Cambridge Rental Limited Company Setup: Tax, Profit, and Exit Planning for Landlords

If you're serious about growing your property portfolio in Cambridge, thinking like a business isn’t just smart—it’s necessary. For many landlords, especially those scaling beyond one or two properties, operating under a limited company structure can offer significant tax advantages, greater flexibility, and a smoother exit route. But is it right for you? This guide breaks down the essentials of setting up a rental limited company Cambridge landlords are increasingly turning to in 2025.

Limited Company vs Personal Ownership: Tax and Flexibility

The first question landlords ask is: why switch? The short answer? Tax.

When you own property personally, rental income is taxed as personal income—subject to your marginal rate, which can be as high as 45%. You can no longer deduct all mortgage interest from your tax bill, thanks to Section 24 reforms.

By contrast, limited companies pay corporation tax (currently 25% in most cases), and full mortgage interest is deductible. This means more of your rental profit stays in the business.

But it’s not just tax savings. A company structure allows:

• More flexible income planning (through dividends or salary)

• Easier joint ownership structures

• Better scalability for multiple properties

Cambridge landlords eyeing growth—or even retirement income streams—often find company ownership provides more long-term control.

How to Set Up a Rental Company in the UK

Setting up a rental limited company is straightforward, but attention to detail is essential.

1. Register with Companies House: Choose a company name and register your business as a Special Purpose Vehicle (SPV) for property letting.

2. Open a Business Bank Account: Keep property finances fully separate from personal money.

3. Assign Directors and Shareholders: Often the same person(s), but clear roles are essential.

4. Inform HMRC: Your company will need to file annual accounts and corporation tax returns.

5. Get Professional Advice: Work with an accountant familiar with landlord tax UK rules to avoid missteps—especially if transferring personally owned property into the company.

Limited company structures do involve more admin, but modern accounting software and landlord-focused advisers make it manageable.

Profit Strategies: Salary, Dividends, Retained Earnings

Once you’ve set up, how do you take money out—or keep it in to grow?

• Salary: Directors can be paid a salary, reducing corporation tax. It also builds state pension entitlement.

• Dividends: Profits after tax can be distributed as dividends. The first £500 (in 2025) is tax-free; beyond that, dividend tax applies.

• Retained Earnings: Keeping profits in the company allows you to reinvest in new properties without triggering personal tax.

Every landlord’s situation is different. If you’re managing flats to let Cambridge UK or HMOs in Romsey, your cash flow needs may vary. Working with a tax adviser helps align strategy with your goals.

Exit Planning: Selling Shares vs Selling Properties

A huge benefit of a rental limited company Cambridge landlords overlook is the potential for a cleaner exit.

If you sell personally owned property, Capital Gains Tax (CGT) applies at up to 28%. But when you own via a company, you can choose to:

• Sell the property and pay corporation tax on gains

• Or sell shares in the company, potentially attracting lower Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) rates

This flexibility can be especially useful for portfolio landlords planning retirement or passing assets to family. It also makes your portfolio more attractive to institutional buyers or investors.

How Cambridge Stays Supports Portfolio Landlords with Company Structures

At Cambridge Stays, we understand that managing properties through a company requires more than basic letting services. That’s why we tailor our support for landlords using limited companies.

Our services include:

• Rent collection and reporting aligned with your corporate accounting cycle

• Maintenance tracking for deductible expenses

• Liaison with your accountant for year-end reports

• Strategic pricing to maximise retained earnings and ROI

Whether you manage short let apartments Cambridge tenants love or houses to let in Cambridge for professionals, we ensure your properties are optimised—not just occupied.

Ready to structure your property business for the future?

If you’re building a serious property portfolio in Cambridge, operating under a limited company can offer the control, efficiency, and tax savings you need. At Cambridge Stays, we help you turn that structure into success.

Let’s build a smarter, scalable property business together—one that’s ready for 2025 and beyond.