The “always use a limited company” advice is costing landlords money

Somewhere along the way “set up a company” stopped being advice and became a reflex. It suits some landlords very well and others not at all, and the people telling you it is universal are rarely the ones who carry the consequences.

A version of this call reaches me most weeks. Someone has been to a property meetup, or listened to a podcast on the drive home, or had a very confident conversation at a barbecue, and they have arrived at a decision before they have arrived at a question. Should I put the portfolio into a company? They do not really want an answer. They want me to confirm the one they have already been given.

I understand the appeal. A clean rule is far easier to carry around than a set of trade offs.

Here is the honest position. For some landlords the company route is clearly right. For others it is an expensive detour, and a few of those only find out years later when they try to get the money back out. The structure is not the problem. Universal advice about the structure is the problem.

The enthusiasm does have a real cause, and it is Section 24. Companies are taxed differently, with corporation tax on profits and mortgage interest treated in a way it no longer is for individual landlords. For a higher rate taxpayer with a leveraged portfolio who is reinvesting rather than drawing an income, that difference can be big enough to reshape the whole plan. That case is genuine and it is well evidenced.

What happened next is the trouble. “This suits higher rate, leveraged, reinvesting landlords” got rounded up into “everyone should do this”, and the rounding up is where the money goes. Popularity is not suitability.

What actually decides it is a handful of things, and they move around from person to person. Your income and your tax band. Whether you plan to live off the rent or reinvest it, because getting profit out of a company has its own tax consequences that can quietly eat the headline saving. Your time horizon and how you intend to exit. The size of the portfolio, since the fixed costs and the admin of a company make far more sense across eight properties than across one. Change any one of those and the answer can flip.

Then there is the part the confident voices almost never raise. Money inside a company is not yet your money. Salary, dividends, director’s loans, pension contributions: every route out has a tax treatment attached to it. A structure that looks superb while you are building can look considerably less superb on the day you want to spend it. Plan the way out, not just the way in.

And no, “I will just incorporate later” is not the safety net people assume it is. You can move personally held property into a company, however doing so can trigger capital gains tax and stamp duty, and you will be refinancing onto company mortgages while you are at it. Sometimes the long term saving justifies that bill. Sometimes it never pays back. It is dramatically cheaper to get this right before you buy than to unpick it afterwards.

Which brings me to the thing that genuinely irritates me about all of this.

I am regulated. If I want to tell you something specific about your circumstances, it goes through a compliance process, it gets checked, and if I get it wrong there is a mechanism for you to complain and be put right. That is exactly as it should be. It also means an article like this one takes weeks to reach you and is written with a great deal of care.

Meanwhile anybody with a microphone and an audience can tell three hundred thousand people what to do with their property, in a single sentence, with no knowledge of anyone’s income, tax position, health, dependants or plans, and face nothing whatsoever if it turns out badly. The confidence is the product. The accountability is optional.

I am not asking you to distrust everything you hear. I am asking you to notice that the people most likely to hand you a universal rule are the people least likely to be answerable for it, and that the ones hedging and asking about your circumstances are not being evasive. They are being accurate.

There is no best structure. There is only the one that fits you.

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Your home or other property may be repossessed if you do not keep up repayments on your mortgage. Most buy to let mortgages are not regulated by the Financial Conduct Authority.

Tax treatment depends on individual circumstances and may change over time. The value of any tax benefits or reliefs will therefore vary from person to person and cannot be guaranteed.

This article is general information, not personal tax or financial advice. The right ownership structure is highly individual and tax rules change. Always take professional advice before acting.

Legacy Capital Management is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website at www.sjp.co.uk/products.

The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.

Legacy Capital Management, Rosewood House, Duffield Park, Stoke Poges, SL2 4HY

SJP Approved 27/07/2026