With any such measures, an important element is how robust the processes are, and how likely is it that legislators might try to shut the doors in their quest for more revenues? 

The following article examining the topic, comes from Jo Bateson (pictured below) who is a partner at , a firm of chartered accountants. The editors are pleased to share these views and invite responses. The standard editorial disclaimers apply. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

Jo Bateson

What is the best way to hold property assets and could a Family Investment Company now be the best option?

The Autumn Budget 2025 has been the key topic of conversation with clients over the last few months. Now that the Chancellor has delivered her Budget, the discussion has moved on to what it means for those with property businesses and investments and, in particular, whether personal or corporate ownership makes sense.

Profits from rental businesses are taxed in the hands of individuals at a top rate of 45 per cent – there is no National Insurance Contributions on rental income. Since 2017, individuals have been restricted to basic rate relief only on the amount of tax relief that they can obtain on mortgage interest against their rental profits. 

In comparison, the top rate of corporation tax is 25 per cent and companies still generally obtain tax relief on their full mortgage costs which has made corporate ownership of rental properties attractive for some.

As announced in the Autumn Budget 2025, the tax rate on property income profits for individuals will increase by 2 per cent on each tax band (22 per cent, 42 per cent, and 47 per cent) from 6 April 2027. This means that lots of landlords will start to consider whether owning their rental properties through companies makes better sense than owning personally.

If landlords want to acquire new properties, they should definitely consider establishing a property company. There is a higher upfront Stamp Duty Land Tax (SDLT) cost but, depending on the property values (and therefore the cost of the additional SDLT), this can often pay for itself over a few years in terms of a lower rate of tax on the profits as well as full relief on the interest costs. A property rental company works well if the landlord does not require the funds personally because there would be additional tax as and when the landlord withdraws funds by way of a dividend (at rates of up to 39.35 per cent). Property rental companies are usually most effective where the landlord wants to reinvest the rental profits in future properties as they can do so at a lower tax cost.

Some landlords may already have a significant property portfolio held personally and would like to consider how to move this into a company. The transfer of property into a company will trigger both a capital gains tax disposal and a SDLT event so it is not for the faint hearted and certainly requires tax advice. There are reliefs available for both taxes and when the conditions are met, they can provide the landlords with some good options. Even where SDLT would be triggered by incorporating the property business, it can still sometimes make sense due to the other tax and non-tax benefits – it is often worth modelling the scenarios. 

The capital gains tax incorporation relief is a very subjective area of legislation and case law. It does require the landlord to carry on a property business which looks at both the quality and the quantity of business activity by the landlord themselves. It is important that specialist tax advice is sought as there is a significant downside if this goes wrong and it is no longer possible to obtain HMRC pre-transaction clearance on property business incorporations.

From an inheritance tax perspective, corporate ownership does allow property ownership to be split more easily which can have the added benefit of minority shareholder discounts.

There are non-tax benefits to a property rental company too. Aside from limitation of liability for the landlords (which does have the added cost and complexity of filing information at Companies House), companies can offer additional asset protection through well drafted articles of association and shareholder agreements for life events such as divorce. You can even create growth shares so that the future growth in the value of the business accrues to the next generation whilst the current generation retain control which is often attractive for families.

The Chancellor also announced a 2 per cent increase to the basic rate and higher rate on dividend tax from April 2026. There is no increase to the additional (i.e. top rate) of dividend tax rate. For those who have equity portfolios, a family investment company (FIC) is becoming an even more attractive option with the increasing tax rates. Where a FIC receives qualifying dividends, they are tax-free which allows the funds to be re-invested on a gross basis. As with the property company, there would be additional tax if and when the funds are withdrawn from the company by way of dividend which means that a FIC is usually most appropriate for those who do not need the dividends to fund day-to-day living costs. You can fund a FIC with loans, but the anti-avoidance rules are complex and wide reaching so advice is needed before pursuing this option.

There is an international element too. If the FIC is non-UK incorporated (but still UK tax resident), there can be IHT benefits once the shareholders are no longer long-term UK residents or they can benefit from particular capital taxes treaties. 

Clients generally like owning companies as they understand them. Where the funds are excess to day-to-day needs and in the case of a FIC have the right underlying investments, they often make sense. With personal tax rates for dividends and property increasing, we are likely to see even more clients asking about the advantages and disadvantages of personal versus corporate ownership. For a while those differences were narrowing but these seem to be diverging once again.