Should my business buy or rent its premises?

Buying premises fixes your occupation costs and builds an asset, and it ties up a deposit and puts the property’s value at risk alongside the business. Renting keeps cash in the business and lets you move when you outgrow the space. If you buy, the building can be held in the company, by you personally or in a pension scheme, and each choice changes the tax on the rent, on a sale and on your estate.

Start a funding search Find what fits

Buying or renting

Buying needs cash at the start: the deposit, which is the price less the loan a lender will make, plus stamp duty land tax or its Scottish or Welsh equivalent, a survey and legal fees. That money comes out of the business or out of your own pocket, and it is no longer available for stock, staff or a bad month. In return the monthly cost is a mortgage repayment you control, the building gains or loses value for you, and you decide on alterations without a landlord’s consent.

Renting keeps that cash working in the business. You can move when the lease ends or at a break clause, which suits a business that expects to outgrow its space or is not yet sure where it needs to be. The costs of renting sit in the lease: rent reviews, a repairing obligation that can make you responsible for the whole building, and a dilapidations claim at the end for putting it back into repair. A new lease also carries stamp duty land tax when the net present value of the rent over the term exceeds £150,000, at 1% above that figure.

Buying suits a settled, profitable business that will use the same building for many years, such as a dental surgery, a workshop or a care home. A young business, or one that would have to drain its working capital for the deposit, is better placed renting.

Stamp duty land tax on business premises

0%on the first £150,000 of a non-residential purchase

2%on the part from £150,001 to £250,000

5%on the part above £250,000

Source: gov.uk, stamp duty land tax non-residential rates, at November 2026

Stamp duty land tax applies in England and Northern Ireland, and the return and payment are due 14 days after completion. Scotland charges Land and Buildings Transaction Tax on non-residential property at 0% to £150,000, 1% to £250,000 and 5% above. Wales charges Land Transaction Tax at 0% to £225,000, 1% to £250,000, 5% to £1 million and 6% above.

Three ways to hold the premises

	In the company	Personally, let to the company	In a pension scheme
Who buys and borrows	The company	You, alone or with other directors	The scheme, borrowing up to 50% of its net value
Rent	None	The company pays you a market rent and deducts it from its profits	The company pays the scheme a market rent and deducts it from its profits
Tax on the rent	No rent is paid	Income tax on your rental profit	None inside the scheme
Mortgage interest	Deducted from the company’s profits	Deducted in full from your rental profit	Paid by the scheme from the rent
On a sale	Corporation tax on the gain in the company, then tax again when the money comes out to you	Capital gains tax at 18% or 24%	No capital gains tax in the scheme

A high-rise building under construction in London

Funding each route

A company buying its own premises borrows on a commercial mortgage in its own name, with the deposit from its cash or from a director’s loan to the company. The lender tests the company’s earnings and will ask the directors for a personal guarantee. Where the building has to be secured before a mortgage is ready, at auction for instance, a bridging loan can complete the purchase and the mortgage repays it.

Buying personally means a commercial mortgage in your own name, with the lender relying on the rent the company will pay and on your own finances. If part of the building will be your home and makes up 40% or more of it, the loan is a regulated mortgage and needs a regulated adviser. A pension scheme buys with its own funds and can borrow the rest within the 50% limit; a small self-administered scheme can instead lend to the company on strict terms. Using your pension to buy commercial property covers the pension rules.

Stamp duty on £400,000 premises in each country

Illustrative example

A business buys freehold premises for £400,000. The tax on the purchase:

England: 2% of £100,000 plus 5% of £150,000: £9,500
Scotland: 1% of £100,000 plus 5% of £150,000: £8,500
Wales: 1% of £25,000 plus 5% of £150,000: £7,750
Tax on the same purchase: England, Scotland, Wales: £9,500, £8,500, £7,750

The tax consequences over time

In the company, the building is a company asset. A gain on sale is taxed at the company’s corporation tax rate, and getting the proceeds out to you as a dividend or on winding up is taxed again. The structures and buildings allowance gives 3% a year of the qualifying construction or renovation cost, with nothing for the land.

Held personally, the building stays yours if you sell the business. You can sell the company and keep the premises, letting them to the buyer. Interest on a loan for commercial property is deducted in full; the restriction on landlords’ finance costs applies only to homes. On a later sale, business asset disposal relief at 18% can apply to the premises as an associated disposal, but only where they are sold as part of the same withdrawal from the business as your shares, and no relief is due for periods after 5 April 2008 in which the company paid you a full market rent. The lifetime limit for the relief falls from £1 million to £500,000 for 2027-28, as set out in the Budget on 28 October 2026.

Moving the building between you and the company later is expensive. A transfer to a company connected with you is charged to stamp duty land tax on at least the market value, whatever the company pays, and can bring a capital gains tax charge on you, so settle the owner at the start.

In a pension, the rent builds the pension untaxed, and the scheme pays no capital gains tax on a sale. From 6 April 2027, unused pension funds count towards your estate for inheritance tax. Which route suits you is a personal planning question about your pension as a director and, later, selling the business, and the firm’s advisers cover both.

Business loan calculator

The monthly repayment on a business loan, the interest over the term and the total you repay with the arrangement fee.

Open the calculator

Questions people ask

Should a company buy its own premises?

A settled, profitable company that will stay in the same premises for years can gain from buying: fixed occupation costs, an asset and control over the building. It needs a deposit, stamp duty and fees, which come out of working capital. A company that may outgrow its space or needs its cash for trading is better placed renting for now.

Can I buy commercial property personally and rent it to my company?

Yes. You buy the building, the company pays you a market rent and deducts it from its profits, and you pay income tax on the rental profit after mortgage interest. You keep the building if you sell the company. Business asset disposal relief on a later sale of the premises is restricted for periods in which the company paid rent.

How much stamp duty is there on commercial property?

In England and Northern Ireland, stamp duty land tax on non-residential property is 0% on the first £150,000, 2% from £150,001 to £250,000 and 5% above. On £400,000 that is £9,500. Scotland and Wales have their own taxes and bands, which give £8,500 and £7,750 on the same price.

Can my pension buy my business premises?

A small self-administered scheme or a self-invested personal pension can buy commercial premises and let them to your company at a market rent. The scheme can borrow up to 50% of its net value. Rent and gains are not taxed in the scheme, and from 6 April 2027 unused pension funds count for inheritance tax. Take personal advice before you decide.

Can I get a mortgage to buy business premises?

Yes, a commercial mortgage, in the company’s name or your own. The lender sets the loan to value, tests the business’s earnings or the rent against the repayments, and takes a charge over the building.

Finance is subject to status and to the lender’s terms. A personal guarantee makes you liable for the company’s debt if it does not repay, and it can be enforced against your own assets, including your home. Nothing here is a personal recommendation.

Should my business buy or rent its premises?

Buying or renting

Stamp duty land tax on business premises

Three ways to hold the premises

Funding each route

Stamp duty on £400,000 premises in each country

The tax consequences over time

Business loan calculator

Questions people ask

Assets and property

Commercial mortgages

Commercial bridging loans

Secured business loans

Should I lend my own money to my company?

Should my business buy or rent its premises?

Buying or renting

Stamp duty land tax on business premises

Three ways to hold the premises

Funding each route

Stamp duty on £400,000 premises in each country

The tax consequences over time

Business loan calculator

Questions people ask

Assets and property

Commercial mortgages

Commercial bridging loans

Secured business loans

Should I lend my own money to my company?

Start a funding search

Cover for a personal guarantee