Accounting for business owners who want financial clarity and control, not just compliance

It is one of the most common questions landlords ask, particularly since the changes to mortgage interest relief for residential properties: should you hold your property portfolio in a limited company? For some landlords, it works. Buying through a limited company reduces their tax liability and creates more flexibility. However, for others, it can actually increase their costs without delivering much benefit at all. The truth is, there is no right answer. It depends on your income, borrowing, long-term plans and how your portfolio is structured. What matters is understanding the trade-offs before making a decision that can unfortunately be expensive to reverse. Why more landlords are using limited companies The main reason is usually tax. Since the introduction of Section 24, individual landlords can no longer fully deduct mortgage interest from rental income before calculating tax. Instead, they receive a basic-rate tax credit worth 20% of the finance costs. For higher-rate taxpayers with mortgages, this can significantly increase the amount of tax paid on rental profits. Limited companies are treated differently. Mortgage interest remains a deductible business expense for companies before corporation tax is calculated. That difference is one of the main reasons incorporation has become more popular among landlords over recent years. When a limited company may make sense A company structure is often more attractive when: you are a higher or additional-rate taxpayer your portfolio is heavily mortgaged you are planning to buy more properties you do not need to draw all rental profits personally long-term growth is more important than immediate income For example, some landlords leave profits within the company to fund future purchases, refurbishments or debt reduction. That can create more flexibility compared to being taxed personally on all profits as they arise. When personal ownership may still be better Despite the tax advantages, limited companies are not automatically the best option. Personal ownership can still work well if: properties have little or no mortgage debt rental profits are relatively modest you are a basic-rate taxpayer you want simple administration you regularly rely on rental income personally There are also extra costs with companies, including: company accounts and corporation tax returns separate mortgage products legal and administrative costs potentially higher mortgage interest rates and arrangement fees Some landlords move into a company expecting major tax savings, only to discover the additional costs reduce much of the benefit. The biggest mistake landlords make One of the most common mistakes we see landlords make is assuming they should transfer existing personally-owned properties into a company without properly understanding the tax position first. In many cases, transferring properties into a limited company can trigger: Capital Gains Tax Stamp Duty Land Tax refinancing costs legal fees This is why many landlords choose to keep existing properties personally owned, buy future properties through a company instead, or run a combination of both Tax should not be the only consideration You should also think about: succession planning extracting profits future borrowing portfolio growth retirement plans inheritance considerations administrative workload For example, a structure that looks tax-efficient today may not suit your long-term plans five or ten years from now. The reality In practice, many landlords now operate through a mixture of personal ownership and limited companies. There is rarely a perfect structure, and the goal is usually finding the approach that balances: tax efficiency borrowing flexibility simplicity long-term growth How we can help At MSF Associates, we work with landlords, developers and property businesses across a range of structures. If you are considering whether a limited company is right for your portfolio, we can help you understand the tax position, compare the long-term costs and identify the structure that best supports your plans. To speak with our team, call us on 0113 240 4100.

As the new tax year starts, you may find yourself among the thousands of savers contacted by HMRC about tax on savings interest. As you likely already know, you do not pay tax on the money you save, however you may need to pay tax on the interest it earns. And with interest rates still relatively high and tax thresholds unchanged, it is becoming easier to cross that line without realising. In fact, recent estimates suggest around 2.79 million people could receive a letter. Why this is happening If you have noticed better returns on your savings over the past couple of years, you are certainly not alone. Higher interest rates mean your money is likely earning more than it used to. At the same time, tax thresholds have remained frozen. That combination means you may now be exceeding your allowance, even if your savings habits have not changed. In short, you may be earning more interest without actively doing anything differently, and that is what can trigger a tax charge. How the personal savings allowance works The amount of interest you can earn tax free depends on your income. If you are a basic rate taxpayer, you can earn up to £1,000 in interest tax free. Anything above this is taxed at 20%. If you are a higher rate taxpayer, your allowance drops to £500, with interest above that taxed at 40%. If you are an additional rate taxpayer, there is no allowance, so all interest is taxed at 45%. If your income is below the personal allowance, you may be able to earn more interest tax free, depending on your circumstances. Why you could still be affected with modest savings You might assume that only large savings balances are affected. In reality, it can happen sooner than expected. For example, if you are using a fixed rate savings account, interest is often paid at the end of the term. If that term runs over more than one tax year, all the interest can be counted in the year it becomes accessible. That can push you over your allowance in one go. In some cases, even a relatively modest balance can be enough. What to expect from HMRC Your bank or building society reports the interest you earn directly to HMRC, so in most cases, you do not need to do anything yourself. If tax is due, you will usually receive a P800 letter or a Simple Assessment. This will explain what you owe and how it will be collected. For many people, the amount is recovered through a change to your tax code, rather than a separate payment. What you can do now It is worth taking a few minutes to check how much interest your savings are generating, especially if you have money spread across different accounts. You can review this through your bank statements or your Personal Tax Account on GOV.UK . This will give you a clearer idea of whether you are likely to exceed your allowance. Need help? If you think you may be close to the limit, it may be worth reviewing how your savings are structured. If you would like a second pair of eyes on your savings, or want to understand how the rules apply to you, call us on 0113 240 4100.