGT on transfer of existing properties (SDLT + CGT event)
- ✕More complex compliance and accounting
Best for: Higher-rate taxpayers building a portfolio, or those not needing to extract all profits.
Partnership
Advantages
- Flexible profit sharing between partners
- Can use each partner's personal allowance and basic rate band
- Simpler than a company
- No corporation tax
Disadvantages
- ✕Partners are personally liable
- ✕Still subject to personal income tax rates
- ✕Mortgage interest restricted to 20% credit (same as sole trader)
- ✕Less attractive than company for high earners
Best for: Married couples or families wanting to split income and utilise multiple tax allowances.
Get the Right Structure for Your Portfolio
The optimal structure depends on your portfolio size, income, mortgage position and long-term plans. We'll model the options and recommend the best approach.
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