Updating post from Reddit.
Hi all I've been told that it is not worth putting a single B2L property into a company. Companies are for multiple properties. Question is why? Does anyone have a spreadsheet or something so I can see the numbers please?
The advice is old, things changed a lot since then. At the time this was true you could claim 100% of mortgage interest but now you can’t so the consideration was the additional running costs of an LTD including at least £1k in accountancy costs and at least 1 % higher BTL mortgage interest rates.
Now you need two consider your long term strategy and then work out which will result in you paying the least tax.
Some examples.
I set up a BTL SPV LTD in 2013 to manage some mortgage free alt property bringing in around £8k a year. Company filings were £800 so 10% of income went on expenses that I would not have had to pay if I had not set up the LTD.
In 2017 I was earning around £100k PAYE and had two traditional private rentals bringing in £20k in income, I was being taxed 40% on that rental income. I worked out that the cost of selling to my BTL would break even after 5 years based on income tax savings. It did assume all profit would go into a Directors Pension.
Now in 2025 I am transferring my old home into the BTL LTD. If the rental income was in my name and not my wife it would be taxed at 45% so it would take about 3 years to break even. As the rental is taxed at my wife’s tax rate of 20% it will take maybe 6.
The thing is, I will release equity from selling the property to my BTL which will use to substantially reduce my Personal mortgage saving my literally £100k’s over the shortened repayment term.
My strategy means that I pay 0 corp tax or income tax on £35k rental income, that will shortly increase to 0% tax on £60k of rental income.
If I needed to live of the money I could pay back the Directors Loan and pay 19% corporation tax.
TL;DR. LTD makes sense if you are in it for the long term (5 or 10 years), are in a higher rate tax band and do not need to live off the rental income.
What is your long term strategy for the rental?
Youve missed the impact of stamo duty nibor, but the key point in this post is “do not need to live off rental income“. So many think theyre avoiding personal tax….until they realise that all draw downs will be taxed as normal.
No I haven't, its part of the cost of selling and as I said, it took me 5 years to break even in 2017 and 6 years now. Most of that is due SDLT.
Pension tax planning is a different consideration and personally I'd prefer to defer that challenge down the line and be as tax efficient while I am a 45% tax payer and aim to be a basic rate tax paying pensioner.
Because you effectively have to sell the property to you ltd company. You need money in the company to do that. You are then going to find everything you normally do such as mortgage, insurance, accountants and agency fees will go up as they all charge premium for ltd complexity's. You can't sell it to your company for cheap it has to be the market rate, then you will be faced with CGT bill. Really you should buy via ltd straight away in my opinion. I got stung because of being higher tax payer and student loan so having it in my name wasn't the best decision.
Plus if you transfer to Ltd you have to pay stamp duty again
Dont know why youve been downvoted. This is true in most cases albeit the Ltd coy pays on ’purchase’.
There’s pros and cons to owning property into Ltd company.
The main benefit to owning a property without Ltd company is that you can remortgage the equity out without owing capital gains tax. The main downside is more personal income tax along with only being able to claim 20% tax relief on mortgage payments.
Limited company structure lets you claim 100% tax relief, keep the money in the company to reinvest with minimal tax implications and if you don’t pay yourself a wage this won’t trigger any personal income tax. More accountancy fees but these aren’t normally a large amount.
My advice would be to find a good reputable accountant who specialises in property and book in for a consultation to weigh up the pros and cons before making a decision.
I was given the same advice as you on my first BTL property and I am currently in the process of incorporating it into a Ltd structure as I’m now a higher rate tax payer and barely breaking even.