Business office investment

Holiday let incorporations hit a record high during staycation boom

As the holiday let sector goes from strength to strength, there has been a spike in the number of new holiday let companies being set up. What are the benefits of incorporating?

In recent months, there has been surging demand and high returns for holiday-let investments. Currently, appetite for staycations across the UK is stronger than ever before. More investors are entering the short-term rental sector or growing their investment in the field. At the same time, the number of holiday let incorporations has increased too.

During the first six months of 2021, there were 1,404 new holiday incorporations in England, Wales and Scotland. This is the highest figure since records began back in 2007, according to research by estate agency Hamptons. It’s also 83% growth on the number of holiday let incorporations in 2020. And it’s even 119% more than in 2019.

In the past year, the number of companies set up to hold buy-to-let properties has also increased. The sector continues to professionalise and adapt to tax changes. This includes changes to mortgage interest tax relief. However, despite this, buy-to-let incorporations is growing at only half of the rate of holiday lets.

Benefits of incorporating

A property that qualifies as a furnished holiday let is considered a trading business. Because of that, there is no limit to the amount of mortgage interest the owner can offset against profits. This provides tax benefits whether investors incorporate or not.

Instead, the benefits of incorporating a short-term holiday let is predominately the fact that the owner pays corporation tax instead of income tax. Currently, corporation tax is 19%. And income tax can be up to 45%.

This makes incorporating particularly advantageous for higher-rate taxpayers. While sometimes investors can face limitations with how to withdraw money from a company, there is a dividend allowance every year.

Additionally, if a limited company is then sold to another investor, stamp duty is only 0.5%. Incorporating a holiday home can also help with inheritance tax planning.

Overall, incorporating a holiday let can be an important stepping stone to building a holiday let business. Holding your portfolio in one limited company means you can then use the profits from one property to buy another.

What to consider

Hamptons research shows that 93% of active holiday let companies have only one mortgaged property. For buy-to-let companies, this figure is much lower at 45%. There is often debate whether it’s better for investors to purchase property as an individual or limited company. It really depends on your specific situation and investment strategy.

There are pros and cons for incorporating. Tax advantages have often been big draws for investors. However, mortgage rates are usually higher for limited companies than individuals. A limited company structure can also create extra admin tasks.

It’s important to weight up the obligations and costs with any tax benefits and savings. Seek out professional advice to help you decide if starting a limited company is right for you. For further information, we can put you in touch with an independent tax expert.

BuyAssociation has a number of investment opportunities available on a short-term basis. Contact us if you’re interested in holiday-let investments.

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:


Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment


Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:


+44 (0) 333 123 0320

Open from 9am-6pm GMT


+852 6699 9008

Open from 9am-6pm HKT