Accountants and business advisors Whitley Stimpson report a significant shift in the property investment landscape as more landlords opt to register as limited companies.

This trend is driven by recent tax changes and rising interest rates, which have made traditional buy-to-let ownership less financially viable.

According to Companies House data, there are now 401,744 buy-to-let firms—a 332% increase since 2016 when tax relief on mortgage interest payments was first reduced for landlords. This figure now surpasses the number of fast food outlets and hairdressers combined.

Ian Parker, Director at Whitley Stimpson, explains: "The move towards limited company structures is largely a response to the changing tax environment. Landlords are seeking ways to protect their profits and maintain cash flow, and incorporating offers significant tax advantages."

Landlords holding properties personally face limited tax relief on mortgage interest, receiving only a 20% basic rate tax credit. In contrast, those operating through companies can deduct 100% of borrowing costs, significantly reducing tax liabilities.

"Setting up a limited company involves additional legal obligations and costs. It's crucial for landlords to assess whether potential tax savings outweigh these factors, especially for those not in higher tax brackets" says Ian.

Despite these considerations, limited companies remain attractive, particularly for landlords with multiple properties. The ability to pay corporation tax instead of capital gains tax and claim a wider range of expenses makes this structure appealing.

Ian concludes: "Our role is to help clients understand these trends and make informed decisions that align with their financial goals."