The Benefits of Buying a Property in the UK through a Limited Company vs. Personal Name

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Introduction

When considering purchasing a property in the UK, exploring the options available, including buying it through a limited company or in your name, is essential. This blog will explore the advantages of purchasing a property in the UK through a limited company. We will highlight critical benefits such as tax relief, transfer of ownership, stamp duty savings, estate planning, and flexibility in changing directorship.

  1. Tax Relief: One of the significant advantages of purchasing a property through a limited company is the potential for tax relief. Unlike personal ownership, where income tax is payable on rental income, limited companies are subject to corporation tax, currently set at a lower rate. This can result in more favourable tax treatment and increased profitability for property investments.
  2. Transfer of Ownership: A property owned by a limited company offers greater flexibility in transferring ownership. In the case of personal ownership, transferring ownership can be complex and expensive, involving legal procedures such as conveyancing. Conversely, moving shares in a limited company is more straightforward, allowing for a more efficient transfer of property ownership.
  3. Stamp Duty Savings: Stamp duty, a tax paid when purchasing property, can be a substantial expense. However, buying a property through a limited company can provide potential savings. In 2016, the UK government introduced higher stamp duty rates for individuals purchasing additional residential properties. Limited companies, conversely, are exempt from these higher rates, resulting in potential cost savings for property investors.
  4. Estate Planning: Purchasing a property through a limited company can offer advantages in terms of estate planning. Property assets can be more easily transferred to beneficiaries using a limited company structure, allowing for smoother inheritance and reduced complexities associated with personal estates. This can particularly benefit those interested in long-term wealth preservation and succession planning.
  5. Changing Directorship: Another advantage of buying property through a limited company is the flexibility to change directorship. Changing the ownership structure can be cumbersome and time-consuming in personal ownership. However, in a limited company, the transfer of shares allows for more straightforward changes to company directorship, offering greater agility and adaptability for investors.

Conclusion

While purchasing a property in the UK can be done in your personal name, buying through a limited company presents numerous benefits. Tax relief, transfer of ownership, potential stamp duty savings, efficient estate planning, and the ability to change directorship easily are all compelling reasons to consider the limited company route. However, consulting with legal and tax professionals is essential to determine the most suitable approach based on individual circumstances. With careful planning and consideration, buying a property through a limited company can provide substantial advantages and help maximise returns on investment. We recommend you discuss your plans with GetGround, who specialise in setting up and managing your limited company investment. 

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