Limited Company vs Personal Name: Tax Saving Calculator

The Short Answer

If you are a higher-rate or additional-rate taxpayer with mortgaged buy-to-let properties, buying through a limited company (SPV) will almost always save you significant tax. Basic-rate taxpayers with unmortgaged properties may find personal ownership simpler. Use our calculator to see your exact position.

Why This Decision Matters Now

Section 24 changed everything. Since April 2020, individual landlords can no longer deduct mortgage interest from rental income. Instead, you get a 20% tax credit, regardless of your actual tax band.

For basic-rate taxpayers, the impact is minimal. For anyone paying 40% or 45%, it effectively halves the value of your mortgage interest relief. The result: thousands in extra tax on income that is not real profit.

This is why around 80% of new buy-to-let purchases are now made through limited companies (SPVs). And it is exactly why Sourced Enterprise exists, to help investors set up and run property companies properly from day one.

How You Are Taxed: Personal Name

Rental profits are added to your other income and taxed at your marginal rate.

Up to £12,570 = 0%

£12,571 – £50,270 = 20%

£50,271 – £125,140 = 40%

Over £125,140 = 45%

You cannot deduct mortgage interest. You get a 20% tax credit instead. If you are a 40% taxpayer, you are reclaiming half the relief you would have had before Section 24.

How You Are Taxed: Limited Company

The company owns the property, receives rent, pays expenses (including 100% of mortgage interest) and pays corporation tax on what is left.

Up to £50,000 = 19%

£50,001 – £250,000 = 19–25% (marginal relief)

Over £250,000 = 25%

Even at 25%, that is significantly less than 40% or 45%. And because the company deducts mortgage interest in full, the taxable profit is lower to begin with. Profits retained in the company can be reinvested without triggering personal tax.

Example

Higher-rate taxpayer, 3 mortgaged properties

Salary: £75,000.

Rent: £36,000/yr.

Mortgage interest: £18,000/yr.

Other expenses: £4,800/yr.

Personal name: Taxable profit £31,200 (no interest deduction). Tax at 40% = £12,480, minus 20% credit on £18,000 = £3,600 back. Net tax: £8,880.

Limited company: Taxable profit £13,200 (interest deducted). Corporation tax at 19% = £2,508. Add £1,500 admin costs. Total: £4,008.

See Your Exact Tax Saving