A company that owns rental property can deduct mortgage interest in full, unlike an individual landlord, and pays corporation tax at 19% to 25% on its profits. But taking money out as dividends is taxed again, companies pay the higher rates of stamp duty, and transferring properties you already own into a company is charged on their market value.
How we compared
We compared the two routes using HMRC and GOV.UK figures for 2026 to 2027 on four points: tax on profits, relief for interest, tax on taking money out and costs when buying. We have not modelled any individual case, because the answer depends on your income, plans and borrowing.
Personal ownership or a limited company
| In your own name | Through a company | |
|---|---|---|
| Tax on rental profit | Income tax at your rate | Corporation tax, 19% to 25% |
| Mortgage interest | 20% tax credit (22% from April 2027) | Deductible as a cost |
| Taking money out | No extra tax | Dividend tax after £500 allowance |
| Stamp duty | Higher rates on extra homes | Higher rates; 17% may apply above £500,000 |
| Lender rental test | Applies | Applies |
Tax on profits
Companies with profits of £50,000 or less pay the 19% small profits rate; above £250,000 the main rate is 25%, with marginal relief in between. Those limits are shared between associated companies. An individual pays income tax on rental profit at their marginal rate, and from April 2027 at the new property rates of 22%, 42% or 47%.
Mortgage interest
For individuals, interest only earns a basic rate tax credit, explained in our guide to Section 24. HMRC confirms that companies are not affected by that restriction. This is the main reason higher rate taxpayers look at company ownership.
Taking money out
Profits paid to you as dividends are taxed again. In 2026 to 2027 the dividend allowance is £500, then dividends are taxed at 10.75%, 35.75% or 39.35% depending on your band.
Dividend tax rates, 2026 to 2027
Stamp duty and transfers
Companies buying residential property for £40,000 or more pay the higher rates of Stamp Duty Land Tax, and above £500,000 the 17% corporate rate may apply; our stamp duty surcharge guide sets out the bands. If you sell your own properties to a company you control, HMRC charges SDLT on at least their market value, and for capital gains purposes a disposal to a connected person is generally valued at market value too.
HMRC has also warned, in its Spotlight 63, against schemes that move landlords’ properties into partnerships with a corporate member to claim interest relief and reset gains: in its view they do not work and may cost more than the tax they aim to avoid.
Borrowing through a company
The Bank of England’s buy-to-let underwriting standards apply whether the borrower is a person or a company, so the rental test in our ICR guide still applies. Deposits work the same way as in our LTV guide, though fewer lenders offer company loans, so compare the criteria carefully with an adviser.
Which route suits whom?
- If you are a basic rate taxpayer with modest borrowing, owning personally often stays simpler.
- If you pay higher rate tax and plan to buy new properties with large mortgages, a company is worth modelling.
- If you mainly want to move existing properties, cost the stamp duty and capital gains first.
This is general information, not financial advice: speak to an FCA-authorised mortgage adviser about your own circumstances. For tax, speak to a qualified accountant before you incorporate.
Questions for your accountant
- Will I buy new properties or move existing ones?
- What is my income tax band now and in retirement?
- How much profit will I need to withdraw each year?
- What will the stamp duty and capital gains cost on day one?
- Which lenders accept company borrowers for my plans?
FAQs
Is a limited company always cheaper for buy-to-let?
No. Interest is fully deductible, but profits you withdraw are taxed again as dividends, and buying or transferring property costs stamp duty at the higher rates. It depends on your tax band and borrowing.
Can I transfer my rental homes into my company without tax?
Generally not. HMRC charges stamp duty on at least market value when you transfer property to a connected company, and for capital gains tax a disposal to a connected person is generally valued at market value.
Are company buy-to-let mortgages assessed differently?
The PRA’s underwriting standards apply whether the borrower is an individual or a company, including the interest coverage ratio and stress rate.
A company deducts interest in full and pays 19% to 25% corporation tax, but dividends are taxed again and transfers of existing property are charged at market value.
References
- Corporation Tax rates and reliefs — GOV.UK: 19% small profits rate, 25% main rate, marginal relief.
- Tax on dividends — GOV.UK: £500 allowance and 2026 to 2027 rates.
- Income Tax when you rent out a property: working out your rental income — GOV.UK / HMRC (updated 19 March 2025): allowable expenses, finance costs, companies not affected.
- Stamp Duty Land Tax: buying an additional residential property — GOV.UK / HMRC (updated 1 April 2025): higher rates, £40,000 threshold, refunds.
- SDLTM30220: Companies: deemed market value (FA03/S53) — HMRC manual: transfers to a connected company are charged on at least market value.
- Property business arrangements involving hybrid partnerships (Spotlight 63) — HMRC (updated 16 May 2025): warning on LLP schemes for landlords.
- Supervisory Statement 13/16: Underwriting standards for buy-to-let mortgage contracts — Bank of England, Prudential Regulation Authority (September 2016): ICR, stress rate, portfolio landlords.
