Can a limited company buy a property to rent out?

In the UK, a limited company can own and let residential property, but the tax result depends on whether the property is in England or Northern Ireland, Scotland, or Wales. The main difference is not legal capacity to buy, but the purchase tax and Corporation Tax treatment after the company owns it.

Can a limited company buy a house to rent out?

Yes: a limited company can buy a house to rent out, including a single property to let, because Companies Act 2006 says a registered company is a body corporate and “is capable of exercising all the functions of an incorporated company.” A company can rent a residential property as landlord, but the purchase tax differs by nation: in England and Northern Ireland, “There is a 5% surcharge on residential properties bought by companies,” and certain company purchases over £500,000 can be charged at 17% SDLT because “Stamp Duty Land Tax (SDLT) is charged at 17% on residential properties costing more than £500,000 bought by certain corporate bodies or ‘non-natural persons’.” In Scotland, the LBTT Additional Dwelling Supplement applies to most company purchases even if the company owns no other homes, and Revenue Scotland says this includes “corporate bodies, companies and certain trusts.” In Wales, a company buying a dwelling pays LTT higher rates because “any purchase of a dwelling by a company is charged the higher rates.”

How is a property SPV taxed?

A property SPV is not a distinct tax status: it is an ordinary limited company taxed under normal Corporation Tax rules, and the phrase special purpose vehicle appears in SDLT anti-avoidance rules for “a company created for that purpose” to acquire land. The company’s rental profit is within Corporation Tax because CTA 2009 says “The charge to corporation tax on income applies to the profits of a property business.” For the 2026 financial year the main Corporation Tax rate is 25%, since the legislation says “The main rate of corporation tax for that year is 25%,” while the standard small profits rate is 19% only where the company is not a close investment-holding company. A typical buy-to-let SPV is usually set up because lenders, accounting and tax reporting are cleaner when the property is inside one company; the tax code still taxes the company, not the label SPV. Landlord record-keeping sits apart from the ownership question: Abodient holds the tenancy, rent and compliance records against the property itself, whether it's owned by an SPV, an individual or any other structure. Company mortgage interest is not computed like an individual landlord’s finance-cost restriction: HMRC’s manual says, “unlike income tax, interest is not an expense in computing the property business profits.”

Can a sole trader own property?

Yes: a sole trader can own property personally, but rental income is normally taxed as a property business, not as trading income, because ITTOIA says “Income tax is charged on the profits of a property business.” Sole trader status is a business description, not a land-ownership vehicle; GOV.UK says “A sole trader is a type of business,” while HMRC’s property manual says “The mere fact that the taxpayer spends a lot of time working in their letting business - perhaps even all their working time - does not convert rental income into trading income.” That means a person can own one or more rental properties in their own name without using a limited company and without the rent becoming sole-trader turnover merely because they are self-employed elsewhere. The practical tax distinction is between property income, trading income, and company income; the Land Registry title can be in an individual’s name, while the tax computation follows the person who receives or is entitled to the rental profits.

Can you own a property personally but put the rental income through your limited company?

No, unless the company has a real legal right to the property income, because simply paying rent into your limited company while you keep the property personally does not move the tax charge from you to the company. ITTOIA says “The person liable for any tax charged under this Chapter is the person receiving or entitled to the profits,” and HMRC adds that “Receiving rent as agent of another person does not mean the agent receives the income for tax purposes.” Diverting rent to your own company while retaining the asset is also caught by the Transfer of Income Streams rules in ITA 2007 Part 13 Chapter 5A, where the statute targets a transfer where “the transfer of the right is not a consequence of the transfer to the transferee of an asset from which the right to relevant receipts arises.” A genuine lease granted to the company is different because ITA 2007 treats “the grant or surrender of a lease of land” as a transfer of land, but then you are taxed on the head rent or transfer terms, not magically sheltering personal rent inside the company.

Can you rent a room in your own home to your limited company?

Yes, you can rent or license a room in your own home to your limited company, but rent-a-room relief normally will not shelter office rent because HMRC says, “You should refuse claims that rent-a-room can apply where rooms in private homes are let as office accommodation.” The connected-company point also matters: HMRC’s property allowance guidance says “Individuals whose relevant income includes income from a connected party are not eligible for the property allowance for that tax year,” so a director charging their own company rent cannot rely on the £1,000 property allowance for that year. A formal rent arrangement may create personal taxable property income and needs a sensible calculation of household costs and business use; exclusive business use can also create capital-gains problems on a later home sale, whereas mixed use preserves relief because HMRC says “a room which is used partly for business purposes and partly for residential purposes will qualify in full for relief.” That is why many directors use the simpler homeworking payment: HMRC allows £6 per week or £26 per month without the employer justifying the amount.

Does the £1,000 property income allowance apply to a limited company?

No: the £1,000 property income allowance applies to individuals for income tax, not to rental income earned through a limited company. Finance Act 2017 describes the allowance as “giving relief from income tax,” and ITTOIA states, “For the purposes of this Chapter, an individual's property allowance for a tax year is £1,000.” A company’s property rental profits are instead within Corporation Tax, because CTA 2009 says “The charge to corporation tax on income applies to the profits of a property business.” The same £1,000 figure also cannot usually be used by a director who charges rent to their own connected company, because HMRC says individuals whose relevant income includes connected-party income “are not eligible for the property allowance for that tax year.” In practice, the allowance is useful for small amounts of personal property income; it is not a company deduction, not a company tax-free band, and not a way to make home-office rent from your own limited company tax-free.

How do you avoid capital gains tax when your company sells a property?

You avoid Capital Gains Tax when your company sells a property because a company never pays Capital Gains Tax on the sale; it pays Corporation Tax on any chargeable gain instead. TCGA 1992 says “Capital gains tax is not charged on gains accruing to a company in respect of which the company is chargeable to corporation tax,” and GOV.UK puts the company rule plainly: “Your limited company usually pays Corporation Tax on the profit (‘chargeable gain’) from selling or disposing of an asset.” There is no company annual CGT exemption either, because HMRC says “There is no similar exemption for chargeable gains arising to companies, on which they pay corporation tax.” Some reliefs reduce, defer or change the transaction: indexation is frozen after December 2017, intra-group transfers can be no gain/no loss, and substantial shareholding exemption is a share-sale rule only where Schedule 7AC is met. Ordinary letting is not a trade, so a typical buy-to-let property company should not assume trading-company share-sale relief applies.

Last reviewed August 2026.

Sources

• Companies Act 2006 s.16 — “That body corporate is capable of exercising all the functions of an incorporated company.” Source
• GOV.UK, Stamp Duty Land Tax: corporate bodies — “There is a 5% surcharge on residential properties bought by companies.” Source
• GOV.UK, Stamp Duty Land Tax: corporate bodies — “Stamp Duty Land Tax (SDLT) is charged at 17% on residential properties costing more than £500,000 bought by certain corporate bodies or ‘non-natural persons’.” Source
• Revenue Scotland, LBTT Additional Dwelling Supplement — “The ADS applies to most purchases of residential property in Scotland by non-natural persons, known as non-individuals for example corporate bodies, companies and certain trusts, even where they have no other residential properties.” Source
• Welsh Government, higher rates for residential property — “It is liable to the higher rates on that acquisition, as any purchase of a dwelling by a company is charged the higher rates.” Source
• SDLT Disclosure of Tax Avoidance Schemes Regulations 2005, Schedule — “The acquisition of a chargeable interest in land by a company created for that purpose (‘a special purpose vehicle’).” Source
• Corporation Tax Act 2009 s.209 — “The charge to corporation tax on income applies to the profits of a property business.” Source
• Finance Act 2025 s.13 — “The main rate of corporation tax for that year is 25%.” Source
• Finance Act 2025 s.14 — “(a)the standard small profits rate is 19%, and” Source
• Corporation Tax Act 2010 s.18A — “(b)it is not a close investment-holding company in the period, and” Source
• Corporation Tax Act 2010 s.18N — “(b)for the purpose of making investments in land, or estates or interests in land, in cases where the land is, or is intended to be, let commercially (see subsection (3)),” Source
• HMRC Property Income Manual PIM2052 — “So, unlike income tax, interest is not an expense in computing the property business profits.” Source
• ITTOIA 2005 s.268 — “Income tax is charged on the profits of a property business.” Source
• HMRC Property Income Manual PIM1051 — “The mere fact that the taxpayer spends a lot of time working in their letting business - perhaps even all their working time - does not convert rental income into trading income, PIM4300 has more details.” Source
• GOV.UK, Set up as a sole trader — “A sole trader is a type of business.” Source
• ITTOIA 2005 s.271 — “The person liable for any tax charged under this Chapter is the person receiving or entitled to the profits.” Source
• HMRC Property Income Manual PIM1030 — “Receiving rent as agent of another person does not mean the agent receives the income for tax purposes.” Source
• Income Tax Act 2007 s.809AZA — “(b)(subject to subsection (3)) the transfer of the right is not a consequence of the transfer to the transferee of an asset from which the right to relevant receipts arises.” Source
• Income Tax Act 2007 s.809AZG — “(a)the grant or surrender of a lease of land is to be regarded as a transfer of the land, and” Source
• ITTOIA 2005 s.784 — “This Chapter provides relief on income from the use of furnished accommodation in an individual's only or main residence.” Source
• HMRC Property Income Manual PIM4002 — “You should refuse claims that rent-a-room can apply where rooms in private homes are let as office accommodation.” Source
• HMRC Capital Gains Manual CG64663 — “So a room which is used partly for business purposes and partly for residential purposes will qualify in full for relief.” Source
• HMRC Employment Income Manual EIM01476 — “To help employers, from 6 April 2020 you can agree to a payment of £6 per week or £26 per month for monthly paid employees to an employee working regularly at home without the employer having to justify the amount paid.” Source
• Finance Act 2017 s.17 — “Schedule 3 contains provision about a trading allowance and a property allowance giving relief from income tax.” Source
• ITTOIA 2005 s.783BD — “For the purposes of this Chapter, an individual's property allowance for a tax year is £1,000.” Source
• HMRC Property Income Manual PIM4410 — “Individuals whose relevant income includes income from a connected party are not eligible for the property allowance for that tax year (see PIM4454 onwards)” Source
• Taxation of Chargeable Gains Act 1992 s.4 — “Capital gains tax is not charged on gains accruing to a company in respect of which the company is chargeable to corporation tax, or would be so chargeable but for an exemption.” Source
• GOV.UK, Tax when your company sells assets — “Your limited company usually pays Corporation Tax on the profit (‘chargeable gain’) from selling or disposing of an asset.” Source
• HMRC Capital Gains Manual CG18000 — “There is no similar exemption for chargeable gains arising to companies, on which they pay corporation tax.” Source
• Taxation of Chargeable Gains Act 1992 s.53 — “Indexation allowance is not allowed in respect of changes shown by the retail prices indices for months after December 2017.” Source
• Taxation of Chargeable Gains Act 1992 Sch.7AC para.1 — “A gain accruing to a company (‘the investing company’) on a disposal of shares or an interest in shares in another company (‘the company invested in’) is not a chargeable gain if the requirements of this Schedule are met.” Source
• Taxation of Chargeable Gains Act 1992 Sch.7AC para.19 — “For this purpose a ‘qualifying company’ means a trading company or the holding company of a trading group or a trading subgroup.” Source
• HMRC Property Income Manual PIM4300 — “Although property income is now computed like trading income, letting is still not a trade.” Source