Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.

Limited Company Not Always Best for Landlords, Says Abbs

A significant increase in landlords setting up limited companies has been reported in the UK buy-to-let market. However, Jorden Abbs, chief executive of Commercial Trust, states that incorporation is not the right choice for every landlord.

Hamptons reported that 66,587 new companies were established to hold rental property in 2025, an 8% rise from the previous year. By the end of 2025, there were 443,272 active companies holding rental property across the UK, nearly five times the number recorded in 2016. Paragon Bank found that 43% of mortgaged buy-to-let purchases in 2025 were made through a limited company, up from 35% the previous year and 7.5% in 2018.

Despite these figures, Abbs points out that the majority of new company formations are for new purchases, not for transferring existing properties. The costs associated with moving properties into a company structure can be significant. Transferring a property is treated as both a disposal and a purchase, which can trigger capital gains tax and stamp duty land tax. In England and Northern Ireland, stamp duty for company or additional residential purchases includes a five-percentage-point higher-rate surcharge.

Abbs gives the example of a landlord who bought a semi-detached property in Nottingham for £90,000 twenty years ago. The increase in property value can make the tax bill for transferring into a company substantial, potentially running into five figures before any tax savings are realised.

For some landlords, particularly those with modest incomes, little or no debt, or those approaching retirement or sale, the benefits of incorporation may be minimal or non-existent. Basic-rate taxpayers with limited income beyond their rents may not be significantly affected by mortgage interest restrictions. Additionally, the double taxation effect—corporation tax on company profits and dividend tax when profits are withdrawn—can reduce the appeal of incorporation. From April 2026, the ordinary dividend tax rate increased by two percentage points to 10.75%.

These factors are important for letting agents and inventory clerks to consider when advising clients or managing portfolios, as the decision to incorporate depends on individual circumstances and may not always be financially advantageous.