Can My Company Buy Property or Invest in Shares

At Towerstone Accountants we provide specialist limited company accountancy services for directors and owner managed businesses across the UK. We wrote this guide for people running a company who want clear answers on tax, payroll, Companies House filing duties, and day to day compliance without jargon. Our aim is to help you understand your responsibilities, reduce the risk of penalties, and know when to get professional support.

This is a question I hear frequently from directors who have built up profits inside a limited company and want to make better use of that money long term. From my experience, it usually comes after a few strong trading years, when cash has started to accumulate in the business account and leaving it there feels wasteful.

I often hear the same follow up questions. Can the company buy a rental property instead of me personally. Can it invest in shares or funds. Is it tax efficient. Will it cause problems later if I want to sell the company or take money out. These are sensible questions and the answers are not always straightforward.

In this article I will explain how company owned investments work in the UK. I will cover buying property through a limited company, investing in shares through a company, how tax applies at each stage, and the real world risks I see people overlook. I will also explain when this approach works well and when it can quietly create long term problems if it is done without proper planning.

Everything here is based on current UK practice and my day to day experience advising owner managed businesses.

Can a limited company buy property

Yes, a limited company can buy property. There is no restriction in UK company law that prevents a trading company from owning property, provided it is permitted by the company’s articles of association and the purchase does not breach any existing finance agreements.

In practice, most standard articles allow this without issue.

Companies can buy several types of property, including:

• Residential buy to let property

• Commercial property such as offices or warehouses

• Mixed use property

• Property used by the company itself

The reason this has become popular is largely tax driven, but tax should never be the only deciding factor.

Buying residential property through a company

Buying residential property through a limited company has become more common since mortgage interest relief was restricted for individual landlords. Companies are not affected by that restriction, which means mortgage interest remains fully deductible against rental profits.

From a tax perspective, this can be attractive, but there are still important points to understand.

When a company buys residential property:

• Rental profits are subject to Corporation Tax

• Mortgage interest is treated as a business expense

• There is no personal income tax until money is extracted

• Stamp Duty Land Tax usually includes the 3 percent surcharge

Corporation Tax is currently lower than higher and additional rate income tax for individuals, which is why many landlords consider this route.

However, the money does not magically become tax free. If you later want to take those profits out of the company, further tax will usually apply in the form of dividends or salary.

Stamp Duty considerations for company purchases

One of the biggest upfront costs when a company buys residential property is Stamp Duty Land Tax.

Companies usually pay:

• Standard residential rates

• Plus the additional 3 percent surcharge

This applies even if the company is buying its first property. There is no first time buyer relief for companies.

For higher value properties, there can also be an additional 15 percent rate in certain circumstances, although reliefs often apply for genuine rental businesses. This is an area where advice is essential before exchanging contracts.

Ongoing tax on company owned property

Once the property is owned by the company, ongoing tax is relatively straightforward on the surface.

The company pays Corporation Tax on its rental profit. Allowable expenses usually include:

• Mortgage interest

• Repairs and maintenance

• Letting agent fees

• Insurance

• Accountancy costs related to the rental activity

Capital allowances are not available on residential buildings, but may apply to certain fixtures in commercial property.

The key thing I stress to clients is that the tax efficiency only works if profits are retained or reinvested. If profits are regularly extracted personally, the overall tax position can end up similar to owning property personally, sometimes worse once additional administration is factored in.

What happens when the company sells the property

When a company sells property, any gain is subject to Corporation Tax rather than Capital Gains Tax.

There is no annual CGT allowance for companies. The full gain is taxable, although indexation allowance applies for older periods.

After Corporation Tax, if you then want to take the remaining money out of the company, further tax usually applies. This is the double layer of tax that often catches people out.

In practice, I see this work best where:

• The property is part of a long term investment strategy

• Profits are reinvested or retained

• The company is not expected to be sold as a trading business

Can a trading company invest in shares

Yes, a trading company can also invest in shares, funds, or other financial assets.

This can include:

• Quoted shares

• Exchange traded funds

• Investment trusts

• Certain managed portfolios

There is no legal barrier to this, but there are important tax and commercial consequences that need to be understood upfront.

How share investments are taxed inside a company

When a company invests in shares, tax treatment depends on the type of income and gains generated.

Dividends received by UK companies from most UK and overseas companies are often exempt from Corporation Tax, although there are exceptions.

Capital gains on shares are subject to Corporation Tax when the shares are sold.

Losses can usually be offset against other chargeable gains in the company, which can be helpful from a planning perspective.

From a cash flow point of view, this can feel efficient, but there is again a second layer of tax if you extract the money personally later.

Investment activity and trading status

One area I am very careful with is protecting a company’s trading status.

If a company builds up significant investment activity relative to its trading activity, this can cause problems with reliefs such as:

• Business Asset Disposal Relief

• Entrepreneurs’ relief style planning

• Certain inheritance tax considerations

In extreme cases, a company can become classed as an investment company rather than a trading company, which can significantly change its tax profile.

This is why I often advise keeping substantial investments in a separate company, rather than mixing them into a core trading business.

Using a separate investment company

In many cases, the cleanest structure is:

• Trading company generates profits

• Profits are paid as dividends to a holding or investment company

• Investment company buys property or invests in shares

This can allow profits to move without personal tax at that stage and keeps the trading company clean.

However, this structure must be set up properly and aligned with long term plans. It is not something to rush into without advice.

Practical risks I see directors overlook

In practice, the risks are rarely about whether something is allowed. They are about unintended consequences later.

Common issues I see include:

• Cash tied up in illiquid property

• Difficulty extracting funds without tax

• Mortgage restrictions limiting future plans

• Complications when selling the trading business

• Unexpected tax bills on exit

None of these mean company investments are wrong. They just mean they need to be planned with the end in mind.

Is this right for you

In my opinion, company owned investments work best when:

• You have surplus profits not needed personally

• You are building long term wealth inside companies

• You are comfortable with complexity

• You have a clear exit or succession plan

They are often less suitable where directors need regular access to cash or plan to sell the trading business in the short to medium term.

Final thoughts

Yes, your company can buy property and invest in shares. The real question is whether it should.

From my experience, the best outcomes come when investment decisions are made as part of a wider strategy, not just because there is cash in the bank. Tax efficiency matters, but so does flexibility, risk, and what you ultimately want the money to do for you.

If you plan properly, company investments can be a powerful tool. If you rush in without understanding the long term consequences, they can quietly limit your options later.

You may also find our guidance on How do I handle capital gains within a limited company and What happens to company assets when I close the business helpful when exploring related limited company questions. For a broader overview of running and managing a company, you can visit our limited company hub.