This guide gives a general overview only. Tax rules change and depend on your circumstances. It is not tax advice. Speak to a qualified adviser before making decisions.
Tax inside the property company
A UK company that owns property pays corporation tax on its rental profits and on any gain when the property is sold. Distributions to shareholders are paid from profits after that tax.
Dividends you receive
Distributions paid to you as a shareholder are usually dividends. UK residents have a tax-free dividend allowance, and dividends above it are taxed at dividend rates that depend on your income tax band.
Selling your shares
If you sell shares for more than you paid, the gain may be subject to Capital Gains Tax, after your annual exempt amount. Losses can usually be offset against other gains.
Buying shares
Transfers of shares in UK companies are generally subject to Stamp Duty or Stamp Duty Reserve Tax at 0.5%, rather than the Stamp Duty Land Tax that applies to buying a property directly.
ISAs and pensions
Shares in unlisted property companies generally cannot be held in a standard Stocks and Shares ISA. Some self-invested personal pensions can hold such investments, subject to the scheme's rules.
For current rates and allowances, see GOV.UK tax guidance.
This guide is general information, not financial, tax or legal advice. If you are unsure whether an investment is right for you, speak to a regulated financial adviser.