Tax & compliance
Ltd Co vs personal ownership.
The perennial landlord question. Compare annual tax on the same rental profit held personally (with Section 24) against a limited company paying corporation tax — with or without extracting the profit.
The portfolio
£
Excluding mortgage interest.
£
£
Salary or pension outside the property.
£
Company profit
Extract all profit as dividends
Off = retain profit in the company (corporation tax only, deferring dividend tax).
Annual tax saving via company
—
Personal (S24)
—
Company
—
Company profit (interest deductible)—
Corporation tax—
Dividend tax on extraction—
Total company tax—
Transfer cost not modelled. Moving existing property into a company triggers SDLT and CGT on the way in — often the deciding factor. This compares the ongoing annual position only. Take advice before incorporating.
How this is calculated
- Personal: Section 24 method — rent−expenses taxed as income, 20% credit on interest.
- Company: corporation tax on rent−expenses−interest (19% to £50k, 25% above £250k, marginal between).
- Dividend tax (if extracted): 8.75% / 33.75% / 39.35% with a £500 allowance, stacked on other income.
Either way
PAM runs personal and company portfolios.
One record per property — whoever owns it. Compliance, rent and filing in one place.