Our guide to setting up a limited company to purchase UK property

November 3, 2025

Investing through a limited company is a popular option for investors from around the world who want to invest in UK buy-to-let. In the right circumstances, it can offer significant advantages to investors – but what is a limited company? And how does it work in the world of property?

Read on to learn about:

What is a limited company for property investors?
What are the benefits of using a limited company for property investment?
How do you set up a limited company for property investment?
What is the easiest way to set up a limited company for property investment?

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What is a limited company for property investors?

A limited company is a separate legal entity that is distinct from you as an individual. It allows you to buy properties, collect rental income and access mortgages as usual, while also giving extra protection against some risks.

Investing through a limited company is popular in the UK. Companies House data shows there are now more than 400,000 investors using a limited company to hold their property portfolios.

It is a common, well-understood way to invest that is a good fit for many different investment strategies.

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What are the benefits of using a limited company for property investment?

Limited companies offer investors some important advantages compared to investing as an individual. They add up to make the choice of incorporating to invest an attractive one, which can be more profitable in the right circumstances.

Read on to learn more about the potential advantages of forming a limited company for your buy-to-let property portfolio, and make sure to speak to your independent financial advisor before investing.

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Tax differences

If you invest in buy-to-let through a limited company, you may be able to access certain tax benefits. For example, you will pay corporation tax on your rental income rather than Income Tax. Depending on your overall income, that can potentially lower your overall tax bill.

As of Q4 2025, the rates of income tax in the UK are:

Up to £12,570 – 0%
£12,571 to £50,270 – 20%
£50,271 to £125,140 – 40%
Over £125,140 – 45%

In comparison, the rates of corporation tax are:

Up to £50,000 – 19%
£50,001 - £250,000 – 25% (minus marginal relief)
Above £250,000 – 25%

In theory, you could pay less tax by using a limited company for your investments if you wanted to reinvest the profits. That is a powerful incentive for landlords who want to grow their portfolios.

As with all tax questions, we would always advise you to speak to an independent tax advisor before making any decisions.

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Mortgage interest deductions

If you invest as an individual, you cannot deduct mortgage interest from your income for tax purposes. However, if you set up as a limited company, mortgage interest is an allowable business expense and can be removed from the overall taxable income.

This cannot be claimed for properties you are paying the mortgage on personally, but any properties which are held by the limited companies can be claimed for. This can be a big saving on your overall tax bill in the right circumstances.

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Reduced liability and risk

Using a limited company to own and invest in properties can shield you from a level of risk. If the company falls into debt or you cannot make property payments, you are only liable up to the value of your financial investment.

Your personal financial risk can be lowered so long as you have behaved responsibly as a director and fulfilled your legal obligations.

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How do you set up a limited company for property investment?

To set up a buy-to-let limited company, you need to do the following: