Should You Set Up a BTL Trading Company for Property Investment?

As a landlord or property investor in the UK, you might have heard of setting up a Buy-to-Let (BTL) trading company. While it may seem like a complex option, it could be an effective way to manage your property investments, especially given the evolving UK tax landscape, mortgage application processes, and the broader real estate sector.

In this article, we will explore what a BTL trading company is, the pros and cons of using this structure, the tax benefits, mortgage considerations, the setup process, and answer some frequently asked questions. Whether you are a portfolio landlord, setting up a trading limited company, or exploring options through a limited liability partnership, this guide will help you understand whether setting up a BTL trading company is the right decision for you.

What Is a BTL Trading Company?

A BTL trading company is a limited company set up specifically for buying, renting, and managing investment property. Unlike personal buy-to-let investments, the property portfolio is owned by the company, not by you as an individual. This approach can offer advantages in terms of tax planning, asset protection, and estate planning.

In the UK, more property investors, particularly portfolio landlords, are turning to limited company structures and SPV Limited Companies for their buy-to-let investments, especially following the restrictions introduced by Section 24. These companies often fall under Section L: Real Estate Activities and must be registered with the appropriate Standard Industrial Classification (SIC) codes, such as 68100 or 68209.

Why Should You Consider a BTL Trading Company?

1. Tax Benefits and Efficiency

Corporation Tax: A company pays corporation tax, which currently stands at 25% (as of 2025) for profits above £50,000. This is generally lower than the higher-rate income tax band that personal landlords might fall into.

Mortgage Interest Deductions: One major benefit is that the full amount of finance costs, including interest-only payments, can be deducted from rental income.

Reinvestment of Profits: Profits within the company can be retained and used for capital raising or reinvestment without personal tax consequences.

Incorporation Relief and CGT calculators can help when moving property from personal ownership to a company to manage the impact of Capital Gains Tax (CGT).

Disadvantages of a BTL Trading Company

1. Higher Mortgage Rates and Less Choice

BTL mortgages for companies generally have:

• Higher interest rates
• Fewer available products
• Stricter criteria, including more detailed credit checks and scrutiny of deposit sources

Some lenders, such as Lloyds Bank, Vida Homeloans, and other financial institutions, prefer to deal with SPV Limited Companies rather than trading companies involved in other activities.

2. More Administration and Costs

Setting up and running a company involves:

• Obtaining a Certificate of Incorporation 
• Drafting a Memorandum and Articles of Association
• Managing annual filings with Companies House
• Preparing detailed accounts (especially for layered limited companies with beneficial owners)
• Adhering to regulations if you’re involved in niche areas like Clinically Proven Devices or Technical Reliability products

3. Transfer Taxes

If transferring personally owned BTL property into a company, you may face:

• Capital Gains Tax (CGT)
• Stamp DutyA tax paid by the buyer when purchasing a property. Land Tax (SDLT)

Mortgage Considerations for BTL Companies

When applying for a BTL mortgage under a limited company:

• Lenders require strong projected rental income
• Loans are often offered on an interest-only basis
• Products are assessed on key criteria such as experience, property type (e.g., Multi-Unit Freehold Blocks), and company structure
• Some companies use Trading Ltd Cos while others form SPVs with SIC codes solely for property letting

Expect:

• Loan terms with higher fees
• Early Repayment Charges
• Deposit requirements of around 65% LTV

Setting Up a BTL Trading Company

Steps:

1. Register with Companies House and choose SIC codes (e.g. 68100 or 68209)
2. Set up a business bank account to manage company funds
3. Prepare legal documents: Certificate of Incorporation, Memorandum and Articles of Association
4. Ensure compliance with EPC regulations (obtain an Energy Performance Certificate)
5. Work with a qualified accountant familiar with trading business requirements
6. Apply for a mortgage, considering brokers’ advice on lender experience and criteria
7. Consider the structure of layered limited companies if you’re expanding

FAQs

Are BTL company mortgages more expensive?

Yes. They come with higher rates, limited lender options, and specific criteria. Use a broker and tools like Buy to Let calculators to find the right fit.

Can I transfer personally owned properties to a company?

Yes, but CGT and SDLT may apply. Incorporation Relief can help, but you should speak to a tax adviser first.

What are the best SIC codes for BTL trading companies?

Typically 68100 (property buying/selling) and 68209 (letting own property). These are preferred by lenders.

Do I need a trading company or an SPV?

SPVs are often preferred for buy-to-let as they simplify the mortgage process. Trading companies may be suitable for diversified business activities but face stricter scrutiny.

Where can I find support for setting this up?

Consider booking an online session with a landlord specialist, contacting your mortgage broker, or calling expert lines like 0345 345 6788 for advice.

Final Thoughts

A BTL trading company can offer serious advantages for UK property investors — especially those building a Buy-to-Let Portfolio. But like all decisions involving finance, tax, and the mortgage market, it requires careful consideration.

Always review your personal financial goals, speak with a qualified tax advisor and mortgage broker, and examine tools like the CGT calculator and Buy to Let mortgage brokers.

If you’re involved in wider commercial activities (like skin tightening, body shaping, or mental wellness), ensure your company structure doesn’t conflict with mortgage provider expectations. Clear separation of business activities is key.

From deposit sources to advertising partners, traffic sources, and social media services, your success will depend on how professionally you manage your trading limited company in line with the UK’s ever-changing financial rules.