Buy to Let in a Limited Company: Does It Still Add Up for Landlords?
Should your rental properties sit in a limited company? It is the question landlords ask us more than any other, and from April 2027 the answer changes for a lot of people. The landlords who come out of this well will be the ones who run the numbers now, while there is still time to act on them.
Why Everyone Is Asking Again
Budget 2025 created separate income tax rates for property income. From 6 April 2027, individual landlords in England will pay 22% at the basic rate, 42% at the higher rate and 47% at the additional rate on rental profits, two percentage points above the equivalent rates on a salary. Relief for mortgage interest stays capped as a tax reduction, at 22% from that date.
A company is untouched by all of this. Rental profits in a company pay corporation tax at 19% up to £50,000 of profit and 25% above £250,000, with a sliding scale in between, and the company deducts its mortgage interest in full rather than settling for a capped credit.
What a Company Actually Changes
On those headline rates the company looks like an easy win, but the comparison only starts there. Money in a company is the company’s, and taking it out as dividends has its own cost. From April 2026 dividends are taxed at 10.75% in the basic band and 35.75% in the higher band, with only £500 tax free.
That is why the structure suits some landlords and not others. If rents are being reinvested, in more property or in paying down borrowing, profits compound at corporation tax rates and the dividend charge never bites. If you need the rent to live on each month, much of the corporation tax saving hands itself back on the way out.
The Cost of Getting Existing Properties In
Moving properties you already own is the expensive part, because you and your company are connected, so each transfer is treated as a sale at full market value whether or not money changes hands.
That triggers Capital Gains Tax on the growth to date, at 18% or 24%, normally reportable under the 60 day reporting rule. The company also pays Stamp Duty Land Tax on the market value, including the 5% surcharge that applies to company purchases of dwellings. Add lender consent or refinancing, and the entry cost can swallow years of the annual saving. This is exactly why the decision needs arithmetic rather than instinct.
Incorporation Relief Just Changed
Where a portfolio is genuinely run as a business, with real day to day involvement rather than a single let managed by an agent, transferring the whole business to a company in exchange for shares can defer the Capital Gains Tax under incorporation relief, rolling the gain into the shares.
Two things matter here. First, HMRC looks hard at whether a property portfolio truly amounts to a business, and the bar is higher than most landlords assume. Second, for transfers from 6 April 2026 the relief is no longer automatic: it must be claimed in your tax return with details of the transaction. Get the claim wrong or miss it and the deferral is at risk, so this is one to prepare properly, not patch up afterwards.
Who It Tends to Suit
The structure earns its keep for higher rate taxpayers who reinvest their rents, for larger portfolios run as a real business, and for people buying their next property, since purchasing through a company avoids the whole transfer problem. It rarely pays for a single property where the rent is spent as income, once you count the entry costs, the dividend tax and the running costs of a company, including year end accounts and a confirmation statement every year.
If you are starting out rather than restructuring, the same logic we set out in our guide to trading as a sole trader or a limited company applies to property too: the structure should follow the plan, not the other way round.
Run the Numbers Before April 2027
There is a real window here. The new property rates arrive in April 2027, so a landlord who works through the comparison this year has time to restructure, refinance or simply decide to stay put, all with the figures in front of them.
We do this work for landlords right across Oxfordshire, whether you need accountants in Oxford, in Banbury or in the towns in between, alongside our wider accountancy services. Incorporation questions sit within our specialist tax advice work, with a clear price range agreed before we start.
If you want to know whether a company would add up for your properties, bring us the portfolio and we will show you both versions of the sums.