The Benefits of Investing Through Your Own Limited Company

It may just be the smartest way to grow and protect your wealth in today’s environment.

UK taxes have become increasingly hostile to investors. Whether you’re building a share portfolio, investing in property, or simply looking to make the most of your savings, the government has created an environment where tax-efficient growth is harder than ever.

Dividend tax is one of the biggest culprits. The dividend allowance has been slashed to just £500 per year, meaning that any dividend income above this is taxed at punitive rates of up to 39.35% for additional rate taxpayers.

Capital Gains Tax is now payable on even modest profits, with the annual exemption reduced to a mere £3,000.

Meanwhile, property investors have seen the tax treatment of mortgage interest severely restricted. You can no longer deduct all of your finance costs from your rental income, which results in a higher tax bill even if your profits haven’t increased.

At the same time, the available “shelters” from tax — pensions and ISAs — have their own limits. You can only invest up to £20,000 per year into an ISA, and while pensions are incredibly tax-efficient, the annual allowance is capped at £60,000 (and often less for high earners), with restrictions on access until age 55 or later. In short, if you’re a higher-rate taxpayer and have already used your tax wrappers, you’re quickly left with very few options.

But there is an alternative that more investors are waking up to: using a limited company to invest.

The Simplicity of Getting Started

Many people are surprised at how straightforward it is to set up a limited company in the UK.

You can register one online with Companies House in less than an hour, often for under £15.

Once the company is formed, you simply open a business bank account and deposit funds — either by lending the company money or by subscribing to shares — and you're ready to start investing.

In the early stages, there’s no legal requirement to use an accountant immediately. Annual accounts and a corporation tax return will eventually be due, but most investors keep things simple in year one and seek professional help only when needed. This makes it very accessible for those just starting out.

What Can a Company Invest In?