Can a Limited Company Buy a Residential Property and Rent It to Me?
Yes. A UK limited company can buy a house and let a director live in it. If the director pays too little rent, HMRC taxes a benefit in kind based on the property’s annual value, plus an extra charge when the house cost more than £75,000. The company also pays Class 1A National Insurance on it.
This guide explains how that charge is worked out, how much rent removes it, the extra taxes that apply to company homes worth more than £500,000, and when owning the home personally is simpler.
How HMRC taxes a director living in a company house
- Basic charge: the property’s annual value (for UK homes, broadly its old rateable value), less any rent the director pays.
- Additional charge, if the company paid more than £75,000 for the property (including improvements): the cost above £75,000 multiplied by HMRC’s official rate of interest, which is 3.75% from 6 April 2026 (HMRC official rates). Rent paid above the annual value reduces this charge.
- The total is taxed on the director as employment income, reported by the company on a P11D or through payroll. The company pays Class 1A National Insurance at 15% on the same figure (GOV.UK National Insurance rates).
- The benefit is not the gap between market rent and the rent paid – that is a common mistake. HMRC’s method is set out in its Employment Income Manual (EIM11480).
Worked example
Assumptions: the company buys a house for £300,000; annual value £2,000; official rate 3.75%; the director is a higher-rate taxpayer; figures for a full 2026/27 tax year.
If the director pays no rent: basic charge £2,000 plus additional charge (£300,000 − £75,000) × 3.75% = £8,437.50, a total benefit of £10,437.50. The director pays £4,175 income tax at 40%, and the company pays £1,565.63 Class 1A National Insurance.
If the director pays rent of at least £10,437.50 a year, the benefit falls to nil. The company then pays Corporation Tax on that rent.
Homes worth more than £500,000
If the company owns a home worth more than £500,000, it may have to pay the Annual Tax on Enveloped Dwellings (ATED) every year, from £4,600 for 2026/27. The relief for property rental businesses is not available while a director, shareholder or their family lives there, even if they pay full rent (HMRC ATED technical guidance). The 17% company rate of Stamp Duty Land Tax can also apply to the purchase, and relief claimed on purchase can be withdrawn if a connected person moves in. Take advice before anyone connected with the company moves in.
If the company rents a house for the director
If the company rents a property from a third-party landlord for the director, the basic charge is the higher of the property’s annual value and the rent the company pays, less anything the director pays back (EIM11431).
Is it worth it? Buying personally or through your company
| Option | Main tax points |
|---|---|
| Buy the home personally | Paid from taxed income; Principal Private Residence relief can make a gain tax-free on sale; no benefit in kind or ATED. |
| Company buys; director pays rent | The company pays Corporation Tax on the rent; the director pays rent from taxed income; no Principal Private Residence relief – any gain is taxed in the company, and taking it out is taxed again. |
| Company buys; director pays little or no rent | Benefit in kind and Class 1A as above; ATED and Stamp Duty issues above £500,000; lender consent is often required. |
Most buy-to-let lenders do not allow a director or their family to live in a company-owned property, so check the mortgage position with a broker before buying.
Buying rental property to let to other tenants is a different decision – see our property investment accountants page, or our landlord accountants service if you let property in your own name.
What you should do next
Whether a company should own your home depends on the price, how much rent you would pay, your tax band and your plans for the property. Book a consultation and we will check the numbers for your situation, including the benefit in kind, Corporation Tax, ATED and what happens when the property is sold. See also our property tax advice service.
Frequently asked questions
Can my company buy a house for me to live in?
Yes, but it is usually treated as a benefit in kind unless you pay enough rent. The benefit is based on the property’s annual value plus an extra charge if it cost more than £75,000.
How much rent do I need to pay my company to avoid a benefit in kind?
At least the property’s annual value, plus the additional charge if it cost more than £75,000. In our worked example of a £300,000 house, that is £10,437.50 a year.
Will my company pay ATED if I live in its property?
It can, if the property is worth more than £500,000, because the rental business relief does not apply while a connected person such as a director or their family lives there.
Can I get Principal Private Residence relief if my company owns my home?
No. The company owns the property, so any gain is taxed in the company, and taking the proceeds out is taxed again.
Can my company get a mortgage on a house I will live in?
Most buy-to-let lenders do not allow a director or their family to live in the property. Check with a mortgage broker before buying.
About this page
Written and reviewed by Simon Misiewicz FCCA, ATT, MBA, Director of Optimise Accountants (OPTIMISE ACCOUNTANTS LIMITED, company number 04856185). Last reviewed 25 September 2026. General information only; take advice on your own circumstances. Simon leads a team of five ACCA-qualified accountants.
