Limited Company vs Personal Name: The New Standard?

The question we get asked most often is: "Should I buy in a Limited Company?"

Five years ago, the answer was usually "No, it's too much hassle." Today, for most new purchases, the answer is increasingly "Yes".

Why the shift?

The primary driver is tax efficiency, specifically avoiding Section 24 restrictions. Companies pay Corporation Tax (currently 19-25%) on their profits. Crucially, mortgage interest is treated as a business expense, meaning it is fully tax-deductible.

The Pros of a Limited Company (SPV)

• Full Interest Relief: You pay tax on real profit, not turnover.
• Control Over Income: You decide when to take money out (dividends/salary), potentially keeping you in a lower personal tax bracket.
• Inheritance Tax Planning: Easier to transfer shares to children than property titles.

The Cons

• Higher Mortgage Rates: Commercial lenders often charge slightly higher rates for Ltd Companies, though the gap is closing.
• No Personal Allowance: No £12,570 tax-free allowance for the company itself.
• Admin Costs: Annual accounts and confirmation statements cost more than a simple self-assessment.

The Bottom Line

If you are a higher rate taxpayer, the tax savings of a Limited Company usually outweigh the higher mortgage costs and admin fees.

However, if you are a basic rate taxpayer and plan to stay one, buying in your personal name can still be simpler and cheaper.

As always, this is not financial advice. Speak to a qualified tax advisor before incorporating.