Limited Company vs Personal Buy-to-Let in 2026: Which Wins?

Two ways to own a rental in 2026

When you buy a rental property in the UK you can hold it in your own name or inside a limited company. The structure you pick changes how the rent is taxed, how mortgage interest is treated, and how much you keep. In 2026 the gap between the two has widened, mostly because of the Section 24 restriction on personal landlords.

This guide walks through the numbers on a single property so you can see where each structure wins.

How personal landlords are taxed

If you own the property personally, the net rental profit is added to your other income and taxed at your marginal Income Tax rate. For rUK that means 20% up to the GBP 50,270 higher-rate threshold, then 40% up to GBP 125,140, and 45% above that.

The catch is Section 24. Mortgage interest is no longer a deductible expense. Instead you get a basic-rate tax credit worth 20% of the interest. For a higher-rate taxpayer this means you are effectively taxed on rent you never keep.

How company landlords are taxed

A limited company pays Corporation Tax, not Income Tax. The rate is 19% on profits up to GBP 50,000 and 25% from GBP 250,000, with marginal relief using the 3/200 fraction between those points. Crucially, mortgage interest is a normal deductible cost, so Section 24 does not apply.

The trade-off is that money inside the company is not yet in your pocket. Taking it out as dividends means a further charge once you exceed the GBP 500 dividend allowance, at 10.75% basic, 35.75% higher, or 39.35% additional.

Worked example: GBP 12,000 profit before interest

Assume rent and costs leave GBP 12,000 profit before mortgage interest, with GBP 6,000 of annual mortgage interest. Compare a higher-rate personal landlord with a company that retains the profit.

• Personal, higher rate: taxable profit is the full GBP 12,000 because interest is not deductible. Tax at 40% is GBP 4,800, reduced by a 20% credit on GBP 6,000 interest, which is GBP 1,200. Net tax is GBP 3,600.
• Company: profit is GBP 12,000 minus GBP 6,000 interest, leaving GBP 6,000. Corporation Tax at 19% is GBP 1,140.

On these figures the company keeps far more, but the GBP 6,000 retained still sits inside the company. If you immediately paid it all out as a dividend, the dividend charge would reduce the advantage.

Other costs to weigh

• The 5% additional property SDLT surcharge applies to company purchases, the same as a personal second home.
• Company mortgages often carry higher rates and product fees than personal buy-to-let deals.
• Accountancy and filing costs are higher for a company.
• Moving existing personal property into a company is usually a taxable disposal, with CGT at 18% or 24% and a fresh SDLT charge.

Who tends to win

• A basic-rate taxpayer with no mortgage often finds personal ownership simplest.
• A higher or additional-rate taxpayer building a portfolio with borrowing usually benefits from a company because Section 24 bites hardest on them.
• Someone who needs all the rent as income each year sees the company advantage shrink once dividends are drawn.

Run your own figures with the buy-to-let and stamp duty calculators on CalcHub, then confirm the current rules and reliefs on gov.uk before you commit.