There’s no single right answer to whether a short-term let should sit in a limited company or in your own name, but the mechanics that decide it are concrete: how mortgage interest is treated, how profit is taxed, and what it costs to move an existing property into a company afterwards.
Keep reading to learn the structural differences worth understanding before that conversation with your accountant, rather than telling you which one to pick.
Why this question got sharper after the Furnished Holiday Lettings change
Until April 2025, a genuine Furnished Holiday Let was taxed as a business regardless of whether you owned it personally or through a company, which meant full mortgage interest relief either way.
That special tax treatment ended for income tax from 6 April 2025 and for corporation tax from 1 April 2025, so a holiday let’s rental profit is now taxed the same way as any other residential letting income.
That single change is why ownership structure now makes a bigger practical difference than it used to: the two structures are taxed quite differently on ordinary rental profit, whereas before, the FHL rules had partly leveled that out.
How rental profit is actually taxed under each structure
Own the property personally, and rental profit is added to your other income and taxed at your income tax rate, which for a higher-rate taxpayer means 40%, and 45% above £125,140.
Own it through a limited company, and the company pays Corporation Tax on its profit instead: 19% on profits up to £50,000, rising on a sliding scale to the main rate of 25% on profits above £250,000.
On paper that looks like a straightforward win for the company at higher profit levels, but it’s only half the picture, because a company’s profit isn’t automatically your money.
The catch: getting profit out of a company again
Money that stays inside the company, reinvested in more property or held as reserves, is only ever taxed at Corporation Tax rates. Money you want to actually spend has to come out as salary or dividends, and dividends are taxed again on top of the Corporation Tax the company already paid, at rates that depend on your personal income tax band.
For a landlord who wants to draw most of the rental income as personal income each year, that second layer of tax can close most or all of the gap that made the company look attractive in the first place.
Mortgage interest: the mechanical difference driving a lot of this
Individual landlords can no longer deduct mortgage interest from rental profit before working out their tax bill; instead, they get a flat 20% tax credit against the interest paid, a restriction that already applied to standard residential lets and now applies to holiday lets too since the FHL rules ended.
A limited company faces no such restriction and can deduct mortgage interest as a normal business expense before Corporation Tax is calculated. For a highly-geared property with a large mortgage, that difference in how interest is treated is often the single biggest number in the comparison, more so than the headline tax rate.
What it actually costs to move an existing property into a company
Moving a property you already own personally into a limited company is treated as a sale for tax purposes, not a formality. That typically means Stamp Duty Land Tax on the transfer, including the additional dwelling surcharge that applies to company purchases, and potentially Capital Gains Tax on any increase in value since you bought it.
Those costs can be significant enough to outweigh years of the ongoing tax difference, which is why incorporating an existing property is a decision worth costing properly with an accountant rather than assuming the company route is automatically better because it looks that way for a new purchase.
Mortgage availability is part of the decision too
Limited company mortgages for holiday lets and short-term lets exist, but they typically come from a smaller pool of specialist lenders, and rates and fees can run slightly higher than the equivalent personal-name product.
That’s not a reason to rule the structure out, but it’s a genuine cost to weigh against the tax difference rather than something to discover partway through an application.
The general tax rules that apply to holiday lets either way, including allowances and how income is declared, are covered in our complete guide to holiday let tax in the UK.
What tends to influence the decision in practice
Landlords with one or two properties who plan to spend most of the income personally each year often find that the extra accountancy, filing and dividend tax involved in running a company erodes most of the benefit.
Portfolio landlords who are higher-rate taxpayers, and who plan to reinvest profit into buying more property rather than drawing it out, are the group who most often find the company structure worth the added administration.
Neither of those is a rule, and your own mortgage position, growth plans and appetite for the extra paperwork all matter more than any general pattern.
Getting the structure right before you commit
Whichever structure a property sits in, the day-to-day work of running it well, from pricing to guest turnover to compliance, is the same, and it’s the part we manage.
Easier Management manages holiday lets in Bristol and the surrounding region for landlords who own personally and through companies, and is a member of the National Residential Landlords Association, registered with the ICO, and signed up to the Property Redress Scheme and the Deposit Protection Service.
If you’d like to talk through what management looks like for your situation once the ownership question is settled, get in touch today.
