At Accounting Matters, we work with landlords at every stage of their investment journey — from first-time buy-to-let owners to seasoned portfolio landlords. Over the past few years, we’ve seen a clear shift: more and more landlords are choosing to run their property businesses through a limited company rather than continuing as sole traders.
And it’s not hard to see why.
With rising interest rates, reduced mortgage interest relief, and an increasingly complex tax landscape, the traditional sole trader model no longer delivers the same financial benefits it once did. For many, incorporating isn’t just an option — it’s a strategic move that protects profits, reduces tax, and opens doors for future growth.
Here’s our expert breakdown of why incorporation is becoming the preferred route for landlords across the UK.
🟪 Tax Efficiency: Keeping More of What You Earn
Tax is one of the biggest drivers for landlords considering incorporation — and rightly so. Structuring your property business as a limited company can offer significant tax advantages compared with operating as a sole trader.
🔹 Lower Tax Rate on Rental Profits
As a sole trader, your rental profits are taxed as personal income. This means:
- 20% basic rate
- 40% higher-rate
- 45% additional-rate
For landlords in the higher brackets, this significantly eats into returns.
A limited company, however, pays corporation tax on profits — currently between 19% and 25% depending on the company’s size. For many landlords, this is substantially lower than their personal tax rate and can make a huge difference to overall profitability.
🔹 Full Mortgage Interest Relief
Section 24 restrictions mean personal landlords can only claim a 20% tax credit on mortgage interest. This limits relief and creates artificially inflated taxable profits.
Inside a limited company, mortgage interest is treated as a fully deductible business expense — giving landlords back the relief that has been lost at personal level.
For heavily mortgaged properties, this alone can transform the numbers.
🔹 Tax-Efficient Withdrawals
A company provides flexibility in how you take income:
- A small salary (tax-deductible for the company)
- Dividends, which are taxed at lower rates than employment income
This blend often results in a far more tax-efficient personal income strategy than being taxed on full rental profits as a sole trader.
🔹 Reinvest Profits Without Immediate Tax
Perhaps the biggest long-term advantage:
A limited company can retain profits to reinvest in new properties, refurbishments, or debt reduction — without triggering personal income tax.
For landlords building a portfolio, this creates compounding growth opportunities that simply aren’t possible in personal ownership.
🟪 Financial & Legal Protection: Personal Security Built In
When you operate through a limited company, you benefit from clearer separation between your personal affairs and your business activities.
🔹 Limited Liability
A limited company is its own legal entity. That means:
- Your personal assets — including your home — are shielded from business debts and financial risks
- The company carries the liability, not you personally
While lenders may still request personal guarantees, incorporation provides a layer of protection that sole traders simply do not have.
🔹 Clear Separation of Finances
With a company, you have separate:
- Business bank account
- Accounting records
- Tax obligations
This separation protects personal credit scores, improves financial organisation, and strengthens your business image with lenders and agents.
🟪 Strategic Flexibility: Building and Passing On a Stronger Portfolio
Operating through a limited company is more than a tax decision — it’s a strategic business move that gives landlords greater flexibility and future potential.
🔹 Easier Portfolio Expansion
Because profits can be retained, a company has more capital available to purchase additional properties.
Plus, companies can:
- Issue shares to raise investment
- Build stronger borrowing capacity
- Reinforce their reputation as professional landlords
This makes scaling a property business far smoother.
🔹 Inheritance Tax (IHT) Advantages
Properties held personally can be complex and costly to pass on.
Through a limited company, ownership can instead be passed through shares, offering:
- Easier succession planning
- The opportunity to structure ownership between family members
- Potential eligibility for Business Property Relief (in certain circumstances)
This is a major benefit for landlords thinking about long-term legacy.
🔹 Flexible Ownership Options
A limited company can have multiple shareholders, making it ideal for:
- Spouse involvement
- Family investment
- Joint ventures
- Succession planning
This flexibility simply isn’t available under a sole trader structure.
🟣 Is Incorporation Right for Every Landlord?
No — and at Accounting Matters, we believe in honest, tailored advice, not one-size-fits-all solutions.
Incorporation is especially beneficial for:
✔ Higher-rate taxpayers
✔ Landlords with significant mortgage interest
✔ Portfolio landlords aiming to grow
✔ Investors wanting to reinvest profits
✔ Landlords planning for inheritance and succession
For landlords with low gearing or small, static portfolios, the benefits may be less pronounced.
That’s why we always run personalised projections before making a recommendation.
🟪 How Accounting Matters Helps Landlords Make the Move Seamlessly
If incorporation is right for you, our team manages the entire process from start to finish, including:
- Incorporation and company setup
- Guidance on extracting profits and tax planning
- Coordination with mortgage brokers
- Bookkeeping and cloud accounting setup
- Corporation tax, year-end accounts, and dividend planning
- Month-9 Tax Reviews to stay ahead all year
We don’t just help you set up a company — we help you run it properly, efficiently, and profitably.
🟣 Final Thoughts: It’s Time to Think Like a Business
For many landlords, moving from sole trader to limited company isn’t just a tax-saving opportunity — it’s a chance to run a more efficient, protected, and growth-focused property business.
At Accounting Matters, we’ve helped countless landlords structure their investments in a way that reduces tax, increases protection, and supports long-term financial planning.
If you’re wondering whether incorporation is the right step, we’d love to run the numbers and guide you through the options.
Because when it comes to your property investment… Accounting Does MATTER.