Structure
Ltd company vs personal name
Compare annual tax and take-home on the same portfolio held two ways.
Personal name
Profit before interest£20,000
Tax at 40% (interest not deductible)£8,000
− 20% finance cost credit£2,400
Income tax£5,600
Take-home after interest & tax£2,400
Limited company
Profit after interest£8,000
Corporation tax£1,520
Retained in company£6,480
Dividend tax if all extracted£2,018
Take-home if all extracted£4,462
On these figures, a limited company leaves £2,062 more per year in your pocket.
Pros & cons
| Factor | Personal | Ltd company |
|---|---|---|
| Mortgage rates | Wider choice, usually cheaper | Typically 0.25–1% higher, fewer lenders, personal guarantees |
| Admin | Self Assessment only | Accounts, Companies House, CT600, ~£1–2k/yr accountant |
| Section 24 | Applies — 20% credit only | Doesn't apply — interest fully deductible |
| Inheritance | Property in estate; harder to pass on in stages | Shares can be gifted / growth shares; still IHT-able |
| Selling | CGT 18%/24%, £3k allowance | Corporation tax on gain, then tax to extract cash |
Simplified: uses one marginal band for all income and ignores salary, other income and changes in band. Not tax advice.