Structure, succession, and strategy – Choosing the right ownership model for landlords

Tax and ownership structure planning were high on the agenda at our Bristol panel, where specialists including Clare Day of HCR Law, Richard Cartwright of Saffery, George Densham of Carter Jonas, and Angela Niering-Wren from Arbuthnot Latham’s Real Estate Finance team, shared perspectives on how landlords can plan more effectively for the future.

The key message? There is no one-size-fits-all. Ownership models must reflect long-term goals. Choosing the wrong structure can limit flexibility and increase costs.

Incorporation is not always the answer

Many landlords explore incorporation to take advantage of lower corporate tax rates. But the panel warned that unless profits are being reinvested, rather than withdrawn, incorporation may not offer the savings people expect. With corporation tax at 25% and dividends taxed upon extraction, the benefits depend on strategy, not assumptions.

Every portfolio is different. The best route depends on whether the landlord is seeking to grow, extract income, or plan for succession.

SDLT relief is limited and complex

Transferring a personally held property portfolio into a company structure can trigger a significant Stamp Duty Land Tax (SDLT) liability. Relief is available – but only where a genuine, documented partnership has existed for a number of years.

The panel highlighted that many landlords underestimate this threshold and attempt incorporations that are not compliant. In such cases, the tax cost can outweigh any future efficiencies.

Director loans are powerful, but conditional

Where incorporation is appropriate, the ability to withdraw funds via a director’s loan account can offer flexibility – particularly for landlords needing to access capital later. But this needs to be structured at the outset.

Well-advised incorporation can unlock tax advantages. Poorly planned moves can create long-term complications.

ATED is misunderstood

The Annual Tax on Enveloped Dwellings (ATED) only applies to residential properties over £500,000 held in corporate wrappers and not let commercially. While most landlords qualify for relief, annual returns are still required to avoid penalties.

Strategy first, then structure

Perhaps the strongest message was that structure must follow intent. Landlords must begin with their goals: Will you reinvest? Extract income? Pass assets to family? These decisions should determine the structure, not the other way around.

The views and opinions expressed are those of the individual participants and do not necessarily reflect the official policy or position of Arbuthnot Latham.