Purchasing a property through a limited company mortgage can be a huge help to those looking into buying their first investment property or established landlords looking to boost their portfolio. Landlords in Northern Ireland and the rest of the UK can rely on the team at Tyrone Mortgages to provide accurate, relevant mortgage advice. Get in touch now for more information or to make an inquiry into our services.
A limited company mortgage – also known as an SPV mortgage or buy-to-let for limited companies – is a type of mortgage that is purchased by a company rather than by an individual. By purchasing through a company name instead of your own, you can better separate personal and business portfolios and expenses and receive unique tax benefits.
There are a few ways you can approach a limited company mortgage. The first is through a trading company – which has at least one primary activity other than owning property, such as manufacturing or offering some sort of service. The funds from this business activity can be used to purchase a residential property that can then be rented out.
The other option is an SPV (Special Purpose Vehicle) whose sole purpose is holding property. This works by setting up a business with Companies House, but the company does not conduct any business activity, simply purchasing a property and having rent coming in and expenses coming out under the company name. Whichever method you choose, the professional mortgage advisors at Tyrone Mortgages are here to help you every step of the way. Get in touch to find out more.
If you would like more information, or to start the journey to building up your portfolio, landlords and first-time investors should look no further than Tyrone Mortgages. Contact us today to find out more.
Less Restrictions
Restrictions on mortgage interest relief don’t apply to limited companies, meaning that any rental properties owned through a limited company can have the costs of their mortgage interest classed as a business expense. This then reduces your taxable profit, a perfect solution for landlords looking to maximise profit and minimise tax liabilities.
Lower Tax Rates
When you have a limited company, you pay corporation tax rather than personal income tax, which is usually much lower for most landlords, especially when properties generate substantial income. In turn, this provides more options for tax planning and tax relief opportunities, significantly improving the overall profitability and efficiency of a property investment portfolio.
Limited Liability Protection
Unlike personal ownership, a limited company structure means that your personal finances and assets are not at risk if financial issues arise. This extra layer of protection offers more peace of mind to landlords by reducing personal risk while ensuring that investments are shielded within the company’s legal framework. For more information, reach out now.
When you purchase property through a limited company, the tax obligations can differ slightly. Rather than being taxed on your rental income – and therefore your personal income – you will instead pay corporation tax. If you’re unsure how this works, don’t worry. The team at Tyrone Mortgages is happy to break it down for you:
Corporation Tax: A limited company pays corporation tax on its profits. As of 2024, the tax rate is 25% for profits over £250,000, and a 19% rate is applied for profits below this amount. Before paying corporation tax, a limited company can deduct allowable business expenses to reduce their bill.
Stamp Duty Land Tax (SDLT): Like individuals, limited companies are required to pay an additional 3% surcharge on Stamp Duty Land Tax in Northern Ireland and the rest of the UK. In cases where a commercial property is purchased, the SDLT rates are typically lower.
Capital Gains Tax (CGT): When selling a property at a profit, a limited company does not pay Capital Gains Tax. Instead, the gains will be subject to corporation tax. Meanwhile if shareholders in the limited company sell their shares, the individual will pay CGT on the profit of the sale of those shares.
Dividend Tax: After corporation tax has been paid on profits, shareholders can withdraw the remaining profit as dividends – which are subject to dividend tax. These rates are 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers.
Inheritance Tax: If a buy-to-let property is held in a limited company, the shares in the company will be part of the shareholder’s estate for inheritance tax purposes, which can offer more flexibility in terms of succession planning compared to an individual owning the property.
Disclaimer: This guide has been produced for information purposes only. As a mortgage broker, we are not able to offer tax advice.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
While both a limited company and a Special Purpose Vehicle (SPV) allow you to purchase property under a company name, there are key distinctions between the two. A limited company can engage in multiple business activities, such as trading or offering services, alongside property ownership. This gives landlords the flexibility to manage various income streams within the same company.
An SPV, on the other hand, is a type of limited company specifically set up for holding property. It does not engage in any other business activity apart from property investment and management. As a result, SPVs are often seen as more straightforward for lenders to assess, given the focus on property. SPVs typically enjoy a simpler lending process as mortgage providers are more familiar with these setups. For landlords primarily focused on growing their rental portfolio without other business activities, an SPV could be the preferred option.
However, each option has its benefits depending on your broader business objectives. For personalised advice on whether an SPV or a more general limited company is better for your circumstances, the team at Tyrone Mortgages is ready to help.
In general, mortgage interest rates for limited companies tend to be higher than those offered to individual landlords. This is largely due to the perceived higher risk of lending to a company instead of an individual. Lenders may charge a premium to offset this risk, especially if the company is newly established or if the properties being purchased carry a significant level of borrowing.
That said, the slight increase in interest rates may be outweighed by the tax advantages and protection a limited company structure offers, especially for landlords with larger portfolios. Additionally, mortgage availability for limited companies has grown significantly in recent years, leading to more competitive rates and products on the market.
At Tyrone Mortgages, we have been offering comprehensive mortgage advice from our home in Omagh, Northern Ireland, for many years now. We cater to the whole of the UK and offer a wide range of mortgage services, including traditional buy-to-let mortgages, first-time buyer mortgages, self-build mortgages, and more. Some of the reasons our clients turn to us for our expertise include the following:
Experienced Team
We have been providing valuable mortgage advisory services for years, and our team comprises industry experts. If you want professional, reliable mortgage advice from an experienced and knowledgeable team, choose Tyrone Mortgages today.
Industry Connections
We work with a wide range of lenders across the UK to find you the best deal on your mortgage. Whether this is for private landlords looking to purchase through a limited company or first-time buyers who need more support getting onto the property ladder, we’re here to help.
Friendly Advisors
Our team is here to relieve some of the stress of purchasing a property and offer support from start to finish. Our clients are more than just customers; we build lifelong relationships with everyone who chooses our services.
