Why the question matters more in 2026
Two Budget changes have shifted the sums. Dividend tax rose by two points from April 2026, to 10.75% at the basic rate and 35.75% at the higher rate. From April 2027, individuals will pay separate property income tax rates of 22%, 42% and 47%.
Individual landlords still only get a tax credit on mortgage interest, rising to 22% in 2027. Companies deduct interest as a business cost, then pay corporation tax at 19% to 25% depending on profit.
Checklist: tax
- Your income tax band: higher- and additional-rate taxpayers usually benefit most from a company.
- Do you need the income? Money taken out as dividends or salary is taxed again. Companies suit landlords who reinvest.
- Gearing: the more interest you pay, the bigger the company advantage.
- Long-term plans: inheritance and succession planning can be easier with shares, but needs specialist advice.
This is general information, not tax advice. Always speak to an accountant before choosing a structure.
Checklist: mortgage
Most lenders now offer limited company buy-to-let, so choice is wide. Expect a few differences from personal lending.
- Company type: lenders prefer a special purpose vehicle (SPV) with property SIC codes such as 68100 or 68209.
- Personal guarantees: directors and major shareholders are usually asked to guarantee the loan.
- Rental cover: lenders often apply an ICR around 125% for companies, versus up to 145% for higher-rate individuals. This can mean a bigger loan on the same rent.
- Pricing: company products can carry slightly higher rates or fees.
- LTV: typically up to 75%, sometimes higher.
A worked comparison (illustrative)
Take a higher-rate taxpayer with £20,000 of annual rent, £8,000 of mortgage interest and £2,000 of other costs.
- Personal name from April 2027: tax at 42% on £18,000 profit before interest is £7,560, less a 22% credit on £8,000 interest (£1,760). Tax is about £5,800 on a cash profit of £10,000.
- Limited company: taxable profit is £10,000 after interest. Corporation tax at 19% is £1,900, leaving £8,100 in the company.
If the company then pays out all £8,100 as a dividend, higher-rate dividend tax adds around £2,900. The saving shrinks when you draw everything, and grows when you reinvest. These figures are simplified and ignore allowances, so ask an accountant to run your own numbers.
Checklist: buying vs transferring
Buying new properties in a company is simple. Moving existing properties into a company is a sale at market value. That can trigger capital gains tax for you and stamp duty for the company, including the 5% surcharge in England.
Incorporation relief may be available for genuine property businesses, but HMRC applies strict tests. You will also need to redeem your existing mortgage and pay any early repayment charges. Get a costed plan before moving anything.
Checklist: running costs
- Accountancy and annual filing costs.
- Companies House confirmation statements and identity verification for directors.
- A separate business bank account.
- Insurance in the company's name.
For one low-geared property, these costs can outweigh the tax saving. For a growing portfolio, they usually spread more easily.
Keep company and personal money strictly separate. Lenders and HMRC both expect clean records, and mixing funds can cause problems at remortgage.
Questions to ask before you decide
- Will I need this income in the next five to ten years?
- How many more properties do I plan to buy?
- Is my partner in a lower tax band, and could joint ownership help?
- What are my existing gains and early repayment charges?
- Who will inherit the properties?
What about joint ownership?
Married couples and civil partners can sometimes split ownership so more income falls in a lower tax band. Unequal splits need a formal declaration to HMRC. Joint names suit some couples better than a company, particularly if one partner pays basic-rate tax. Lenders are comfortable with joint ownership.
Which structure usually suits whom?
| Situation | Often suits |
|---|---|
| Basic-rate taxpayer, one or two properties, needs income | Personal name |
| Higher-rate taxpayer, buying new, reinvesting profits | Limited company |
| Existing portfolio with large gains | Often keep personal; buy new in a company |
| Planning to pass properties to children | Take specialist advice on both |
Our limited company guide covers set-up in more detail. OMB can compare company and personal mortgage options side by side once your accountant has confirmed the structure. Most investment buy-to-let lending is not regulated by the FCA.
Limited company buy-to-let mortgagesBuy-to-let mortgages for property held in a limited company or special purpose vehicle (SPV).
Explore limited company btlFrequently asked questions
Is it cheaper to buy a buy-to-let through a limited company?
It can be for higher-rate taxpayers with mortgages, because the company deducts all mortgage interest and pays corporation tax. Mortgage rates and fees may be slightly higher, and you pay tax again when taking money out. Whether it is cheaper overall depends on your figures.
Do the April 2027 property tax rates apply to limited companies?
No. The 22%, 42% and 47% property income rates apply to individuals. Companies pay corporation tax on rental profits. However, dividends paid to you from the company are taxed at the higher dividend rates introduced in April 2026. Your overall tax bill therefore depends on how much profit you leave in the company and how much you draw.
Can I move my existing buy-to-let into a limited company?
Yes, but it is treated as a sale. You may pay capital gains tax and the company may pay stamp duty, including the surcharge. You will also need a new mortgage in the company's name. Incorporation relief may apply in some cases, so take tax advice first.
Will I need to give a personal guarantee?
Almost always. Lenders usually ask every director and any shareholder with a significant stake to personally guarantee the company's mortgage. This means you could be personally liable if the company cannot repay. Lenders may also ask for guarantees from other significant shareholders. Consider taking independent legal advice before signing, so you understand the extent of your liability.
Which SIC code do lenders want for a buy-to-let company?
Most lenders prefer SIC codes such as 68100 (buying and selling own real estate), 68209 (other letting of own property) or 68320 (management of real estate). A company that trades in other activities may limit your lender choice. If your company already trades, ask a broker which lenders will accept it.
Can a first-time landlord use a limited company?
Yes, many lenders accept first-time landlords buying through a new SPV, though some ask for owner-occupier experience or a minimum income. Expect a deposit of at least 25%. Lenders will usually check the directors' credit history and personal income too. A clean, newly formed SPV with a property SIC code gives the widest choice.
Important: This guide is general information, not personal advice. Rules, rates and lender criteria change; speak to an adviser about your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage.