If you’re considering investing in buy-to-let property in the UK, one key decision is whether to hold the property in your own name or through a limited company. While both options have their advantages, many investors find that holding a property personally offers a range of financial and tax benefits.

1. Lower Financing Costs

One of the biggest advantages of holding a buy-to-let in your own name is the availability of cheaper financing options. Lenders often charge higher interest rates for mortgages issued to limited companies. On the other hand, personal buy-to-let mortgages tend to have more competitive rates, leading to lower monthly payments and higher profitability.

Key benefits:

• Access to better interest rates.
• Lower monthly mortgage payments.
• Easier mortgage approval compared to a limited company.

If you’re aiming to reduce your financing costs, holding your property personally may be the right choice.

2. Cheaper Accountancy Costs

Running a buy-to-let business through a limited company comes with higher accountancy costs. You’ll need to prepare and file annual financial statements, corporation tax returns, and maintain more detailed records, which can result in significantly higher professional fees.

On the other hand, managing a buy-to-let property in your own name requires much simpler tax filings, typically handled through Self-Assessment. This means lower accounting fees, giving you a cost-saving advantage.

Key benefits:

• Simpler tax filing through Self-Assessment.
• Lower accountancy fees compared to a limited company.
• Reduced administrative burden.

By holding your property personally, you avoid the more complex and costly financial reporting required for limited companies.

3. Capital Gains Tax Benefits

When you sell a buy-to-let property held in your own name, you are liable for Capital Gains Tax (CGT) on the profits made from the sale. The Capital Gains Tax rates for individuals are generally lower than those applied to company-held properties, especially if you fall into the basic rate tax bracket.

Additionally, individuals benefit from the Annual Exempt Amount, which allows you to make a certain amount of profit before CGT is due. This tax-free allowance is not available to limited companies, making personal ownership more tax-efficient upon sale.

Key benefits:

• Lower CGT rates compared to a limited company.
• Annual Exempt Amount allows for tax-free profits up to £6,000 (for 2023/24).
• Reduced tax burden when selling properties personally.

This CGT advantage can significantly boost your returns when selling buy-to-let properties in your own name.

4. No Double Taxation

Holding a buy-to-let in a limited company subjects your profits to corporation tax on any rental income. If you wish to take money out of the company for personal use, you may also face additional dividend tax. This creates a double layer of taxation, reducing your overall profits.

By holding the property in your own name, you avoid this issue altogether, as there’s only one level of tax – your personal income tax on the rental profits. This straightforward taxation structure means more of the rental income stays in your pocket.

Key benefits:

• Avoid double taxation on rental income.
• Pay tax once, at personal income tax rates.
• Simpler tax treatment of rental income.

For many investors, the simplicity and tax efficiency of holding a buy-to-let personally outweighs the potential benefits of a company structure.

5. Easier to Exit the Investment

One of the often-overlooked advantages of holding a buy-to-let property in your own name is the ease of exiting the investment. Selling a property held in a limited company involves additional complexities, such as winding down the company or transferring the assets, which can be time-consuming and costly.

When you hold a property personally, the exit process is much simpler. You can sell the property without needing to close down any structures or incur additional costs associated with company dissolution.

Key benefits:

• Easier to sell property without the need to dissolve a company.
• No additional legal or administrative steps required.
• Simpler to transfer property ownership to heirs or family members.

If flexibility and ease of exit are important to you, holding a buy-to-let personally is likely the more attractive option.

Conclusion on Buying Your Buy-to-Let in Your Own Name

While there are benefits to holding buy-to-let properties through a limited company, for many investors, holding the property in their own name offers several key advantages. From lower financing and accountancy costs to capital gains tax benefits and simplified exits, personal ownership is often the most straightforward and tax-efficient option.

At Goldhouse Accounting, we specialise in providing tax and financial advice tailored to property entrepreneurs. If you have any questions, you can contact a member of the team or in the meantime, check our our free resources including our guides and other blog posts. For more from us, visit our social media channels.