Buy-to-Let: Limited Company vs Personal Name in 2026/27
How mortgage interest relief, Corporation Tax and dividend tax compare against personal ownership and Section 24 for UK landlords in 2026/27.
Why Section 24 Changed the Calculation
Since Section 24 was fully phased in, individual landlords can no longer deduct mortgage interest from rental income before calculating their tax bill. Instead, they receive a tax credit worth 20% of the interest, regardless of whether they pay tax at 20%, 40% or 45%. For a higher-rate taxpayer with a large mortgage, this can mean paying tax on income that, in real cash terms, has already gone to the lender as interest โ pushing the effective tax rate on rental profit well above 40% in some cases, and in extreme cases creating a tax bill even where the property makes little or no real cash profit.
How a Limited Company Avoids This
A limited company that owns buy-to-let property is not an individual taxpayer subject to Section 24 โ mortgage interest is simply deducted as a normal business expense when calculating the company's taxable profit, which is then subject to Corporation Tax at the small profits rate or the main rate depending on the level of profit. This restores full interest relief, which is the primary driver behind the growth in landlords buying through limited companies since Section 24 was introduced.
The Trade-Off: A Second Layer of Tax on Extraction
| Route | Tax on rental profit | Tax when money reaches you personally |
|---|---|---|
| Personal ownership | Income Tax on rental profit (interest gets only a 20% credit) | None further โ it's already yours |
| Limited company | Corporation Tax on rental profit (full interest deduction) | Dividend tax (or Income Tax on salary) when extracted |
Profits left inside the company to fund further property purchases only suffer the Corporation Tax charge at that point โ the dividend or salary tax charge only arises when money is actually taken out for personal spending. This makes a company structure particularly attractive to landlords building a portfolio and reinvesting profit, and less obviously attractive to a landlord who needs most of the rental income as personal income each year.
The Cost of Switching an Existing Property
Moving a property you already own personally into a company is not a simple administrative change โ it is treated as a sale from you to the company, potentially triggering Capital Gains Tax on any increase in value since purchase, and Stamp Duty Land Tax (including the additional-property 5% surcharge) on the transfer, calculated on the property's current market value. These costs can be substantial and need to be weighed carefully against the ongoing tax saving from moving forward โ the decision is far cleaner when made before a property is bought rather than after.
Questions to Work Through Before Deciding
- How much mortgage debt (gearing) sits against the property or portfolio?
- Will rental profit mostly be reinvested, or is it needed as personal income each year?
- What is your personal Income Tax band, both now and expected in future years?
- For an existing property, what would the one-off CGT and SDLT cost of transferring it into a company be?
- Have you factored in the extra accountancy and company filing costs of a limited company structure?
Use the calculators below to compare a buy-to-let's cash flow personally against a limited company structure, and to see the effect of Section 24's mortgage interest restriction on an individually-owned property.
Frequently asked questions
What is Section 24 and why does it push some landlords towards a limited company?
Section 24 restricts mortgage interest relief for individual landlords to a basic-rate (20%) tax credit, rather than allowing the interest to be deducted from rental income before tax is calculated. A limited company is not subject to Section 24 โ it can still deduct mortgage interest as a normal business expense before Corporation Tax, which is why highly geared higher-rate taxpayer landlords often find the company structure more tax-efficient.
Do I pay Corporation Tax and then more tax on top if I own through a company?
Yes โ profits are taxed at Corporation Tax rates within the company, and a further tax charge (dividend tax, or Income Tax on a salary) applies if and when you extract the profit from the company for personal use. If profits are simply left in the company to reinvest in further properties, only the Corporation Tax charge applies at that stage, which is a key reason some portfolio landlords use a company structure โ the double tax charge is deferred until money is actually withdrawn.
Does moving an existing personally-owned property into a company trigger a tax charge?
Generally yes โ transferring a property you already own into a limited company is treated as a disposal for Capital Gains Tax purposes and can also trigger Stamp Duty Land Tax (including the additional-property surcharge) on the transfer, even though no cash changes hands in the way a normal sale would. This is why the limited company decision is far easier to make before buying a property than after, and why simply incorporating an existing personal portfolio needs careful, specific advice.
Is a limited company always better for a higher-rate taxpayer landlord?
Not automatically โ it depends on gearing (how much mortgage debt relative to property value), whether profits are extracted or reinvested, and the landlord's wider tax position. A landlord with little or no mortgage debt has little Section 24 restriction to avoid in the first place, and personal ownership may remain simpler and cheaper once mortgage arrangement, accountancy and additional filing costs of a company are considered.
Try the calculators
Buy-to-Let Calculator
Analyse the profitability of a buy-to-let investment including tax and costs.
BTL Section 24 Impact Calculator
Compare your buy-to-let tax position under old rules (pre-2017) versus current Section 24 rules where mortgage interest is no longer deductible.
Corporation Tax Calculator
Calculate Corporation Tax for UK limited companies for 2025/26.
Dividend Tax Calculator
Calculate tax on dividends received from UK companies for 2025/26.
Related reading
Buy-to-Let in a Limited Company UK 2026: Is It Worth the Extra Admin?
Section 24 has made personal buy-to-let more expensive for higher-rate taxpayers. But does a limited company actually save you money after corporation tax, extraction costs, and higher mortgage rates? A full 2026 comparison.
Buy-to-Let Tax After Section 24: What Landlords Pay in 2026
Section 24 removed mortgage interest as a deductible expense for landlords. Higher-rate taxpayers now face far higher tax bills than they did before 2017. Here is exactly how the numbers work.
Becoming an Accidental Landlord Through Inheritance: Tax Basics for 2026/27
Inheriting a property and renting it out rather than selling makes you a landlord for tax purposes overnight. How rental income tax, Capital Gains Tax base cost and mortgage rules apply in 2026/27.