Can a Limited Company Buy a House in UK?

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Here in the UK, we have our fair share of limited companies doing business with the government and the people. It is often the safest way to do transactions as the assets and debts of the shareholder are different from those of the owner’s. However, there are some limitations regarding property ownership and residential rights. 

The short answer is: you can buy a property through a limited company. It is often considered the best way to do it as there are many advantages. However, the real question is: do you have to buy through a limited company? Private ownership is still a thing, and it will depend on your situation if one works over the other.

Why Should You Do It – Buying A House As a Limited Company

One of the main benefits of buying a house using a limited company is the taxes involved. If you are a private owner, you need to pay higher since it is technically yours now. It means that you will be the one who will pay the taxes on your accounts.

On the other hand, using a limited company means that the taxes involved will be much lower compared to the personal. It is even better if you are already paying higher tax rates since you will only need to pay 19% through corporation tax. It is even lower than income tax, making it easy for you to have more savings but still owning property.

Private landlords or owners used to have lower rates thanks to the relief set up by the government. The relief used to cover up 45% of the costs. However, it changed to as much as 20% only in 2017. Thus, making the transaction using LCs makes it so much better.

Some Things To Consider When Buying A House as a Limited Company

It should also be noted that the taxes involved in LCs are separate from your assets. It means that you will not be affected by any losses in the company. If you are setting it up for inheritance, its tax is so much lower for your family members as well.

However, you need to ask yourself first: are you ready to own an LC? Please do not think of it as an easy way out for lower tax rates, as you will have a company to run now. You will be involved with other payments necessary to keep the company running. It will have its taxes, and you will need to cover it as much as possible. Even if it is separated from your assets, it will not be a good look on you if you end up ruining it.

As such, buying through an LC is great for people who already have an LC running under their name. It makes more sense to do so since you already have the advantages at your disposal. You can try establishing a limited company first and see if you can manage it. Otherwise, it might not be a good move since you will lose so much time creating a company. Sometimes, it is easier for an individual to buy a property and make it private.

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Annette Ferguson

Annette Ferguson

Owner of Annette & Co. - Chartered Accountants & Certifed Profit First Professionals. Helping Online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.