Buy-to-Let — Limited Company vs Personal Ownership for Tax in 2026

Why Landlords Consider Limited Companies

The primary driver behind the growth in limited company buy-to-let structures since 2017 is Section 24. Because individual landlords now receive only a 20% tax credit on mortgage interest (rather than a full deduction), higher and additional rate taxpayers have seen their effective tax burden on rental income rise sharply.

Limited companies, by contrast, are not subject to Section 24. A company can deduct its mortgage interest in full as a business expense before calculating taxable profit. The remaining profit is then subject to **Corporation Tax** rather than Income Tax.

Corporation Tax Rates for 2026/27

For the 2026/27 tax year:

Compare this to the 40% or 45% Income Tax rate a higher rate individual landlord pays. For a profitable, heavily mortgaged portfolio, the saving can be substantial.

The Key Advantages of a Company Structure

• **Full mortgage interest deduction** — companies are unaffected by Section 24.
• **Lower tax rate** — Corporation Tax at 19%–25% vs Income Tax at 20%–45%.
• **Profit retention** — profits left in the company (i.e., not extracted as salary or dividends) are taxed only at the Corporation Tax rate. Personal tax is only triggered when money is taken out.
• **Succession and estate planning** — shares can be gifted or transferred more flexibly than property.

The Key Disadvantages and Costs

• **Stamp Duty Land Tax on incorporation** — if you transfer personally owned properties to a company, HMRC treats this as a sale at market value. SDLT is payable by the company on acquisition, and you may face Capital Gains Tax on the disposal.
• **No main residence CGT exemption** — companies do not benefit from private residence relief on any property.
• **Higher mortgage rates** — lenders typically charge more for company buy-to-let mortgages than personal ones, and the product range is narrower.
• **Double taxation on extraction** — profits are taxed at Corporation Tax rate, then again when extracted as dividends (dividend tax) or salary (Income Tax and National Insurance). The effective combined rate on extracted income can exceed the personal rate.
• **Accounting costs** — companies require annual accounts, a Corporation Tax return, and Companies House filings. Compliance costs are higher than for a personal SA105.
• **Mortgage lenders** — some lenders do not offer products to company borrowers, and personal guarantees are routinely required.

When a Company Typically Makes Sense

The economics generally favour incorporation when:

• You are a higher or additional rate taxpayer with a mortgaged portfolio.
• You do **not** need to extract all rental income each year — leaving profit in the company preserves the Corporation Tax advantage.
• You are building a portfolio over the long term and the one-off SDLT/CGT cost of incorporation is outweighed by annual tax savings.
• You have access to a specialist buy-to-let mortgage broker who can source competitive company mortgage products.

For landlords with smaller portfolios, low or no mortgage, or who need to draw all rental income for living costs, personal ownership may remain more efficient when the higher compliance costs and extraction taxes are factored in.

Running the Numbers

The decision is highly sensitive to your specific income level, portfolio size, mortgage balance, and extraction plans. A qualified accountant or tax adviser experienced in property investment is essential before restructuring. Use our [rental income tax calculator](/rental-income-tax-calculator) to compare estimated personal tax liability against a company scenario as a starting point, then take professional advice before acting.