Answers · UK 2025/26
Is it better to hold buy-to-let through a limited company in 2026?
A company pays corporation tax of 19% to GBP 50,000 profit and gets full mortgage interest deductibility, unlike Section 24 for individuals. On GBP 15,000 company profit the tax is GBP 2,850 (19%), but extracting profit as dividends adds further tax.
Full answer
Holding buy-to-let in a limited company can be attractive for higher-rate landlords because companies deduct mortgage interest in full as a business expense, escaping the Section 24 restriction that limits individuals to a 20% credit. Company profits are taxed at corporation tax rates: 19% on profits up to GBP 50,000, 25% from GBP 250,000, with marginal relief (fraction 3/200) in between. Worked example: a company with GBP 20,000 rent, GBP 3,000 expenses, and GBP 10,000 mortgage interest has profit of GBP 7,000 (interest fully deducted), taxed at 19% = GBP 1,330. An individual higher-rate landlord on the same figures pays around GBP 4,000 after the interest credit. However, getting money out of the company costs more tax: dividends above the GBP 500 allowance are taxed at 10.75% basic, 35.75% higher, and 39.35% additional. There is also a 5% SDLT surcharge on company purchases, no CGT annual exempt amount for companies, and accountancy costs. Incorporation suits those reinvesting profits rather than drawing income. Use the corporation-tax and dividend-tax calculators to compare routes, and discuss the full picture and any incorporation tax charges with an adviser and gov.uk.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.