The limited company buy-to-let question has not gone away, but the answer has narrowed. Since the Section 24 changes were fully phased in for the 2020 to 2021 tax year, landlords who own property in their own names can no longer deduct mortgage interest from rental income. They get a tax credit at the basic rate instead: 20% now, and the property basic rate of 22% from the 2027 to 2028 tax year (HMRC on gov.uk, checked October 2026). For higher-rate taxpayers — and many landlords are — that change put a meaningful hole in net returns. Limited company structure remains the usual workaround. Whether it is the right workaround for any individual case depends on numbers that are personal to that case.
What the company structure actually does
A property held inside a limited company pays corporation tax on its rental profit, with mortgage interest deductible as a business expense. Corporation tax is 19% on profits of £50,000 or less and 25% on profits over £250,000, with marginal relief in between (gov.uk, checked October 2026). Profits held in your own name are taxed at 40% or 45% for higher- and additional-rate taxpayers (gov.uk, checked October 2026), and from 6 April 2027 property income moves to its own rates of 42% and 47% under the Finance Act 2026, according to gov.uk. On the surface, that is a substantial saving — but the figure that matters is what is left after extracting the money to spend.
Extraction is where it gets nuanced
Profit kept inside the company stays at corporation tax rates. The moment you pay it out as dividends, dividend tax applies: 10.75%, 35.75% or 39.35% in the 2026 to 2027 tax year, depending on your income band, after a £500 dividend allowance (gov.uk, checked October 2026). A higher-rate landlord who needs the rental income to live on may extract much of it as dividends and end up with a similar effective tax rate to personal ownership. The company structure works hardest when profit is reinvested in further properties rather than drawn down.
Mortgage rates are higher, but not dramatically
Limited company buy-to-let mortgages usually cost more than personal-name equivalents, and arrangement fees are often slightly higher. The choice of lenders is narrower but has grown over the past five years, and many buy-to-let specialists now offer limited company products. Lenders usually require an SPV (Special Purpose Vehicle): a company set up solely to hold property, with the right SIC codes (typically 68209 or 68100).
The transfer trap
Moving an existing personal-name portfolio into a limited company is not a simple paper exercise. HMRC treats it as a sale and re-purchase. Capital gains tax applies on the uplift since you bought each property, and Stamp Duty applies on the value at transfer — including the higher rates for additional properties, usually 5% on top of the standard rates (gov.uk, checked October 2026). For many portfolios, the tax cost of transferring outweighs the future tax savings unless there are exceptional circumstances (Section 162 incorporation relief in narrow cases, primarily).
How it tends to work out
For new buy-to-let purchases by higher-rate taxpayers who plan to reinvest profits and build a portfolio, limited company ownership is often worth modelling first. For one-off investments where the rental income is needed for living costs, the picture is much more balanced. For existing personal portfolios, the cost of transferring usually outweighs the savings.
The right answer is not ideological. It is arithmetic. Run the numbers on the actual property, the actual tax bracket, and the actual time horizon. Tax treatment depends on your circumstances, so take advice from an accountant before choosing a structure.
Reviewed 19 October 2026. Figures correct as at this date.