Tax efficient BTL Property business

Is there anyone out there whom best knows all about the difference between becoming a LLP vs becoming a Limited Company for their BTL portfolio as i am a sole landlord owning a few properties in my own name.

My long term objectives are to own as much as i can own using mortgages and rent them out down south, mainly looking towards capital growth more so than looking for a rental income however a bit of both is always welcomed.

I presently have enough money to buy about another 3 houses on mortgages and by the time I’ve done that i should have something else where to re-mortgage and continue the process whilst living off of the business as much as possible - self management too including doing my own DIY for smaller repairs.

I understand that i could open a ltd company and me and the ltd company could then become a LLP and from there the LLP might also be able to become a ltd company after a couple of yrs without CGT & stamp duty etc however as a long term goal i really cant formulate if the end goal should be a LLP or a Ltd company and there doesn’t seem to much online about it.

My feeling is so far is that i should buy in my name now, then open a ltd company and become a LLP and stay that way but i dont know for sure as i want to go about it all correct from the outset with a informed choice of direction but i have far too many questions still unanswered.

1 of the questions is a tax comparison between LLP & ltd company for instance.
another question is, if i set up a LLP as suggested then does the ltd company then become classed as trading.
Also when the LLP allocates funds/money/earning to the ltd company does the ltd company need to pay corporation tax on and what about the LLP and me as a human?

If anyone has good experience in this sector it would be most appreciated if you could provide any advise on the matter.

I presently use a chartered Accountant whom knows nothing about property yet he is a good reliable trust worth accountant in all other ways who I’ve used for well over a decade but doesn’t have any property advise etc and i went to landlords4tax and they wanted about £25k plus to tell me this stuff which seems outrageously ridicules to be charging as its bad enough anyone has to pay tax to the corrupt tax man in the first place, let alone to then not be given clear rules in layman’s terms for those paying to at least understand the rules prior to playing the game if you know what i mean.
Thanks in advance.


I found the TaxCafe publications useful and decided that there was insufficient benefit to starting a Ltd Co but I thk it depends on how many properties you have See here: (

Don’t forget to deduct the cost of the book from your income

That’s really interesting Adrian, do you know if they talk about LLP at all and maybe compare an LLP against a limited company for instance?
What about yourself how are you set up if I can ask?

Hi there, I am a landlord and also an accountant. I have seen this sort of advice around about LLPs and switches. This is very open to a challenge by HMRC.
You should decide on a Ltd only if you have several properties and plan to keep for the long term. An Ltd will be an investment company unless you mostly buy and sell through it. As an investment company it does not qualify for some relief if you sell it.
However being a company you have the flexibility to allocate shares, say to family members, as opposed to giving them a specific property.
This needs to be decided upfront as later changes in shareholding may incur tax.
The LLP will have the same tax rates as a normal partnership - it is not taxed itself, you get taxed personally on the share of the profit.

that’s really helpful thank you for that, however with regards to the LLP then when LLP bank accounts receives monies to it although said money is taxable or is it only the allocated money that is taxable to the allocated person which I think is the case.
what I’m trying to figure out is if the LLP bank account has X amount of money in it and it is not allocated to anyone it just sits in that bank account does anyone have to pay any tax or can that simply not ever happen?

also what if my limited company and myself are the LLP and I am forced to allocate profits yet I decide to only allocate it all to the limited company knowing that the limited company has to pay less tax than I do for instance?

I was told that most mortgage companies are open to lending that reasonable rates for a LLP unlike limited company and that also excited me a little, would you so happen to have heard anything about that yourself maybe?

I am always left wondering what the big property developers and buy to let landlords are doing a limited company or a LLP as most solicitors firms seem to be LLP rather than a limited company and I am just trying to make sure that I set up the best set up to achieve the most profit.

I also wondered that if the LLP was to allocate funds to my limited company which was part of the LLP and I then withdraw that said money from the limited company bank account would I not be taxed for profiting on that money as well as corporation tax for the company profit in that money?

What you do with your properties also depends on if you have children. , and how old you are? the easiest is just to make a propertyover to them every now and then . In my case probably now!

Hi Andrew that is a broader subject but some rules:

  • if you have an LTD with you and an LLP as shareholder and decide to allocate dividends one year to you and one year to LLP or change the allocation of money that is only achieved via alphabet shares and HMRC does not like that, especially that is you essentially.
  • LLP members get taxed on the profit in that year, not on money withdrawn. LTD allows you that.
    For example in an LTD if you do not need to take all that profit out you can leave it for later when you have a slower year.
  • solicitors are LLP because their society used to frown upon them being in LTD, used to be the same for accountants. Some nonsense bureaucratic rule.

I dont have anyone whatsoever to leave anything too as i think were already overpopulated so im totally alone, i dont even have niece/nephew or anyone so its all for me as long as i last, sounds a tad sad yet is true…

andrew that does sound sad to me as I have 5 children , but we are all dealt a different card in life, I know a few guys who have no children and are perfectly fulfilled. Usually with a big train layout!

What does a big train layout mean not sure if that’s a local terminology or not?

I really mean they have a big train layout in the loft or in a purpose built shed, it must have taken years to build and looks superb

Okay I understand now that comment was a little bit out of my age range so I didn’t quite get it so I’m guessing I’ve got all that to look forward too…
I shall try & stick to women rather than a train set for as long as I can & when that day ends i may just get high everyday until the end…

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Train sets are easier to look after than women

Hi, you have raised an issue that the missus and myself were looking to go down. I saw a video last week and it got me thinking that we should at least look into this route. We have 3 btls in our names and I am a higher tax payer. The video I saw was on and is well worth a look and maybe subscribe to their news letters. The upshot of it is, they have a software for £97 that will work out your tax as a ltd or individual or LLP. Also for £400 you can get a consultation (money back apparently if not satisfied!) To see if it is viable to set up the partnership. I have not used this site yet so don’t shoot the mesenger. If you consult with them, please give some feedback as to how it went.

money back I dont believe that for a second

Ok colin 3, I’m only letting others know what is out there and what I saw. There is nothing constructive in your comment. This isn’t Twitter.

well it was you who said" money back apparently if not satisfied " Your idea of being satisfied will be different to theirs.At least you may be able to put the £400 against tax. Now that is constructive. Twitter is probably for twits .I dont use it.

Sounds interesting as i do need advise.
If you are high tax payer you need to immediately be considering either a Ltd Company or a LLP I know that 100% for sure as theirs no need for you to be paying 45% tax when u can pay much less.

Basically you would need to set up a LLP and put all BTL in it & sit on that set up for a minimum of 3 yrs then either stay there or then open a ltd company and put all property in that CGT, SD free

As Landlords we probably all have accountants surely they are the ones for advice as they will have looked after our interests for some years… I am a higher rate payer as well but I dont care as i reduce my bill by giving a property away. .When you have kids you view it differently. I am minded of firms who tell you they can reduce your council tax and even if they do not then send you a big bill

we had about 40 rental units 1/2 in a company and half private. my experience is that HMRC continually tweak the rules even retroactively and if they see an advantage they will move to close the gap. if you are showed a scheme that is complex and you don’t fully understand then best to avoid. remember it is easy to start a limited company but its involved to wind it up, it took ages to wind ours up. accounts are a little more involved too.
putting props in joint names means doubling the annual cgt allowance, keeping very good records for cgt work is important - keep them until well after you sell for proof.
there are some excellent responses on here from others on here. Personally, for me, it didn’t make a whole lot of difference. i bought several in company name originally to fend of the ramifications of IR35 but that went away like a damp squib.