Property Holding Structures Compared: Personal, Ltd Company, LLP, and Trust

Choosing how to hold investment property is one of the most consequential decisions a property investor makes — and one of the most difficult to reverse once assets are in place. The structure determines how rental income, capital gains, and inheritance tax are handled throughout the life of the investment. It also affects borrowing capacity, succession, and the cost and complexity of your financial administration.

This guide compares the four main holding structures for UK residential and commercial property: personal ownership, limited company, limited liability partnership (LLP), and trust.

Personal Ownership

The most common structure by number of investors — and increasingly, the least tax-efficient for higher-rate taxpayers with leveraged residential portfolios.

Income tax. Rental profits are taxed at the owner's marginal income tax rate: 20% (basic), 40% (higher), or 45% (additional). The Section 24 restriction means individual landlords can only claim a 20% tax credit on finance costs rather than a full deduction — highly disadvantageous for higher-rate taxpayers with mortgages.

Capital gains tax. Gains on disposal of residential property are subject to CGT at 18% (basic rate) or 24% (higher rate). Commercial and other non-residential property gains are taxed at the same 18%/24% rates (aligned with residential from 30 October 2024). The annual exempt amount is £3,000 (2026/27).

Inheritance tax. Directly owned investment property forms part of your estate for IHT. It does not qualify for Business Property Relief (BPR). On death, the estate pays 40% IHT on the value above the available nil-rate bands.

SDLT. Personal purchasers of residential investment property pay the standard SDLT rates plus the 5% additional dwellings surcharge.

Mortgage access. Personal buy-to-let mortgages are widely available from a broad range of lenders at competitive rates.

Succession. Property passes through the estate on death (or via will). Transferring to the next generation is complex — the transfer is a disposal for CGT purposes (unless via death, which is a CGT-free uplift to market value) and a purchase for SDLT purposes.

Verdict. Personal ownership is simplest but most tax-inefficient for higher-rate taxpayers with leveraged portfolios. Best suited to: lower-rate taxpayers, cash buyers, or those with a single property held for personal reasons.

Limited Company (SPV)

The structure of choice for most new buy-to-let investment since the introduction of Section 24.

Income tax / corporation tax. Companies pay corporation tax on rental profits at 25% (main rate in 2026, with lower rates for small profits). Full deduction of mortgage interest is permitted. Profits retained in the company are taxed only at corporation tax rate; extraction as dividends or salary creates an additional tax charge, so the efficiency depends on how much profit is extracted and at what rate.

Capital gains tax. Companies pay corporation tax on capital gains (no separate CGT regime). The rate is the same as on income — 25%. No annual exempt amount for companies.

Inheritance tax. Shares in a pure property investment company do not qualify for Business Property Relief. The IHT position is broadly similar to personal ownership (the value of the shares representing the underlying property is included in the estate). However, shares are more flexible instruments for succession planning — they can be issued in different classes, transferred in tranches, and held in trust more easily than direct property.

SDLT. A company purchasing residential property pays the same SDLT rates as individuals, including the additional dwellings surcharge. Transferring existing personal property to a company triggers both CGT (at disposal value) and SDLT (on acquisition by the company) — the main deterrent to incorporating existing portfolios.

Mortgage access. Company buy-to-let mortgages are available from a growing number of lenders but typically at slightly higher rates than personal mortgages. Lenders usually require personal guarantees from directors.

Ongoing compliance. Annual accounts, corporation tax returns, Companies House filings. Typically costs £1,500–£5,000 per company per year in accountancy fees.

Verdict. Most tax-efficient for leveraged, higher-rate taxpayer investors buying new properties. Less efficient for low-leverage or basic-rate investors. The compliance overhead is manageable for larger portfolios.

Limited Liability Partnership (LLP)

Less commonly used for residential property but worth understanding, particularly for mixed portfolios or where a genuine partnership exists between investors.

Income tax. An LLP is transparent for UK tax purposes — income and gains are attributed directly to the members and taxed in their hands at their personal rates. There is no entity-level tax on the LLP itself. Members pay income tax on their share of profits at their marginal rate.

Capital gains. Similarly transparent — gains on disposal of LLP assets are attributed to members at their ownership proportions and taxed at personal CGT rates.

IHT. LLP interests in a trading LLP (not a property investment LLP) may qualify for BPR. Pure property investment LLPs do not qualify.

SDLT. Transfers of property from individuals to LLPs can, in certain circumstances, be structured without SDLT under the partnership-to-partnership rules — this is the primary structural advantage of an LLP. However, this requires a genuine pre-existing partnership with documented profit sharing arrangements. HMRC scrutinises these arrangements.

Mortgage access. LLP mortgages are more specialised than company or personal mortgages and fewer lenders offer them.

Section 24. The Section 24 restriction applies to LLP members in the same way as to individuals (since LLPs are tax-transparent and members are taxed as individuals). An LLP does not escape Section 24.

Verdict. Useful primarily for its SDLT structuring potential in genuine partnership situations, and for mixed commercial/residential portfolios. Not a substitute for a limited company where income tax efficiency is the primary objective.

Trust

Trusts holding investment property are relatively uncommon as a primary structure but may arise in succession planning contexts.

Income tax. Trusts pay income tax on rental profits at trust rates: 45% for discretionary trusts (on income above a small standard rate band), or basic rate for interest-in-possession trusts. These rates are higher than both personal and corporate rates for most taxpayers — trusts are not tax-efficient income structures for property.

Capital gains. Discretionary trusts pay CGT at 24% on all chargeable gains (there is no basic-rate band for trusts). The trust annual exempt amount is £1,500 (2026/27, reduced considerably from prior years).

IHT. Discretionary trusts are subject to periodic IHT charges (every ten years) and exit charges. However, placing property in trust removes it from the settlor's estate (after seven years), which can be IHT-beneficial in the long term for large estates.

SDLT. Transferring property to a trust triggers SDLT on the market value — the trust is treated as a purchaser.

Succession. Trusts are useful for succession planning: property can be held for beneficiaries without passing through probate. The trustee manages the property for the benefit of beneficiaries, who may not have direct legal title until the trust distributes.

Verdict. Trusts are rarely the most tax-efficient structure for income-producing property on a standalone basis. They are most useful where succession and control are the primary objectives rather than ongoing tax efficiency.

Summary Comparison Table

Structure	Income tax	CGT	IHT	Section 24	SDLT on acquisition
Personal	40%/45%	24%	Full	Yes (restricted)	Standard + 5% surcharge
Ltd Company	25% CT	25% CT	Full	No restriction	Standard + 5% surcharge
LLP	40%/45%	24%	Full	Yes (restricted)	Possible relief (partnership rules)
Trust	45%	24% (flat)	Periodic charges	Yes (restricted)	Standard + 5% surcharge

Choosing the Right Structure

The right structure depends on:

1. Tax rate of the owner: basic-rate taxpayers benefit less from limited companies than higher-rate taxpayers
2. Level of leverage: the Section 24 issue is most acute for highly leveraged portfolios
3. New purchase vs existing portfolio: incorporation costs (SDLT + CGT) make company structures more attractive for new purchases
4. Succession intentions: trusts and companies offer more flexibility for generational transfer than direct personal ownership
5. Commercial vs residential: commercial property is taxed differently — no additional dwellings surcharge, no Section 24 restriction
6. International dimension: for non-residents, offshore SPVs have historically been used but the look-through IHT rules (since 2017) have reduced their advantage

How Global Investments Can Help

At Global Investments, we work with property investors across the UK and internationally, providing financial planning analysis to help you select and implement the most appropriate holding structure for your circumstances. We can model the tax impact of each structure on your specific portfolio, and coordinate with specialist property tax solicitors and accountants for implementation. Property values can fall as well as rise — structuring your investment correctly from the outset maximises the efficiency of your returns.

This article is for general information only. Tax rules change frequently and the analysis depends on individual circumstances. Always seek qualified legal and tax advice before making structural decisions about property investment.