Should your business premises sit in a separate company?
Charging your company rent moves profit from Corporation Tax to your income tax, but where the premises sit matters most on the way out: selling the business, or passing it on.
Your answer
Enter what the premises are worth, the rent, your company's profit and your other income.
About this calculator
For one owner of a trading company (not a letting or investment business) that uses the premises, with income tax at the England, Wales and Northern Ireland rates.
We compare the premises in your company, owned by you and rented to it, and in a separate property company you own. We don't work out the cost of moving premises you already own.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
Each year: in your company, the mortgage interest comes off its profit. Owned by you, the rent comes off instead, and you pay income tax on the rent less all the interest (no National Insurance, and on business premises the interest isn't limited to 20% relief). A separate property company letting to your own company pays the 25% main rate on its profit (it's a close investment-holding company), and the two companies share the £50,000 and £250,000 limits.
On the way out: selling shares with the premises inside can get Business Asset Disposal Relief at 18%. Premises you own can get it too, but only if you charged no rent from April 2008 on. A separate company pays Corporation Tax on the gain, then you pay tax to take the money out. At death, premises inside your trading company get 100% business relief, premises you own and your company uses get 50% if you control it, and a property company gets none.
Worked example
Owning the premises yourself and charging your company £40,000 rent would cost about £3,321 a year more tax than keeping them in the company.
2026/27 rates · financial year 2026 · one owner · market rent · you control the company · selling in 5 years
| Your company's yearly profit before the premises | £150,000 |
|---|---|
| In your company: profit after the mortgage interest | £135,000 |
| In your company: Corporation Tax (with marginal relief) | £32,025 |
| Owned by you: company profit after the rent | £110,000 |
| Owned by you: company's Corporation Tax (with marginal relief) | £25,400 |
| Owned by you: rent less all the mortgage interest | £25,000 |
| Owned by you: your income tax on it, on top of your other income | £9,946 |
| Owned by you: tax a year | £35,346 |
| Separate company: trading company's Corporation Tax, limits halved (with marginal relief) | £27,275 |
| Separate company: 25% on the property company's profit | £6,250 |
| Separate company: tax a year | £33,525 |
| Value of the premises | £500,000 |
| Gain on the premises if sold | £200,000 |
| Sale, in your company: with Business Asset Disposal Relief | £35,460 |
| Sale, owned by you: no relief after market rent | £47,264 |
| Sale, separate company: 25% Corporation Tax on the gain | £50,000 |
| Sale, separate company: then Capital Gains Tax to wind it up | £35,264 |
| Inheritance tax in your company: 100% business relief | £0 |
| Inheritance tax owned by you: 50% business relief | £100,000 |
| Inheritance tax in a separate company: no business relief | £200,000 |
| Over 5 years and the sale: in your company | £195,585 |
| Over 5 years and the sale: owned by you | £223,994 |
| Over 5 years and the sale: separate company | £252,889 |
Worked out using HMRC's 2026/27 rates for income tax, Capital Gains Tax and inheritance tax, and Corporation Tax for the financial year from 1 April 2026.
Questions people ask
Why does charging rent lose Business Asset Disposal Relief?
Selling premises you own along with your shares can qualify (an associated disposal), but the relief is cut by how far the rent from 6 April 2008 matched the market rent. Full market rent leaves nothing to relieve.
Is there a reason to keep premises out of the company that isn't tax?
Yes. If the trading company fails, its creditors can't take premises it doesn't own. And a buyer of your business may not want the property, which you could keep and let to them.
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