Should you put your rental in a limited company? The 2026 landlord trade-off

Updated July 2026 · Applies to England · 7 minute read

Section 24 sent thousands of landlords Googling "limited company". For some it is a genuinely smart move. For others it is an expensive answer to the wrong question. Here is the honest trade-off, without the hype you see in property forums.

Why a company escapes the Section 24 squeeze

The headline appeal is simple. Section 24 stops individual landlords deducting mortgage interest, forcing them onto a 20% credit that hurts higher-rate taxpayers. A company is not caught by it at all. A company deducts its mortgage interest in full as a business cost and pays Corporation Tax only on what is left. If borrowing is a big part of your model, that difference can be substantial.

Corporation Tax for 2026 to 2027 runs at 19% on profits up to £50,000, 25% on profits of £250,000 and over, with a tapering marginal rate in between. For a typical small portfolio that usually means 19% on the rental profit, comfortably below higher-rate income tax.

The catch: getting the money back out

Money inside a company is not your money yet. To spend it personally you generally take a salary or, more commonly for landlords, dividends, and that is where a second layer of tax appears. From 6 April 2026 the dividend tax rates rose by two points, so you now pay 10.75% as a basic-rate taxpayer and 35.75% at higher rate, above a £500 dividend allowance. Stack Corporation Tax and dividend tax together and, if you draw everything out each year, the company route can end up costing more than staying personal.

This is the crux of the whole decision. A company shines when you leave the profit inside it to pay down debt or buy the next property, letting it roll up taxed only at Corporation Tax rates. It works far less well when you need the rental income to live on now.

The other real-world frictions

Beyond the tax, a company brings running costs and admin that a personal let does not. You will usually need a limited-company buy-to-let mortgage, which tends to carry higher rates and comes from a smaller pool of lenders, and many lenders want a personal guarantee anyway. There are company accounts and a Corporation Tax return to file every year, Companies House obligations, and typically higher accountancy fees. None of these are dealbreakers, but they are real, and they eat into the saving on a small portfolio.

Who it tends to suit, and who it does not

Incorporating tends to make sense for higher-rate landlords who are actively building a portfolio, reinvest rather than draw the profit, and are thinking in decades rather than years. It tends not to make sense for someone with one or two properties, anyone who needs the rent as income, or a landlord close to selling up or retiring. The only way to know which camp you are in is to model your own numbers, because the answer genuinely flips depending on borrowing, tax band and how much income you take.

Frequently asked questions

Do company landlords use Making Tax Digital for Income Tax? No. Company property is dealt with under Corporation Tax, outside the MTD for Income Tax regime.

Can I dodge capital gains tax by transferring property into my company? No. It is a disposal at market value and can trigger CGT, with Stamp Duty due on the company side.

Can I move my current mortgage across? Usually not. The company normally needs its own buy-to-let mortgage, typically at a higher rate.

Is it worth it for one property? Rarely, once you count the one-off transfer costs and ongoing admin. It is a portfolio-and-reinvestment play.

This guide is general information for landlords in England, not tax or legal advice for your specific circumstances. Incorporation has significant tax consequences that depend entirely on your position. Speak to an accountant before acting.