A UK limited company is the single most consequential entity-choice question in modern property tax. Since the 2017 to 2020 phase-in of the Section 24 mortgage-interest restriction at ITTOIA 2005 s.272A, the corporate route has shifted from a niche option for sophisticated investors to a default consideration for any leveraged landlord at the higher rate or above. The decision is consequential, fact-intensive, and asymmetric in cost: the wrong choice in either direction can leave £10,000 to £50,000 per year of tax on the table.

This page is the pillar / hub for the cluster. We cover what a limited company is under the Companies Act 2006, why landlords use them, the eight typical use-case forks (BTL, HMO, FHL, development, commercial, multi-SPV group, Family Investment Company, hybrid LLP corporate member), the operational framework (corporation tax, Companies House compliance, ECCTA, statutory accounts, PSC register, director duties), the extraction routes, the honest cost-side cons, the alternatives (sole trader, partnership, LLP, LP, trust), and the decision band for when LtdCo is the right answer. Specialist pages on the site cover each use-case fork in depth; this pillar funnels generic-intent traffic to the right specialist.

What is a UK limited company?

Companies Act 2006 s.1 defines "company" as a company formed and registered under CA 2006 (or its predecessor Acts). CA 2006 s.3 sets out three forms:

  • Limited by shares: the operative form for property. Members hold shares; member liability is limited to the amount unpaid on those shares.
  • Limited by guarantee: uncommon for property. Members guarantee a small fixed contribution on a winding-up. Used for clubs, charities, and some property-management companies.
  • Unlimited: exceptionally rare. Members have unlimited liability for company debts. Used for some professional partnerships seeking separate legal personality without losing transparency.

CA 2006 ss.7 to 9 govern the incorporation procedure: memorandum, articles of association (typically the model articles for private companies limited by shares), filing the IN01 incorporation form with Companies House. From the date of incorporation per s.15 the company is a body corporate, a separate legal person distinct from its shareholders. It can own property, enter into contracts, sue and be sued in its own name. The separate-legal-personality principle dates from Salomon v A Salomon & Co Ltd [1897] AC 22 and is the foundational concept beneath UK company law.

Limited liability: the structural attraction (with practical caveats)

CA 2006 s.74 limits a member's liability to the amount unpaid on their shares. For a typical fully-paid £1-share company, member liability beyond the £1 paid-up share capital is NIL.

Operative consequence for property: the LtdCo's debts (mortgages, trade creditors, tenant deposit obligations, landlord liability under Housing Act 2004 and Renters' Rights Act 2025, ATED, CT) do NOT attach to the shareholder personally.

Two important practical caveats:

  • Personal guarantees on BTL mortgages. Standard lender practice for property LtdCos requires the director (typically the sole shareholder) to give a personal guarantee on the mortgage. The limited-liability shield is therefore narrower than the bare CA 2006 s.74 reading suggests: on a leveraged portfolio the personal guarantees re-expose the shareholder to the mortgage debt in default scenarios.
  • Statutory veil-piercing. Insolvency Act 1986 provisions (wrongful trading, fraudulent trading), Company Directors Disqualification Act 1986, and various Companies Act enforcement provisions can pierce the corporate veil for fraud, insolvency-related misconduct, or compliance failures. The principle is robustly defended in Adams v Cape Industries plc [1990] BCC 786: courts will not lightly disregard separate corporate personality, but they will where the substance demands it.

Why landlords have moved to limited companies since 2017

ITTOIA 2005 s.272A (introduced by Finance (No.2) Act 2015, phased in April 2017 to April 2020) restricted mortgage-interest deduction for individuals carrying on a property business. Full deduction was replaced by a 20% basic-rate tax credit. Higher-rate and additional-rate landlords now pay tax on rental income calculated WITHOUT interest deduction, then receive only 20% credit on the interest. Effective marginal tax rates on geared rental income for higher-rate individuals can exceed 50%; for additional-rate individuals, 55%.

Limited companies are NOT within s.272A scope. They deduct interest in full under CTA 2009 Part 5 (loan relationships). Combined with the corporation tax rate stack (19% small profits up to £50,000 / 26.5% marginal-relief band / 25% main rate), the structural advantage for leveraged property portfolios held in companies vs personally is typically £5,000 to £15,000 or more per year on a mid-size BTL portfolio with substantial mortgage interest.

The Section 24 driver is the primary reason for the post-2017 shift. Other reasons that compound the case:

  • CT-rate retention for reinvestment. Profits retained inside the company at the CT rate compound faster than profits drawn personally at HRT or ART. For reinvestment-intent operators, the retention math is the dominant argument.
  • Asset protection via per-property SPVs. Each property in its own LtdCo ring-fences from creditors of the rest of the portfolio.
  • Succession planning. Limited company shares transfer more cleanly between generations than direct property. Lifetime gifts as potentially exempt transfers, Family Investment Company architecture for value-freeze IHT planning, pension contributions, all work cleanly through the corporate wrapper.
  • Tax-deductible pension contributions. Employer pension contributions from the LtdCo are CT-deductible (subject to the wholly-and-exclusively test under CTA 2009 s.54). Personal pension contributions from rental income offer narrower scope.

The eight use-case forks

Limited companies in the property context divide into eight typical configurations. Each has its own tax profile, lender market, compliance regime, and decision drivers. This pillar surfaces the forks; the specialist pages cover the depth.

1. BTL LtdCo (single-let residential portfolio)

The most common use case. Single-let residential properties held in a limited company for rent. Full interest deductibility under CTA 2009 Part 5 (no s.272A restriction). Standard LtdCo BTL mortgage products available from specialist lenders (Aldermore, Paragon, Landbay, Kent Reliance, and the broader specialist BTL market). Rate premium 50 to 75 bps over personal BTL typical. See our companion BTL LtdCo complete guide for the depth on this fork.

2. HMO LtdCo (multi-tenant licensed HMO)

Houses in multiple occupation under Housing Act 2004 Part 2 mandatory or selective licensing. HMOs carry materially more capital allowance opportunity than single-let BTL (communal kitchens, common areas, mandatory fire-suppression). HMO LtdCo mortgage market is narrower than personal HMO; specialist-lender rate premium typically 50 to 100 bps over standard BTL. The HMO licence transfers on incorporation under Housing Act 2004 with local-authority application required. See our companion HMO incorporation pros-and-cons page for the decision framework on this fork.

3. FHL LtdCo (furnished holiday let)

Furnished holiday lets operated as short-term lettings. Note: the FHL regime is in transitional abolition under FA 2025 with the favourable FHL treatment phased out; the LtdCo route for short-term let portfolios may now be evaluated alongside the broader CTA 2009 Part 4 property-business framework. Verify the current FHL state against gov.uk at the time of any client decision.

4. Development LtdCo (property trading, flip, new-build)

Property trading rather than investment. The trading-versus-investment line at CTA 2010 ss.1124 to 1126 and extensive case-law (Marson v Morton, Salt v Chamberlain, the badges-of-trade analysis from Iswera v IRC) governs the characterisation. Trading profits are taxed under CTA 2009 Part 3 with different loss-utilisation rules from investment-side profits. Stamp duty, VAT, and CGT treatment all differ for trading entities. See our companion trading-versus-investment pages for the depth.

5. Commercial LtdCo (non-residential or mixed-use portfolio)

Commercial property (shops, offices, industrial units, mixed-use buildings). Generally outside the 3% HRAD residential surcharge under FA 2003 Sch 4ZA (which applies to dwellings); often subject to VAT (option-to-tax considerations under VATA 1994 Sch 10). Commercial LtdCo mortgage market is distinct from residential, with bank-side rather than specialist-BTL lenders dominant.

6. Multi-SPV group (HoldCo plus multiple SPVs)

Holding company plus multiple single-purpose vehicles, each holding one or a small number of properties. Asset protection per SPV; group relief flow under CTA 2010 Part 5 (subject to eligibility per the 75% subsidiary test, Sch 18 equity-holder overlay, and the s.137 arrangements anti-avoidance); intra-group dividend conduit under CTA 2009 Part 9A; SDLT group relief on intra-group transfers under FA 2003 Sch 7 with 3-year claw-back. See our companion group-relief eligibility page for the depth.

7. Family Investment Company (FIC)

NOT a separate statutory entity: a private limited company under CA 2006 with growth-share / share-class architecture used for family-wealth structuring and IHT planning. Voting shares held by founders; growth shares held by next-generation children; future value growth accrues to children's shares, removing future-growth value from founders' IHT estates. The initial gift of growth shares is a PET (potentially exempt transfer) becoming wholly exempt after 7 years. CGT applies on the initial growth-share gift at market value (no s.165 holdover for investment-FIC shares). See our companion family-investment-company guide for the depth.

8. Hybrid LLP corporate member

An LLP combining individual members with one or more corporate members (typically a UK limited company). NOTE: the FA 2014 mixed-membership partnership rules at ITA 2007 ss.850C to 850E systematically dismantle the income-splitting attraction for the classic founder-plus-own-LtdCo configuration. Three residual legitimate uses survive (external investor, asset protection, FIC succession). See our companion hybrid-LLP page for the honest framing on this fork.

The operational framework

Corporation tax (CTA 2010 + CTA 2009)

CTA 2010 s.3 charges corporation tax on company profits. The rate stack from FA 2021 onwards:

  • Small profits rate 19% on profits up to £50,000 (single company; threshold divided by number of associated companies under ss.18D to 18J).
  • Marginal relief effective 26.5% on profits between £50,000 and £250,000.
  • Main rate 25% on profits above £250,000.

UK property business profits are taxed under CTA 2009 Part 4 (ss.202 to 291). Full interest deductibility under CTA 2009 Part 5 loan relationships, without the s.272A restriction that applies to individuals. Chargeable gains form part of CT-rated profits (no separate annual exempt amount; indexation allowance withdrawn from 1 January 2018 per F(No.2)A 2017 s.26, frozen at December 2017 RPI for assets held before that date).

Companies House compliance + ECCTA framework

ECCTA 2023 Part 1 (the Economic Crime and Corporate Transparency Act 2023) introduces several operational obligations for ALL UK companies:

  • Appropriate registered office (CA 2006 ss.86 to 88 as amended): PO Box-only addresses no longer permissible.
  • Registered email address (new CA 2006 s.88A+ post-ECCTA): Companies House contact route.
  • Confirmation statement (CA 2006 ss.853A to 853L): annual filing confirming current registered information.
  • PSC register (CA 2006 Part 21A): persons with significant control register maintained internally and reported to Companies House.
  • Mandatory identity verification for directors and PSCs: in force from 18 November 2025 for new appointments, with a 12-month transition window for existing officeholders. Verification via the GOV.UK One Login service or via an Authorised Corporate Service Provider (ACSP). New regime under CA 2006 s.66 (ACSP route) and s.68 (per-natural-person personal code).

ECCTA also strengthens enforcement: civil penalties up to £10,000 under Sch 1B; director disqualification routes for non-compliance with the identity-verification regime. Verify the current rollout state via the official Companies House campaign tracker.

Statutory accounts (CA 2006 Part 15)

CA 2006 Part 15 (ss.380 to 474) governs accounts and reports. Small companies (most property LtdCos) file abridged or filleted accounts under FRS 105 (micro-entities) or FRS 102 (small companies regime). Size-test thresholds at CA 2006 s.382, s.383, and s.477 determine the regime and the audit exemption. Most single-SPV property LtdCos qualify as micro-entities (turnover below £632,000; balance sheet total below £316,000; 10 or fewer employees; verify current thresholds at the time of any client decision). Filing window: 9 months from end of accounting reference period (s.441); first accounts within 21 months from incorporation.

PSC register (CA 2006 Part 21A)

Persons with significant control register, maintained internally by the company and reported to Companies House. Five conditions identify a PSC: (i) holds, directly or indirectly, 25% or more of the shares; (ii) holds, directly or indirectly, 25% or more of the voting rights; (iii) has the right to appoint or remove the majority of the board; (iv) has the right to exercise, or actually exercises, significant influence or control; (v) has significant influence or control over a trust or firm holding any of the foregoing. For family property LtdCos with multiple shareholders, the PSC analysis requires careful attention to share-class voting structures and any shareholder agreements.

Director duties (CA 2006 ss.170 to 177)

General duties of directors: act within powers (s.171); promote the success of the company (s.172); exercise independent judgment (s.173); exercise reasonable care, skill and diligence (s.174); avoid conflicts of interest (s.175); not accept benefits from third parties (s.176); declare interest in proposed transactions (s.177). The s.172 duty includes consideration of long-term consequences, employees, suppliers, community and environment, and reputation. Statutory duty applies regardless of company size.

Extraction routes from a property LtdCo

Five typical routes, in rough order of cost-efficiency:

  1. Salary up to Personal Allowance plus Primary Threshold. CT-deductible at LtdCo level. No employee NIC under PT; employer NIC at the FA 2026 secondary rate (15% from 6 April 2026) above the Secondary Threshold. The cheapest first lever for owner-operators.
  2. DLA repayment where a credit balance exists (typically from a TCGA 1992 s.162 incorporation that created a value-differential credit balance). Tax-free return of capital up to credit-balance exhaustion. Be careful of the DLA exhaustion trap: the credit balance is finite, and post-exhaustion the operator must shift to a personally-taxable extraction route. See our companion Director's Loan Account guide.
  3. Employer pension contributions. CT-deductible at LtdCo (subject to the wholly-and-exclusively test under CTA 2009 s.54). Tax-deferred at director level, subject to the annual allowance (£60,000 currently, tapered for high earners with adjusted income above £260,000). Long-horizon extraction route.
  4. Dividend at the rate stack from 6 April 2026 per FA 2026 substituting ITA 2007 s.8(2):
    • £500 dividend allowance.
    • 10.75% ordinary (basic-rate) dividend rate.
    • 35.75% upper (higher-rate) dividend rate.
    • 39.35% additional rate.
    Standard medium-cost lever for owner-operators with rental profits above PA.
  5. Rent to director for property used by the LtdCo (home-office space, parking, storage). CT-deductible at LtdCo level. Director declares rental income under ITTOIA 2005 Part 3. Modest practical lever where applicable.

The extraction-discipline rule: use the cheapest unfilled lever first. See our companion extraction-pillar and salary-versus-dividends pages for the operational depth.

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Worked examples

Example 1: The headline comparison (£50k profit, geared, higher-rate)

A landlord with £50,000 of net rental profit (after deductible operating costs), £40,000 of mortgage interest, and otherwise higher-rate band on personal income:

  • Personal ownership (HRT): taxable rental income calculated WITHOUT full interest deduction per s.272A. £50,000 × 40% = £20,000. Less 20% basic-rate credit on £40,000 interest = £8,000. Effective tax around £12,000 per year.
  • LtdCo, profits retained (no extraction): £50,000 minus full £40,000 interest deductible per CTA 2009 Part 5 = £10,000 taxable profit. CT at 19% small-profits rate = £1,900 per year. Saving £10,100 vs personal.
  • LtdCo, profits fully extracted at HRT: £10,000 taxable. CT £1,900. Distributable £8,100. Dividend tax on £7,600 (after £500 allowance) at 35.75% = £2,717. Combined around £4,617 per year. Saving £7,383 vs personal.
  • LtdCo, profits fully extracted at ART: same £10,000 CT base. Dividend tax at 39.35% on £7,600 = £2,991. Combined £4,891. Saving £7,109 vs personal.

Operative insight: retention saves most; extraction at higher or additional rate still saves but by less; the decision turns on retention vs extraction intent. The pillar holds this honestly.

Example 2: BTL LtdCo where retention wins decisively

Mrs Patel owns a 6-property BTL portfolio personally. £90,000 gross rental; £45,000 mortgage interest; £20,000 operating costs. Higher-rate individual planning to retain profits for portfolio expansion over the next 10 to 15 years.

  • Personal ownership: taxable £90,000 minus £20,000 = £70,000. Tax at 40% = £28,000. Less 20% credit on £45,000 interest = £9,000. Effective tax around £19,000 per year.
  • LtdCo retention: profit £90,000 minus £20,000 minus £45,000 (full interest) = £25,000. CT 19% = £4,750. Retention benefit per year £14,250.
  • Incorporation cost: SDLT post-MDR-abolition on £900,000 portfolio (6 × £150,000) around £43,000 plus setup £10,000 = around £53,000 one-off.
  • Payback: £53,000 / £14,250 = 3.7 years. LtdCo wins decisively for retention horizons above 4 years.

Example 3: Multi-SPV group structure where scale demands group operation

Singh Properties Group: HoldCo plus 5 SPVs (each holding 2 to 3 properties). Aggregate portfolio £4 million; aggregate profits £200,000 per year; aggregate interest £100,000 per year.

  • CT operation: each SPV computes CT separately. The £50,000 small-profits threshold is divided across 5 associated companies per CTA 2010 ss.18D to 18J, giving each SPV a £10,000 small-profits threshold plus a £50,000 marginal-relief upper limit. Most SPVs land in the marginal-relief band at 26.5% effective on profits above £10,000 per SPV.
  • Group-relief flow: SPV-A has loss-year (£40,000 refurb capex year). SPV-B has profit £30,000. SPV-C has profit £20,000. SPV-A surrenders £30,000 loss to SPV-B (eliminates SPV-B's £30,000 profit) plus £10,000 loss to SPV-C (reduces SPV-C profit to £10,000). Group CT bill reduced by £40,000 × 26.5% effective = around £10,600.
  • Intra-group dividend conduit (CTA 2009 Part 9A): SPV-D distributes £50,000 to HoldCo as intra-group dividend (exempt from CT at HoldCo per s.931A class exemption). HoldCo distributes £50,000 upward to the founder as ordinary dividend at the founder's marginal dividend rate.

Group operation unlocks CT group relief plus intra-group dividend exemption: material savings vs single-LtdCo holding all 5 properties. See our companion group-relief eligibility page for the depth on the 75% subsidiary test and the Sch 18 equity-holder overlay.

Example 4: HMO LtdCo where HMO-specific advantage compounds

Mrs Kapoor's 4-HMO portfolio: £60,000 gross rental; £30,000 mortgage interest; £18,000 operating costs; substantial common-parts plant (around £80,000 qualifying for CAA 2001 plant-and-machinery allowances). Personal ownership comparison vs LtdCo:

  • LtdCo extraction year 1: £60,000 minus £18,000 minus £30,000 = £12,000 profit pre-allowances. Capital allowances £20,000 (year-1 AIA on plant) → loss £8,000 carried forward. CT bill £0 year 1; carry-forward loss reduces year-2 CT.
  • Personal ownership: capital allowances also available but s.272A interest restriction still bites alongside. Effective tax saving on the £20,000 allowance: £8,000.

HMO LtdCo wins on capital-allowance arithmetic in addition to the Section 24 advantage. See our companion HMO incorporation page for the depth on the eight HMO-specific decision factors.

Example 5: When personal ownership wins (the honest counterexample)

Mr Verma, basic-rate taxpayer with one single-let BTL flat. £8,000 gross rental; £2,000 mortgage interest; £1,500 operating costs.

  • Personal ownership: taxable £6,500. Tax at 20% basic rate = £1,300. Less 20% credit on £2,000 interest = £400. Effective tax around £900 per year.
  • LtdCo full extraction: £8,000 minus £1,500 minus £2,000 = £4,500 profit. CT 19% = £855. Dividend on £3,600 (after £500 allowance) at 10.75% = £387. Combined £1,242 per year. Worse than personal by £342 per year.
  • Plus one-off SDLT around £4,000 (single dwelling at residential rate stack with 3% HRAD) plus setup £5,000 = around £9,000 one-off cost that never amortises.

Operational conclusion: for single-property basic-rate-taxpayer landlords, the LtdCo route loses. The pillar holds this honestly; not every landlord benefits from incorporation.

Example 6: FIC sub-category (succession-planning use)

Patel Family: Mr and Mrs Patel hold an 8-property portfolio in a Family Investment Company structure. Voting shares (Class A) held 50/50 by Mr and Mrs Patel; growth shares (Class B and C) held by adult children. Annual dividends paid only on Class A.

  • CT side: FIC pays CT on rental profits at the applicable rate stack (typically 26.5% effective for an 8-property portfolio at the marginal-relief band).
  • IHT side: future growth in property value accrues primarily to the children's growth shares (Class B and C), removing future-growth value from Mr and Mrs Patel's IHT estates. The initial gift of Class B and C shares to the children is a PET that becomes wholly exempt after 7 years from the gift date.
  • CGT consideration: TCGA 1992 s.165 holdover is NOT available for transfers of investment-FIC shares (s.165 plus Sch 7 limit holdover to trading-company shares). CGT crystallises at market value on the initial growth-share gift. Minority-discount valuation typically reduces the CGT base.

FIC is the succession-planning sub-category of LtdCo, not a separate statutory entity. See our companion FIC guide for the depth on the IHT-planning architecture.

Example 7: Extraction routes mapped (the operational day-to-day question)

Singh Property Ltd has £80,000 retained earnings plus £40,000 annual profit; Mr Singh is a higher-rate-band individual.

  • Route 1 (Salary up to PA + ST): £12,570 salary. CT-deductible. No employee NIC under PT; minimal employer NIC. Cost to Mr Singh personally: £0 income tax (within PA), minimal NIC. First lever, cheap.
  • Route 2 (Employer pension contribution): £20,000 employer pension contribution. CT-deductible (subject to wholly-and-exclusively test). No personal tax (within annual allowance). Long-horizon extraction lever with tax-deferral.
  • Route 3 (DLA repayment, where credit balance exists from s.162 incorporation): £15,000 DLA repayment. Tax-free return of capital up to credit-balance exhaustion. Cheapest lever while credit balance lasts.
  • Route 4 (Dividend at HRT): £30,000 dividend distribution. CT already paid on the profit. Dividend tax on £29,500 (after £500 allowance) at 35.75% = around £10,546. Plus the original CT cost. Standard medium-cost lever.
  • Route 5 (Rent to director for property used by LtdCo): modest where applicable. Director rents home-office space to the LtdCo. CT-deductible; director declares rental income via ITTOIA 2005 Part 3.

Extraction discipline: use the cheapest unfilled lever first. See our companion extraction-pillar for the full sequencing analysis.

The honest cost-side cons

Ten operative considerations against the LtdCo route. The pillar holds these as bluntly as the pros:

  1. SDLT on incorporation at residential rate stack with 3% HRAD surcharge per FA 2003 Sch 4ZA, materially worsened by F(No.2)A 2024 s.7 MDR abolition effective 1 June 2024 (no more multiple-dwellings relief). For a £600,000 4-HMO bundle, around £43,000 SDLT post-abolition vs around £18,000 pre-abolition.
  2. CGT on transfer unless TCGA 1992 s.162 incorporation relief or FA 2003 Sch 15 partnership-incorporation relief applies. The Ramsay business test for s.162 is fact-intensive; the Sch 15 route requires a genuine PA 1890 partnership.
  3. Double-layer tax on extraction: CT plus dividend at marginal rate. Combined effective rate around 47% to 52% for higher-rate individuals; offsets some of the Section 24 advantage on extracted profits.
  4. Mortgage product narrowing in LtdCo space plus typical 50 to 75 bps rate premium over personal BTL.
  5. Loss of CGT annual exempt amount inside LtdCo: corporate gains taxed without the £3,000 AEA per disposal that individuals receive.
  6. ATED admin for single dwellings above £500,000: annual return required under FA 2013 even where the property-rental-business relief at ss.133 to 141 eliminates the chargeable amount.
  7. Annual filing overhead: CT600, statutory accounts (FRS 105 or FRS 102), confirmation statement, PSC register maintenance, ID verification post-ECCTA. Typical annual compliance cost £2,000 to £5,000 in adviser fees plus internal time.
  8. Loss of Private Residence Relief and lettings relief on disposal: where any property was ever the operator's main residence, PRR under TCGA 1992 ss.222 to 226 and residual lettings relief at s.223B can shelter substantial gain. Transfer to LtdCo crystallises (subject to s.162); LtdCo holds without PRR access.
  9. Refinancing cost: existing personal BTL mortgages cannot typically be transferred to an LtdCo. LtdCo refinances at incorporation: lender arrangement fees (1% to 2% of loan), valuation fees (£500 to £2,000 per property), legal fees (£1,000 to £3,000 per property), broker fees.
  10. Personal guarantees on LtdCo BTL mortgages typically required by lenders, narrowing the limited-liability shield in practice on default scenarios.

The alternatives to LtdCo

Four operative alternatives within the entity-choice decision tree:

  • Sole trader: no separate entity; default for single landlords; ITTOIA 2005 Part 3 property business plus s.272A restriction; simplest compliance.
  • General partnership under PA 1890: two or more persons carrying on business in common; tax-transparent under ITTOIA 2005 Part 9 and TCGA 1992 s.59; unlocks FA 2003 Sch 15 SDLT incorporation relief. See our companion partnership-existence test page for the four-tests gate and the s.2(1) co-ownership negative.
  • Limited Liability Partnership under LLPA 2000: limited liability plus tax-transparent default; salaried-member regime exception at ITA 2007 ss.863A to 863G (post-BlueCrest narrowed); mixed-membership regime at ITA 2007 ss.850C to 850E for hybrid LLP configurations. See our companion LLP pages.
  • Limited Partnership under LPA 1907: at least one general partner plus one or more limited partners; post-ECCTA 2023 Part 2 compliance reforms. See our companion LP-reforms page.

Trust structures (bare trusts, discretionary trusts, interest-in-possession trusts) are covered elsewhere on the site as separate routes.

Decision band: when is LtdCo the right answer?

The decision depends on five interacting factors:

  • Portfolio size: 3 or more properties typically amortises the incorporation cost; single property rarely does.
  • Current LTV: 50%-plus LTV means larger absolute s.272A impact, larger annual saving from full interest deductibility.
  • Rate band: higher-rate (40%) or additional-rate (45%) individuals see materially larger savings vs LtdCo CT rates than basic-rate (20%) individuals.
  • Retention vs extraction intent: retention captures the full CT-rate saving; extraction loses some of the saving in the double-layer tax.
  • Time horizon: longer holding periods amortise the one-off SDLT and setup costs across more years of saving.

Rough decision band:

  • Favours LtdCo: 3-plus properties + 50%-plus LTV + higher/additional-rate + retention intent + 5-plus year horizon. Payback 3 to 10 years.
  • Favours personal: single low-yield property + low LTV (30% or below) + basic-rate + extraction intent + short horizon.
  • Borderline: 2-property portfolios; mixed-rate bands; mixed retention/extraction intent. Full fact-specific calculation required.

Where this page sits in the cluster

This page is the broadest LtdCo pillar. The specialist pages cover each use-case fork and operational dimension in depth:

BTL LtdCo specialists

HMO LtdCo specialists

SPV / operational specialists

Extraction specialists

Group operation specialists

Incorporation mechanics specialists

Pillar siblings (LEVER and MECHANICS)

Alternatives (entity-choice forks)

Decision pages

ECCTA + Companies House