At Hammond & Co, we work with landlords at every stage of their property journey — from first-time buy-to-let investors to seasoned portfolio owners. In recent years, we’ve noticed a clear trend: more landlords are choosing to run their property businesses through a limited company rather than as sole traders.
And it’s easy to see why.
With rising interest rates, reduced mortgage interest relief, and an increasingly complex tax landscape, the traditional sole trader model no longer delivers the same financial benefits. For many, incorporation isn’t just an option — it’s a strategic move that protects profits, reduces tax, and opens doors for growth.
Here’s why more landlords are taking the leap.
🟪 Tax Efficiency: Keeping More of What You Earn
Tax is one of the biggest drivers for landlords considering incorporation — and rightly so. Structuring your property business as a limited company offers significant advantages compared with operating as a sole trader.
Lower Tax Rate on Rental Profits
- Sole traders pay personal income tax on rental profits: 20% basic, 40% higher, 45% additional.
- Limited companies pay corporation tax on profits — currently 19–25%, often substantially lower than personal rates.
Full Mortgage Interest Relief
- Section 24 restricts personal landlords to a 20% tax credit on mortgage interest, inflating taxable profits.
- Inside a company, mortgage interest is fully deductible, restoring lost relief and improving profitability.
Tax-Efficient Withdrawals
- Take a small salary (tax-deductible for the company)
- Dividends, taxed at lower rates than personal income
This strategy often results in a far more efficient income plan than being taxed on full rental profits.
Reinvest Profits Without Immediate Tax
- Companies can retain profits for new properties, refurbishments, or debt repayment without triggering personal income tax.
- This allows compounding growth — a key advantage for portfolio landlords.
🟪 Financial & Legal Protection: Safeguarding Your Personal Wealth
Operating through a limited company provides a clear separation between personal and business finances.
Limited Liability
- The company is a separate legal entity.
- Personal assets — including your home — are shielded from business debts.
- While lenders may request personal guarantees, incorporation adds an extra layer of protection.
Clear Separation of Finances
- Separate bank accounts, accounting records, and tax obligations.
- Protects personal credit scores, improves organisation, and strengthens your professional image.
🟪 Strategic Flexibility: Building a Stronger Portfolio
Incorporation is more than a tax decision — it’s a strategic move with long-term benefits.
Easier Portfolio Expansion
- Retained profits provide capital for growth.
- Companies can issue shares to raise investment, strengthen borrowing capacity, and reinforce professional credibility.
Inheritance Tax (IHT) Advantages
- Property passed personally can be complex and costly to inherit.
- Company ownership allows transfer via shares, making succession simpler and potentially eligible for Business Property Relief.
Flexible Ownership Options
- Multiple shareholders for spouse involvement, family investment, joint ventures, or succession planning.
- Flexibility not possible as a sole trader.
🟣 Is Incorporation Right for Every Landlord?
Not always — which is why Hammond & Co offers tailored advice. Incorporation is particularly beneficial for:
✔ Higher-rate taxpayers
✔ Landlords with significant mortgage interest
✔ Portfolio landlords aiming to grow
✔ Investors planning to reinvest profits
✔ Landlords planning inheritance and succession
For small, low-leverage portfolios, benefits may be less pronounced — we always run personalised projections first.
🟪 How Hammond & Co Makes Incorporation Seamless
If incorporation is right for you, we manage the entire process, including:
- Company setup and incorporation
- Profit extraction and tax planning guidance
- Coordination with mortgage brokers
- Bookkeeping and cloud accounting setup
- Corporation tax, year-end accounts, and dividend planning
- Month-9 Tax Reviews to stay ahead all year
We don’t just set up a company — we help you run it efficiently and profitably.
🟣 Final Thoughts: It’s Time to Think Like a Business
Moving from sole trader to limited company isn’t just a tax-saving opportunity — it’s a chance to run a more efficient, protected, and growth-focused property business.
At Hammond & Co, we help landlords structure investments to reduce tax, protect assets, and support long-term financial planning.
If you’re considering whether incorporation is right for you, let us run the numbers and guide you through your options.