Since the phased introduction of Section 24 (finished in April 2020), higher-rate landlords can no longer deduct mortgage interest as a normal expense against personally-held rental income. That single change is why so many UK landlords now weigh holding property through a limited company (usually a special purpose vehicle, or SPV) instead of in their own name.
There is no universal winner. The right structure depends on your other income, how much you borrow, whether you plan to draw the profit or reinvest it, and whether you are buying fresh or moving property you already own. Below we answer the questions landlords ask most.
How is personal buy-to-let taxed?
Rental profit you own personally is added to your other income and taxed at 20%, 40% or 45%. Since Section 24, you cannot deduct mortgage interest as an expense — instead you get a 20% tax credit on the interest, which hurts higher and additional-rate taxpayers most.
The sting is that your turnover, not your true profit, effectively drives your tax band. A highly-geared higher-rate landlord can face a marginal rate on rental income well above 40% once the interest restriction bites. If you want to see the effect on your own numbers, try our Section 24 impact calculator. Lower-rate landlords with little or no mortgage are far less affected and often have no reason to incorporate at all.
How is a limited company buy-to-let taxed?
A company pays Corporation Tax on its rental profit and can deduct mortgage interest in full as a business expense. But extracting that profit — as salary or dividends — is taxed a second time in your hands, so the headline company rate is only half the story.
For the 2025/26 tax year, Corporation Tax runs from a 19% small-profits rate up to 25%, with marginal relief in between. Retaining full interest deductibility is the company's biggest draw. The catch is double taxation: profit is taxed once inside the company, then dividends are taxed again (at dividend rates, after a small dividend allowance) when you pay yourself. If you leave profit in the company to buy more property, that second layer is deferred — which is why companies suit landlords who are growing a portfolio rather than living off the rent.
Which is better — company or personal?
Broadly: a limited company tends to win for higher-rate, highly-mortgaged landlords who reinvest profit and are buying new. Personal ownership tends to win for lower-rate landlords, those with little borrowing, or anyone who needs to spend the rental income now.
Use this comparison as a starting point, not a verdict:
| Factor | Personal ownership | Limited company |
|---|---|---|
| Tax on profit | Income tax 20/40/45% | Corporation Tax 19–25% |
| Mortgage interest | 20% tax credit only (Section 24) | Fully deductible expense |
| Extracting profit | Already yours — no second tax | Dividends/salary taxed again |
| Mortgage rates & choice | Generally cheaper, wider choice | Often higher rates, fewer lenders |
| Running costs | Self Assessment only | Accounts + Corporation Tax filing |
| Reporting to HMRC | MTD for Income Tax (phasing in) | Company accounts, not MTD ITSA |
For a tailored comparison on your own figures, try our free Ltd Co vs personal comparator.
Can I just move my existing properties into a company?
Not without cost. Transferring personally-owned property to a company is a sale at market value for tax, so it can trigger Capital Gains Tax on the gain and Stamp Duty Land Tax for the company as buyer. Reliefs exist but are narrow — get advice before you act.
Two reliefs are often raised. Incorporation relief can defer CGT where a genuine property business (not just passive investment) is transferred as a going concern, typically requiring the landlord to be running it as a partnership with sufficient activity — this is fact-sensitive and HMRC scrutinises it. SDLT is charged on the company's acquisition, usually including the higher-rate surcharge for additional dwellings, though partnership rules can reduce it in limited cases. These are specialist areas: the wrong assumption can be expensive.
This article is general information for UK landlords, not personal tax advice. Your circumstances, income and portfolio will change the answer — speak to a qualified accountant or tax adviser before restructuring or buying through a company.
What are the ongoing costs of a company?
A company must file annual accounts with Companies House and a Corporation Tax return with HMRC, usually with an accountant's help. Company buy-to-let mortgages also tend to price higher than personal ones, and there are director and administrative duties to keep up.
These costs are real but modest against a large or growing portfolio — and often trivial next to the tax saved by a highly-geared higher-rate landlord. For a single flat with a small mortgage, though, they can wipe out any benefit. Note too that companies report through Corporation Tax and statutory accounts rather than MTD for Income Tax, which applies to personally-held property income as it phases in.
Does it matter whether I'm buying new or already own the property?
Yes — hugely. Buying a new property through a company avoids the CGT and SDLT problem of transferring in, so companies are far easier to justify for fresh purchases. Incorporating an existing portfolio is where the tax traps and professional-advice costs pile up.
This is the single most important practical distinction. Many landlords sensibly keep existing personally-owned properties as they are and buy any new ones through a company, building the corporate side over time rather than triggering a taxable transfer. Whatever route you lean towards, model it on your actual numbers and confirm it with an adviser before committing — and keep clean records, as PAM's document vault and finance tools are built to help you do.