Limited Company Vs Sole Trader

Hi and thanks in advance for any helpful replies.

I have 2 properties and I’m considering changing over to the Limited company route so I can offset mortgage interest fully again, especially with interest rates so high.

In my circumstances is it worth it with only 2 properties? I’m assuming it is, but seen many people say it’s not and just sell up, especially with everything else to contend with these days.

In brief between the 2 properties;

Rents total £15,850 pa

Mortgage interest £13,850 pa (2/3 years ago my mortgage was about £4,500 pa)

Other costs £950 pa

My only other income is a pension of £3,600 pa

I can’t see how continuing as a sole trader makes any sense anymore. Is there anything obvious I’m missing?

Also if I become a Limited Company are there any CGT implications?

Is it possible and if so how is the best way to file my own accounts without an accountant?

Will I be able to leave the mortgage in my name rather than having the faff and cost of changing to a Ltd Co mortgage? I’m guessing I won’t be that lucky and will need to change that over too!

Grateful for any advice on the above, thanks.


Using a ltd company is of most benefit to higher rate tax payers who now cant fully offset mortgage interest. As you would be basic rate tax payer the use of the 20% tax credit would effectively offset the tax and based on your income it would all fall within your personal allowance so no tax to pay.

Dont see much point going ltd although clearly you aren’t making much so you may consider selling at an appropriate time.

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On top of what Richard has said, Ltd company mortgages are typically a higher rate. Think of mortgage fees, stamp duty, capital gains, solicitor and everything else. Can’t see it being worth it if not in higher tax bracket.

(You can avoid stamp and CGT by converting to LLP before transferring to Limited company.)

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Ive spoken to a couple of BTL tax specialists in the past and both said its not worth it if you already own the properties personally as you can lose more in cgt and sdlt than you gain. Dont forget your company will have to file accounts each year and pay corporation tax on profits.

Also see the recent HMRC statement on hybrid schemes in case youre tempted by them.

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Apologies for the delay in replying, thanks for all your replies, it’s useful to have other opinions to mull over.

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