Buy-to-let through a limited company (2026)

Holding buy-to-let in a limited company changes how rental profit is taxed, how you take money out, and what it costs to buy and to borrow. It is not automatically better than owning in your own name, and moving properties you already own into a company is a taxable event. This guide sets out what the 2026 rules actually say on both sides. It is general information, not tax advice. AgentCheck is not a tax adviser, accountant or solicitor, and nothing here is a recommendation to incorporate.

More landlords have bought through a limited company since mortgage interest relief was restricted for individuals, and the Budget on 26 November 2025 gave the question fresh urgency by confirming separate, higher income tax rates on property income from April 2027. If you are weighing it up, the useful thing is to see the whole picture rather than the one comparison that makes companies look good.

Why landlords compare the two

If you own a rental property in your own name you cannot deduct mortgage interest from your rental profit. Instead you get a tax reduction worth 20% of the interest under HMRC's finance cost rules. From April 2027 that reduction is given at 22%, matching the new property basic rate. For a higher rate taxpayer with a sizeable mortgage the restriction is still a real cost, and it is the main reason the company route comes up at all.

From April 2027 property income also gets its own rates, two percentage points above the equivalent income tax rates. The property basic rate will be 22%, the higher rate 42% and the additional rate 47%. Landlords who hold through a company are not affected by that change, because a company pays corporation tax on its profits rather than income tax.

For the financial years 2026 and 2027 the corporation tax main rate is 25%, with a small profits rate of 19% where profits are £50,000 or less. Marginal relief applies between £50,000 and £250,000, so each extra pound of profit inside that band is effectively taxed at 26.5%. Both thresholds are divided by the number of associated companies you control, which means a landlord with several companies does not get several small profits bands. A company also deducts mortgage interest as an ordinary business expense.

Getting the money out again

Corporation tax is not the end of the story. Profit inside a company belongs to the company, not to you, and taking it out is a second tax event.

• Dividends. The dividend allowance is £500 for 2026/27. Above that the ordinary rate is 10.75%, the upper rate is 35.75% and the additional rate is 39.35%. The first two rose by two percentage points on 6 April 2026. The additional rate was left where it was.
• Salary. Deductible for the company but brings PAYE and National Insurance into play.
• Director loan repayments. If you lent money to the company to fund a purchase, repaying that loan is not taxable income. This is one of the things that makes the maths very individual.
• Pension contributions. Employer contributions can be an allowable expense, subject to the usual rules and limits.

If you plan to draw the profit every year to live on, the combined corporation tax and dividend tax can land close to, or above, what you would have paid personally. If you plan to leave profit inside the company and buy again, the picture is different. That single question, spend it or reinvest it, does more to decide the answer than anything else.

What it costs to run a company

A company files annual accounts at Companies House, a corporation tax return with HMRC and a confirmation statement each year. Accountancy fees are higher than for a self assessment return, and your directorship and the company accounts sit on a public register.

Borrowing is the bigger practical difference. Fewer lenders offer limited company buy-to-let products than personal ones, rates are usually priced above the equivalent personal product, arrangement fees are more often charged as a percentage of the loan, and lenders almost always want a personal guarantee from the directors. Get real quotes for your own situation rather than relying on a general figure, because the gap moves with the market.

Buying a property in a company

In England and Northern Ireland a company pays the 5% surcharge on top of standard residential stamp duty rates, and it pays it on the first property as well as the tenth. Where the price is more than £500,000, a flat 17% rate on the whole purchase price applies to companies and other non-natural persons. Relief from that 17% charge is available where the property is used in a genuine property rental business, which brings the charge back to the standard rates plus the surcharge, but the conditions have to be met and the relief can be withdrawn if the property later stops qualifying. Check this before you exchange rather than after. Scotland and Wales have their own regimes.

To work out the stamp duty on a purchase, use the stamp duty calculator, and to see the monthly mortgage payment the rent has to cover, use the buy-to-let mortgage calculator.

Companies holding residential property worth more than £500,000 also fall within the Annual Tax on Enveloped Dwellings, a banded annual charge. Relief is available where the property is let commercially to an unconnected tenant, but it has to be claimed, and a relief declaration return still has to be filed each year even where the relief takes the charge to nil. Missing that return is a common and avoidable penalty.

Moving properties you already own

This is where people get caught out. Transferring a property you own personally into your own company is treated as a sale at market value, even though no money changes hands in the usual way. That can mean:

• Capital gains tax on the gain, charged at 18% and 24% for residential property, with an annual exempt amount of £3,000 for 2026/27
• Stamp duty for the company on the purchase, including the surcharge
• Early repayment charges on your existing mortgages, plus arrangement and legal costs on the new borrowing

Incorporation relief under section 162 can defer the capital gain where a genuine property business is transferred to the company as a going concern in exchange for shares, but it is narrower than it sounds and HMRC looks closely at these arrangements. For transfers on or after 6 April 2026 the relief no longer applies automatically. It has to be claimed in your self assessment return for the tax year of the transfer, with details of the transaction and the computations. Treat any scheme sold to you on the promise of a tax-free incorporation with real caution and get independent advice on it.

Questions worth taking to an accountant

• Do I need this income to live on, or can it stay in the company for the next purchase?
• What do the numbers look like over ten years, not one, including the exit?
• What will a limited company mortgage actually cost me on this property?
• If I ever want the property back in my own name, what does that cost?
• How does this interact with what I want to happen to the portfolio eventually?

The half that structure does not change

Your legal duties as a landlord are the same either way. Since 1 May 2026 all assured tenancies in England are periodic, section 21 is gone and rent increases go through a single annual notice, and a company landlord is bound by every one of those rules. The same goes for the energy standard, deposits, safety certificates and repairs. If you want a refresher, start with our guide to the Renters' Rights Act, then check where you stand on the EPC C deadline and on landlord insurance. New to letting altogether? Our first-time landlord checklist covers the ground in order.

A plain caveat

AgentCheck is a comparison service for landlords and letting agents. We are not tax advisers, accountants or solicitors. This article is general information about the published rules, not tax advice on your circumstances, and you should not act on it on its own. Tax treatment depends on your income, your other assets, how the properties are financed and what you want to do with them later, and the rules change. Take advice from a qualified accountant, ideally one who works with property investors, before you buy in a company or move anything into one.

Whichever way you decide to hold the property, the agent managing it makes more difference to your net return than most landlords expect. You can compare local letting agents on AgentCheck and see fees side by side before you commit.

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