Is it better to hold buy-to-let property in a limited company?

For many landlords with significant rental income and mortgage interest costs, a limited company structure can be more tax-efficient due to Section 24 restrictions on personal name landlords. However, personal name ownership may be better for lower-income landlords or those planning to sell. Use our calculator above to compare your specific situation.

What is Section 24 for landlords?

Section 24 (Finance Act 2015) restricts how much mortgage interest individual landlords can deduct from their rental income. Since April 2020, landlords only receive a basic rate (20%) tax credit on their mortgage interest payments, not full deduction. This significantly increases the tax burden compared to limited companies where mortgage interest is fully deductible.

What are the 2026/27 corporation tax rates for property landlords?

For the 2026/27 tax year, Corporation Tax rates are: Small Profits Rate 19% for profits up to £50,000, Main Rate 25% for profits over £250,000, and Marginal Relief (approximately 26.5%) for profits between £50,001 and £250,000. Most small property SPV companies fall in the small profits rate.

How is Section 24 mortgage interest relief calculated?

Under Section 24, you calculate tax on your total income including rental profit. Then calculate tax on your other income without rental. The difference is the tax on rental income. You then receive a 20% tax credit on your mortgage interest, limited to the tax charged on your rental income. For example, £10,000 mortgage interest gives a £2,000 credit.

Can I transfer my personal property to a limited company?

Yes, you can transfer properties to a limited company, but this may trigger Capital Gains Tax and Stamp Duty Land Tax events. The market value of the property is used as the transfer price, potentially creating a significant tax liability. It's important to seek professional advice before doing so to understand the full tax implications.

Do I need to pay dividend tax on company profits?

If you extract profits from a limited company as dividends, you may need to pay dividend tax. The first £500 of dividends is tax-free (dividend allowance), then dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate) depending on your total income. You can retain profits in the company to avoid this tax.

What is an SPV (Special Purpose Vehicle) company?

An SPV (Special Purpose Vehicle) is a limited company specifically set up to hold rental property. Many landlords use SPVs to take advantage of lower corporation tax rates and full mortgage interest relief. SPVs typically have simple structures focused solely on property investment activities.

What other costs should I consider when setting up a limited company for property?

Beyond tax, consider: company formation costs (£50-200), annual accounting fees (£500-2,000+), Companies House filing fees (£13-£100/year), separate business bank account, potentially higher mortgage rates for limited companies, and more complex tax returns. Factor these into your decision.

Free UK Tax Calculator 2026/27

Limited Company vs Personal
Property Tax Calculator

Compare your tax liability holding buy-to-let property in a limited company versus personal name. See which structure saves you more money.

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2026/27 Tax Year

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Enter your rental property details below

Your Rental Income Details

Total Rental Income (£)

£

Annual rental income from your property

Allowable Expenses excl. Mortgage Interest (£)

£

Repairs, maintenance, management fees, insurance, etc.

Mortgage Interest (£) Section 24

£

Annual mortgage interest payments

Personal Income Details

Other Annual Income (£)

Employment, pension, or other income

Limited Company - Dividend Extraction

Dividends to Extract (£)

Amount of after-tax profits to extract as dividends

Tax Comparison Results

Personal Name

Section 24 Applies

Rental Profit £20,000

Tax on Rental £1,486

Section 24 Credit -£1,600

Net Tax on Rental £0

Effective Tax Rate 0%

Limited Company

Full Interest Relief

Rental Profit £12,000

Corporation Tax £2,280 (Small Profits 19%)

Profits After Tax £9,720

Dividend Tax (if extracted) £0

Total Tax Payable £2,280

Effective Tax Rate 10.6%

Your Potential Tax Saving

£2,040

Holding property in a limited company could save you £2,040 per year in tax.

This is a guide only. Actual tax may vary. Consult a qualified accountant for personalized advice.

Should You Hold Your Buy-to-Let in a Limited Company?

Many landlords are now comparing whether it's more tax-efficient to hold rental property through a limited company (SPV) versus personal name ownership. Use our calculator above to see which structure works best for your situation.

Section 24 Restriction (Personal Name)

Since April 2017, individual landlords can only claim basic rate (20%) tax relief on mortgage interest. This significantly increases the tax burden for higher-rate taxpayers.

Basic rate: 20% credit on interest
Higher rate: Effectively 40% - 20% = 20%
Additional rate: Effectively 45% - 20% = 25%

Limited Company (SPV) Benefits

Property landlords using a limited company can claim full mortgage interest as a business expense before corporation tax.

Full mortgage interest deduction
Corporation tax at 19-25%
Dividend extraction planning

Which Structure Should You Choose?

Personal Name May Be Better If:

Total income below £50,000 including rental income
You have unused personal allowance and basic rate band
You plan to sell and use Capital Gains Tax allowance
You want simpler accounting requirements
You won't extract significant profits soon

Limited Company May Be Better If:

Total income above £50,000 including rental income
You're a higher or additional rate taxpayer
You have significant mortgage interest costs
You want to retain and reinvest profits
Asset protection is important to you

2026/27 Tax Year Quick Reference

Corporation Tax 2026/27

Small Profits Rate

19%

≤ £50,000

Marginal Relief

~26.5%

£50,001 - £250,000

Main Rate

25%

> £250,000

Personal Income Tax 2026/27

Personal Allowance

£12,570

Tapers at £100k+

Basic Rate

20%

£12,571 - £50,270

Higher Rate

40%

£50,271 - £125,140

Additional Rate

45%

Over £125,140

Section 24: Individual landlords receive only a 20% basic rate tax credit on mortgage interest, not full relief. This increases tax for higher/additional rate taxpayers compared to limited companies.

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