Property continues to be a reliable investment strategy in the UK, but recent tax and regulatory changes have shifted the playing field. In 2025, more investors are choosing to buy property through a limited company rather than as individual landlords. This article explores the benefits, tax implications, and key considerations of investing in property via a limited company in 2025.

Why Property Investors Are Incorporating in 2025

One of the main drivers for incorporation is the tax treatment of mortgage interest. Since 2020, individual landlords can no longer fully deduct mortgage interest as a business expense; instead, they receive a basic rate tax credit. However, limited companies can still deduct the full cost of mortgage interest from rental income, reducing taxable profits.

Key benefits include:

• Full mortgage interest relief
• Potentially lower tax rates (corporation tax vs. higher rate income tax)
• Easier income splitting through dividends
• Greater reinvestment flexibility

Corporation Tax vs. Income Tax

In 2025, the corporation tax rate is:

• 19% for profits up to £50,000
• 25% for profits above £250,000
• Marginal relief applies between these thresholds

By comparison, individuals may pay:

• 20% (basic rate)
• 40% (higher rate)
• 45% (additional rate)

For higher-rate taxpayers, investing via a company can offer significant tax savings. You can also control when you extract profits via salary or dividends.

Limited Companies and Dividend Tax

Profits retained in the company are taxed at the corporate rate. If you take profits as dividends, current 2025 dividend tax rates apply:

• 8.75% (basic)
• 33.75% (higher)
• 39.35% (additional)

While this does introduce double taxation, strategic planning can help reduce the total tax burden.

Inheritance Tax & Asset Protection

Holding property in a limited company can offer estate planning benefits:

• Use of share transfers instead of property sales to pass wealth
• Potential for family investment companies
• Improved control over inheritance and asset protection structures

Other Considerations Before You Incorporate

Things to be aware of include:

• Higher mortgage rates for limited companies
• Additional accountancy and legal costs
• Capital gains tax and stamp duty if transferring existing properties into a company

It’s important to assess whether incorporation is right for you based on your investment horizon, income level, and future goals.

Should You Invest Through a Limited Company in 2025?

For many UK property investors in 2025, setting up a limited company offers tax efficiency, flexibility, and long-term wealth-building advantages. However, it’s not a one-size-fits-all solution. Working with a specialist accountant ensures you fully understand the benefits, risks, and long-term implications.

Need tailored advice for your property investment strategy? Contact our team of accountants for a free initial consultation and find out whether investing through a limited company is right for you.