Should you hold your Brighton property in a limited company?

It is one of the most common questions we receive from Brighton and Hove property investors: "Should I put my properties in a limited company?" The honest answer is: it depends — but it is absolutely worth modelling properly, because for many landlords the tax savings are substantial.

Why this question matters so much now

The rise of limited company structures for property investment is largely a direct response to Section 24. Because limited companies are not subject to Section 24, they can still deduct mortgage interest as a full business expense. For higher-rate taxpayers with mortgaged portfolios, this difference can be thousands of pounds per year.

The tax case for a limited company

Inside a limited company, profits are subject to corporation tax (currently 19–25%) rather than income tax at up to 45%. If you do not need to draw all profits immediately, money retained in the company compounds more efficiently. Mortgage interest is fully deductible. Dividend tax rates are lower than income tax rates on equivalent amounts.

When a limited company makes clear sense

• You are a higher or additional rate income tax payer
• You want to reinvest rental profits rather than draw them immediately
• You are planning to grow your portfolio significantly
• You are purchasing new properties rather than transferring existing ones

The case against — the real costs

Transfer costs

Moving existing personally-held properties into a company triggers Stamp Duty Land Tax at full rates and potentially Capital Gains Tax on the deemed disposal. For a Brighton property portfolio, these costs can be substantial and may outweigh the tax savings for many years.

Mortgage considerations

Company buy-to-let mortgages are less widely available and often carry higher interest rates than personal mortgages. This reduces the tax saving and must be factored into any modelling.

The hybrid approach many Brighton investors use

Many of our clients keep their existing personally-held properties as they are and acquire all new investments through a limited company structure. This avoids the transfer costs entirely while capturing the company tax advantages on future purchases.