There is no universally correct answer to this question, and any article that gives you one without asking about your tax band, your income plans and your time horizon is selling you a shortcut. For many higher-rate landlords, a limited company now wins. For a basic-rate landlord with one or two properties who needs the rent to live on, personal ownership is often simpler and no more expensive.
This guide compares the two routes on the same facts, so you can see where each one wins and why. It is general information, not personal tax or legal advice. The ownership decision is difficult and expensive to reverse, so take advice from a property accountant before your first purchase through either route.
The short answer, by landlord type
- Higher-rate taxpayer, building a portfolio, reinvesting profits: a limited company usually wins, because it deducts mortgage interest in full and pays corporation tax on the profit left inside the company.
- Basic-rate taxpayer, one or two properties, needing the rent as income: personal ownership usually wins or breaks even, because the second layer of tax on taking money out of a company wipes out much of its advantage, and personal ownership has far lower running costs.
- Buying your first property and unsure: do not incorporate on speculation. The decision is cheapest before the first purchase, but a wrong company structure with no portfolio behind it is still a wrong structure. Model both routes on your actual rent, loan and tax band first.
The change that created the debate: Section 24
Before Section 24, an individual landlord could deduct mortgage interest as a business cost, just as a company still can. Section 24 removed that relief for individual landlords. Instead, personal landlords now receive a tax credit equal to 20% of their finance costs — the basic rate of tax — regardless of the rate at which they actually pay tax.
A basic-rate taxpayer paying 20% tax gets relief at 20% and is roughly unaffected by this part of the change. A higher-rate taxpayer paying 40% gets relief at only 20%, so effectively pays tax on money that went to the mortgage lender. An additional-rate taxpayer at 45% loses even more. Companies are not subject to Section 24: mortgage interest remains a fully deductible business expense.
Section 24 has a second, less obvious effect. Because finance costs are no longer deducted before tax is calculated, a personal landlord's taxable rental income is higher than their real cash profit. That can push a landlord into a higher tax band, reduce their personal allowance once total income passes £100,000, or affect income-tested thresholds — even in a year when the property barely broke even in cash terms. A company does not have this problem, because its taxable profit is calculated after interest.
How each route is taxed, side by side
The table uses 2026/27 rates for England, Wales and Northern Ireland. Scotland sets its own income-tax bands.
| Feature | Personal name | Limited company |
| Tax on rental profit | Income tax at 20% (basic), 40% (higher) or 45% (additional), after the £12,570 personal allowance where it applies | Corporation tax at 19% on profits up to £50,000, 25% on profits over £250,000, with marginal relief tapering between £50,000 and £250,000 |
| Mortgage interest | No deduction; 20% tax credit only (Section 24) | Fully deductible as a business cost |
| Getting money out | It is already yours — no second tax charge | Salary and/or dividends; dividends taxed after a £500 dividend allowance at 10.75% (basic), 35.75% (higher) or 39.35% (additional) in 2026/27 |
| Reinvesting profit | From after-income-tax money | From after-corporation-tax money — more retained for the next deposit |
| Running costs | Minimal: self-assessment return | Company accounts, Companies House filings, corporation tax return, usually accountant fees |
| Mortgage choice | Widest choice, usually lowest rates | Narrower pool, usually higher rates and fees, often personal guarantees required |
Worked example 1: higher-rate landlord
Use the same facts under both routes:
- Purchase price £200,000; loan £150,000 (75% LTV), interest-only at 5%: annual interest £7,500
- Rent £1,200 a month, £14,400 a year
- Other allowable costs (management, insurance, maintenance, certificates): £1,800 a year
- Real cash profit before tax: £14,400 − £1,800 − £7,500 = £5,100
Personal name, higher-rate taxpayer at 40%: taxable rental income under Section 24 is £14,400 − £1,800 = £12,600 (interest is not deducted). Tax at 40% is £5,040, less the 20% credit on interest (£1,500), giving net tax of £3,540. After-tax cash is £5,100 − £3,540 = £1,560.
Limited company, profit retained: taxable profit is £14,400 − £1,800 − £7,500 = £5,100. Corporation tax at 19% is £969, leaving £4,131 retained in the company — a gap of £2,571 in one year, before any difference in mortgage rates or accountancy costs. Compounded over a portfolio and a decade, with retained profit funding further deposits, that is the engine of portfolio growth. It is why the company route suits landlords who are building, not landlords living off the rent.
But what if the company landlord takes all the money out? Pay the £4,131 as a dividend to a higher-rate shareholder: dividend tax at 35.75% on £3,631 (after the £500 allowance) is £1,298, leaving £2,833. Combined tax is £969 + £1,298 = £2,267, against £3,540 personally. The company still wins here, but the margin has shrunk from £2,571 to £1,273 — and once higher company mortgage rates and, say, £600 to £1,200 a year in accountancy costs are deducted, it narrows further. Companies win by the most when profit stays inside them.
Worked example 2: basic-rate landlord
On the same property, a basic-rate personal landlord pays 20% tax on £12,600 (£2,520), less the £1,500 interest credit, giving net tax of £1,020 and after-tax cash of £4,080.
Through a company, the £5,100 profit bears £969 corporation tax, leaving £4,131. Paid out as a dividend to a basic-rate shareholder, dividend tax at 10.75% on £3,631 (after the £500 allowance) is £390, leaving £3,741 in hand after both layers. Personal ownership therefore wins by £339 before accountancy costs, and by more once those costs are counted. The Section 24 penalty barely touches a basic-rate landlord, because the 20% credit matches their 20% tax rate.
Mortgages: the company premium
Company buy-to-let is a smaller market than personal buy-to-let. Fewer lenders offer it, rates and fees are typically higher, and most lenders require personal guarantees from directors, so limited liability does not fully shield you on the mortgage itself.
Most company lending goes through a special purpose vehicle (SPV): a company set up solely to buy, hold and let property. Lenders prefer SPVs because the activity is clean and the accounts are easy to underwrite. If you already run a trading business, do not assume you can buy property through that company on the same terms — ask a broker about SPV lending specifically.
Buying in vs transferring in: the trap
The cheapest time to choose a company is before you buy. Transferring a property you already own personally into your own company is treated by HM Revenue & Customs as a sale at market value, even though no money changes hands in substance. That can trigger both Capital Gains Tax on the gain since you bought it and Stamp Duty Land Tax on the transfer value, plus legal costs — and the combined bill routinely wipes out several years of tax savings.
Incorporation relief under Section 162 of the Taxation of Chargeable Gains Act can defer the Capital Gains Tax where the letting activity counts as a genuine business — in practice, generally a larger, actively run portfolio rather than one or two lets. It does not remove Stamp Duty Land Tax, and its conditions and claim deadlines are strict. For most landlords with one or two personal properties, the better answer is to leave existing properties personal and buy new properties through the company, running a mixed portfolio, rather than paying to transfer everything.
Selling: where personal ownership wins back ground
Companies are not better on exit. An individual selling a buy-to-let property pays Capital Gains Tax at 18% (basic-rate) or 24% (higher-rate) on the gain above the £3,000 annual exempt amount. A company pays corporation tax on the whole gain with no annual exempt amount, and you then pay dividend tax again to get the cash out. For a long-held property with a large gain, personal ownership often works out cheaper on exit, even where the company was cheaper year by year on rent.
Other factors: inheritance, admin and risk
Administration. A company must file annual accounts and a confirmation statement with Companies House, file a corporation tax return and keep statutory records, usually with an accountant. Several hundred to over a thousand pounds a year is a common range for a small SPV, and that fixed cost weighs heaviest on a one-property company. Personal ownership, by contrast, is a self-assessment return and your own records.
A decision framework
Work through these questions in order, with your accountant, before you offer:
1. What is your marginal tax rate, including all other income? Firmly basic-rate and expecting to stay there: the company case is weak. Higher-rate, or pushed into it by rent: the company case strengthens. 2. Do you need the rent to live on, or can you leave it in the company? Income-now landlords lose much of the company advantage to dividend tax. Reinvesting landlords keep it. 3. How many properties, over how long? One property rarely justifies a company on cost alone. A planned portfolio held for ten years or more is where the maths changes. 4. What does the mortgage comparison say? Run the same property through personal and SPV products with a broker. A large rate premium can erase a small tax saving. 5. Are you buying new, or transferring existing stock? If transferring, get the Capital Gains Tax and Stamp Duty Land Tax figures first. If they exceed several years of savings, buy new through the company and leave the old stock personal. 6. What happens on exit? Model the sale, including Capital Gains Tax or corporation tax plus dividend tax, over your intended holding period.
If the answers point in different directions — higher-rate but income-now, for example — that is precisely the case where professional modelling pays for itself. A spreadsheet built on your figures beats any generic verdict, including this article's.
Frequently asked questions
Is a limited company always better for buy-to-let?
No. It is usually better for higher-rate taxpayers who reinvest profit rather than spend it. For basic-rate taxpayers, single-property landlords, or anyone who needs the rent to live on, personal ownership is often simpler and no more expensive once dividend tax, higher mortgage rates and accountancy costs are counted.
Can I move my existing properties into a limited company later?
Yes, but HM Revenue & Customs treats it as a sale at market value, triggering Capital Gains Tax and Stamp Duty Land Tax. Incorporation relief can defer the Capital Gains Tax in some genuine-business cases, but it does not remove Stamp Duty Land Tax. Most landlords therefore leave old properties personal and buy new ones through a company.
What is an SPV?
A special purpose vehicle is a limited company set up solely to hold property. Lenders prefer SPVs for company buy-to-let because the purpose is clear and the accounts are straightforward. Most company buy-to-let mortgages are SPV mortgages.
Do I still need a personal guarantee with a company mortgage?
In most cases, yes. Lenders commonly require directors to personally guarantee the mortgage, so limited liability does not fully protect you on that debt. Check the guarantee terms before signing.
Related reading
- Buy-to-Let Mortgages for First-Time Landlords: Criteria, Deposits and Lenders (2026)
- How to Calculate Rental Yield: Gross vs Net (With UK Worked Examples)