UK Buy-to-Let Through a Limited Company: What Arab Directors Need to Know Before Buying

The biggest tax change most Arab property investors don't know about is Section 24 — the restriction on mortgage interest relief for individual landlords. Before April 2020, personal landlords could deduct mortgage interest costs in full from rental income. Now you get a 20% tax credit instead. If you're a higher-rate taxpayer (40%), that restriction means you pay tax on rental income that your mortgage interest effectively eats up. A limited company is not subject to Section 24 — it deducts mortgage interest as a normal business expense before calculating its taxable profit.

The numbers in practice: assume rental income of £24,000/year and mortgage interest of £12,000/year. A higher-rate personal landlord pays 40% tax on £24,000 gross income (£9,600), then claims the 20% credit (£2,400), netting a tax bill of £7,200 on an income surplus of £12,000 — a 60% effective tax rate. A UK limited company deducts £12,000 interest as an expense, pays 19% Corporation Tax on the £12,000 net profit (£2,280), and retains £9,720 — before any further personal extraction.

Capital gains treatment is different in a company. Personal landlords get a £3,000 annual CGT exempt amount (reduced from £12,300 in 2023), and residential property gains are taxed at 18% (basic rate) or 24% (higher rate). Within a company, all property gains are subject to Corporation Tax at 19–25% — there is no equivalent annual exempt amount. The company structure is generally more efficient for high rental yield properties but less clear-cut when the primary goal is capital appreciation and eventual sale.

Stamp duty is the same. The 3% surcharge on additional dwellings applies whether you buy personally or through a company — there is no exemption for corporate purchases. However, if you own multiple properties through a company, future purchases may qualify for Multiple Dwellings Relief on the SDLT calculation.

A UK property holding company has the same core filing obligations as a trading company: annual accounts, Corporation Tax obligations and a confirmation statement. Director identity verification has been mandatory since 18 November 2025; existing directors provide their personal code with the next confirmation statement. Property transfers can have CGT and SDLT consequences, so obtain advice before moving a personally owned property into a company.