Should new buy-to-let purchases go in your personal name or through a limited company? For higher-rate landlords in 2026, the limited company route has become increasingly attractive — but it comes with mortgage restrictions, extraction costs and additional compliance. This guide gives you the full comparison.
👉 Free download: For the full 62-page guide on this topic — Section 24, FHL, MTD ITSA, CGT, SDLT, incorporation, IHT and HMRC enquiry triggers — get our 2026/27 UK Landlord Tax Playbook (free PDF, no follow-up calls).
For higher-rate taxpayer landlords, holding properties in a limited company often produces a lower overall tax bill — because Section 24 doesn’t apply, mortgage interest is fully deductible, and corporation tax (19-25%) is lower than higher-rate income tax (40%+). The break-even typically sits around 2-3 properties or £30k+ of rental profit, but transfer costs (SDLT, CGT) need careful modelling.
Tax Rate Comparison
| Factor | Personal Name | Limited Company |
|---|---|---|
| Mortgage interest deduction | 20% credit only (Section 24) | Full deduction ✅ |
| Tax rate on net profit | 20–45% income tax | 19–25% corporation tax |
| CGT on sale | 18% / 24% | 19–25% CT on gain |
| Annual exempt amount (CGT) | £3,000 per person | None |
| Profit extraction tax | N/A — income already taxed | Dividend tax on extraction |
| IHT on death | 40% (subject to reliefs) | Shares may qualify for BPR |
Mortgage Availability and Costs
⚠️ Company Mortgages Are More Expensive
- Fewer lenders offer limited company buy-to-let mortgages
- Interest rates are typically 0.3–1% higher than personal name equivalents
- Many lenders require personal guarantees from directors
- Arrangement fees can be higher
- The higher mortgage rate can erode some of the corporation tax saving
The Double Taxation Problem on Extraction
Profits in a limited company are taxed twice before they reach the landlord personally:
📋 Double Taxation Example
- Net rental profit in company: £20,000
- Corporation tax at 19%: £3,800
- Distributable profit: £16,200
- Dividend tax at 35.75% (higher rate): £5,791
- Total tax: £9,591 (48% effective rate)
Compare this to a basic rate landlord paying 20% income tax on the same profit personally. Double taxation makes the company inefficient for landlords who extract everything. It works best when profits are retained in the company for reinvestment.
Should You Hold Property in a Company?
Free incorporation analysis — we’ll model your specific portfolio against transfer costs.
Which Structure Works Best — By Landlord Type
✅ Company Works Best For:
- Portfolio builders who reinvest profits rather than extracting them — corporation tax only until extraction
- Higher/additional rate landlords with significant mortgage balances — Section 24 savings outweigh extraction costs
- Succession planning — shares in a company are more flexible to gift than direct property
- New purchasers — avoiding transfer costs by buying new properties directly into the company
❌ Personal Name May Be Better For:
- Basic rate landlords — Section 24 doesn’t cost them anything extra; company extraction creates double taxation
- Landlords planning to sell within 5–10 years — company CGT may exceed personal CGT; no annual exempt amount
- Landlords who extract most profits — double taxation in a company can exceed the personal tax saving
- Small portfolios with low mortgage balances — the Section 24 saving is minimal
What is an SPV?
A Special Purpose Vehicle (SPV) is a limited company created specifically to hold property — typically a single property or portfolio. SPVs are the standard structure used by portfolio landlords:
- The SPV is a standard UK limited company registered at Companies House
- The SIC code 68209 (letting of own property) or 68100 (buying and selling) identifies it as a property company to lenders
- Most buy-to-let mortgage lenders now accept SPV applications and have standard criteria
- Multiple SPVs can be used to separate different property types or to ring-fence liabilities
Mortgages in Detail: Where Companies Cost More
The mortgage gap is the most-discussed downside of the company route, and it deserves more than a one-line dismissal. Limited-company BTL mortgages typically sit 0.3-1.0 percentage points above their personal-name equivalents, with stricter affordability tests, higher arrangement fees, and a narrower lender panel.
On a £200,000 mortgage, a 0.7% rate uplift costs roughly £1,400 a year in extra interest. For a higher-rate landlord, this partly cancels the Section 24 saving — but only partly. Section 24 typically costs the same higher-rate landlord around £1,600 a year per £100,000 of mortgage interest (at the 20% basic-to-higher differential). Net, the company route still tends to win, but the margin is tighter than the headline tax comparison suggests.
Arrangement fees are higher too. Personal BTL mortgages often charge £999-£1,999 in fees; company products can run £2,500-£5,000 plus 1-2% of the loan. Across a five-property portfolio, that’s £15,000-£25,000 of extra setup costs the personal landlord avoids.
The lender panel has improved dramatically since 2017 — Paragon, Landbay, Aldermore, Foundation, Vida and Precise all offer competitive company products today. But the most aggressive rates (typically Lloyds, NatWest, Coventry, Nationwide BTL) remain personal-name-only. Portfolio landlords with five-plus properties also face stricter underwriting on the whole portfolio under the PRA’s rules, which can be more burdensome for personal landlords than for companies.
Personal guarantees are universal on company mortgages — the director(s) personally guarantee the company’s borrowing. So the “limited liability” argument is more theoretical than practical for property-only SPVs. The real liability protection comes from separating different properties into different SPVs so a problem with one property doesn’t infect the others.
Incorporating an Existing Portfolio: The Real Cost
Most landlords reading this article aren’t starting from zero — they already own properties personally and are considering whether to move them into a company. The answer almost always comes down to one number: the cost of transfer.
SDLT on transfer
Transferring an existing property from personal name to a connected company is treated as a sale at market value for SDLT, even if no money changes hands. The full residential SDLT bands apply plus the 5% Additional Dwelling Supplement (raised from 3% in October 2024). A £400,000 property transferred to a company would attract approximately £27,500 in SDLT (£7,500 standard residential plus £20,000 at 5% surcharge). For a five-property portfolio of similar value, that’s £137,500 of upfront SDLT.
SDLT partnership relief under FA2003 Sch 15 para 10 can eliminate most of this — but only if the properties have genuinely been held in a partnership (registered with HMRC, with partnership accounts and a partnership tax return) for at least 12 months before incorporation. HMRC scrutinises retrospective “paper partnerships” formed solely to access the relief. The relief works when the partnership is real; it fails when it’s a transparent SDLT avoidance device.
CGT on transfer
CGT is also triggered on transfer at market value, regardless of the absence of cash consideration. For an investor who bought a property at £200,000 and now transfers it at £400,000, the £200,000 gain is chargeable — that’s typically £36,000-£48,000 of CGT (at 18% or 24% from October 2024). Across a five-property portfolio with substantial gains, total CGT can comfortably exceed £150,000.
Section 162 incorporation relief defers the CGT by rolling the gains into the base cost of the new shares. Three conditions must be met: (1) the activity must be a “business”, broadly meaning serious, regular, time-consuming property management (at least 20 hours/week of active involvement is the working benchmark from Ramsay v HMRC); (2) the entire business must be transferred as a going concern; and (3) the consideration must be entirely shares in the company. Mortgages can either be novated (preferred) or the debt offset against share value.
Other costs
Conveyancing fees of £1,500-£3,000 per property, mortgage early-repayment charges if applicable (commonly 1-5% of outstanding debt), professional tax fees of £3,000-£10,000 to structure the transaction properly, and lender arrangement fees on the new company mortgages. Total advisory and transactional costs for a five-property incorporation typically run £15,000-£30,000 before any taxes.
Extraction Strategy: The Make-or-Break Variable
What you plan to do with the rental income matters more than most landlords realise. The double-taxation problem (corporation tax then dividend tax) becomes severe when you draw money out, but vanishes if profits stay inside the company.
The reinvestment landlord
If you’re building a portfolio and plan to use rental profits to fund additional property deposits, the company route is highly efficient. After corporation tax at 19-25%, you have 75-81% of the rental profit available inside the company to fund the next property. Compare that to personal-name extraction: at 40% income tax (post-Section 24), you have 60% of the profit available; at 45%, only 55%.
Over a 10-year build-out period buying one property every 18 months, the compounding effect of more capital available for deposits is substantial — typically 1.5-2 additional properties acquired across the period.
The income landlord
If you need the rental income to live on, the picture reverses. A £40,000 profit inside the company, extracted in full as dividends, suffers: £40,000 × 19% corporation tax = £7,600, leaving £32,400. Dividend tax then applies: £500 allowance, basic rate 10.75% on £37,200 used into basic-rate band (assumes no other income), higher rate 35.75% on the rest. For a director already in the higher-rate band from other income, the effective combined tax (CT + dividend) is around 51% — substantially worse than personal-name landlords pay even after Section 24.
The hybrid approach
Most sophisticated landlords use a hybrid strategy: profit accumulates in the company tax-efficiently, then is extracted strategically across tax years (using personal allowances, basic-rate bands, and timing around employment income variations), or extracted via employer pension contributions (corporation-tax deductible and outside personal tax until drawdown), or eventually realised through a winding-up or share buyback under Capital Gains Tax rules (potentially with BADR at 18%/14%).
Quick Decision Checklist
Before committing to either route, work through these questions honestly:
The company route is likely right if you can answer “yes” to most of these:
- Are you a 40%+ taxpayer on your other income?
- Do you have, or plan to acquire, 3+ rental properties?
- Will your rental properties carry mortgages of more than 50% LTV?
- Do you plan to retain most rental profits to grow the portfolio rather than spend them?
- Are you comfortable with the additional Companies House compliance (statutory accounts, confirmation statement, corporation tax return)?
- If incorporating an existing portfolio: can you access Section 162 CGT relief and/or SDLT partnership relief?
The personal route remains better if you can answer “yes” to most of these:
- Are you a basic-rate taxpayer overall, with limited risk of band creep?
- Do you own only 1-2 properties with no plans to expand significantly?
- Do you rely on the rental income for living costs?
- Do you plan to sell within 5 years (Private Residence Relief, if applicable, only works personally)?
- Are your properties low-LTV (50% or less), where Section 24’s impact is small?
- Would you struggle to access competitive company BTL mortgages because of credit profile or lender preference?
Frequently Asked Questions
Can I transfer my existing rental properties into a company without paying SDLT?
Only with proper structuring. SDLT partnership relief under FA2003 Sch 15 para 10 can reduce SDLT to near zero, but only if the properties have been held in a genuine partnership for at least 12 months prior to incorporation. The partnership must be real — registered with HMRC, with partnership accounts, a partnership tax return, and evidence of active joint management. Retrospective paper partnerships are routinely challenged by HMRC.
Will I still pay tax on rental profits if I keep them in the company?
Yes. The company itself pays corporation tax annually on rental profits regardless of whether they’re extracted. Personal tax only arises when you take dividends or salary out. The “tax saving” of the company route comes from (a) full mortgage interest deductibility, (b) corporation tax rates lower than higher/additional personal rates, and (c) the option to defer extraction to a more tax-efficient year.
What happens to my mortgage when I incorporate?
Personal BTL mortgages cannot transfer to a company — they need to be redeemed and new company mortgages put in place. Early repayment charges (1-5% of outstanding balance) usually apply. Some lenders allow product transfers within their group (e.g. personal Aldermore to company Aldermore), but most require a full remortgage. Factor in arrangement fees, valuation costs and any rate-rise differential.
Do BTL mortgage rates make incorporation pointless?
Not pointless, but tighter than the headline tax saving suggests. A 0.7% rate uplift costs roughly £700/year per £100,000 of mortgage. Section 24 typically costs a higher-rate landlord £1,600/year per £100,000 of mortgage interest. The net saving is closer to £900/year per £100,000 rather than the full £1,600 — still meaningful for portfolio landlords, but not the dramatic win sometimes implied.
Can I live in a property owned by my limited company?
Technically yes, but it is rarely worth doing. The company must charge you a market rent, which the company then pays corporation tax on. You may also trigger a benefit-in-kind charge if rent is below market value, and the property typically falls out of scope of Private Residence Relief on eventual sale. For owner-occupied homes, personal ownership is almost always the right answer. The limited company route is for genuine investment property held for rental income or capital growth.
What about furnished holiday lettings (FHLs)?
FHLs occupied a special tax position with full mortgage interest deductibility, capital allowances and BADR access — but the regime was abolished from April 2025. From the 2025/26 tax year onwards, FHLs are treated as standard residential lettings, so Section 24 applies. Owners of former FHLs face the same incorporation question as other landlords, often urgently because the recent loss of capital allowances and BADR has significantly changed the economics. If you previously held FHL status, the incorporation analysis is now worth revisiting.
What records and admin does a property company actually require?
A property SPV is a standard UK limited company, so the compliance load is more than a personal Self Assessment but very manageable. You need annual statutory accounts (filed at Companies House), an annual corporation tax return (CT600 to HMRC), a confirmation statement (every 12 months at Companies House) and PSC register updates if ownership changes. Bookkeeping needs to be more disciplined than for a personal portfolio — separate bank accounts, invoice trails, expense receipts. Most landlords engage an accountant for £600–£1,500 per year per SPV to handle all of this. The admin discipline is itself one of the underrated advantages of incorporation: you genuinely see what each property earns.
✅ Key Takeaways — Personal vs Company 2026/27
- For higher-rate landlords with significant mortgages buying new properties — the company route wins on tax
- For basic rate landlords or those extracting all profits — personal name may still be better
- Company mortgages cost more — typically 0.3–1% higher rates — which erodes some of the tax saving
- Double taxation on extraction makes the company inefficient if you draw out all profits immediately
- The right answer depends on your income tax rate, mortgage balance, extraction needs and holding period — there is no universal answer
- Use our Should I Incorporate calculator to model your specific position
CTA-qualified property tax specialist. Full biography →
Need a specialist look at your property tax position?
This article is part of our wider UK Property Tax specialism — covering Section 24 modelling, BTL incorporation analysis, SDLT, ATED, CGT 60-day reporting and property partnerships. Every engagement is led by a Chartered Tax Adviser.
👉 Buying as a non-UK resident? The personal-vs-company decision works differently for overseas buyers, who face additional SDLT surcharges and ATED. See our guide: Investing in UK Property as a Foreigner 2026/27.