How the two routes are taxed
| Personal name (2027/28) | Limited company | |
|---|---|---|
| Tax on profit | 24% / 44% / 49% | 19% to £50k, 25% over £250k, marginal relief between |
| Mortgage interest | 24% tax credit only | Fully deductible |
| Taking money out | No further tax | Dividends 10.75% / 35.75% / 39.35% (£500 allowance) |
| Selling a property | CGT 18% / 24%, £3,000 exempt | Corporation tax on the gain, then tax on extraction |
| Running costs | Low | Accounts, filing, often higher mortgage rates |
A worked example
A higher-rate taxpayer has £30,000 of rental profit before £10,000 of mortgage interest.
| Personal name | Company, all paid out | Company, profit kept in | |
|---|---|---|---|
| Tax on profit | £13,200 (44% of £30,000) | £3,800 (19% of £20,000) | £3,800 |
| Finance cost credit | −£2,400 | n/a | n/a |
| Dividend tax | – | £5,613 | – |
| Total tax | £10,800 | £9,413 | £3,800 |
The company saves about £1,400 a year if every penny is paid out, and much more if profit is reinvested. That's before company running costs (often £1,000–£2,000 a year) and any higher mortgage rate.
The costs of moving existing property
- Stamp Duty: the company buys at market value and usually pays the higher rates, including the 5% surcharge. There are limited exceptions, for example some partnerships. These are complex and closely watched by HMRC.
- Capital Gains Tax: transferring is a disposal at market value. Incorporation relief can defer the gain only where the letting is a genuine business, a high bar for most small landlords.
- Refinancing: new mortgages in the company's name, with fees and often higher rates.
For many landlords with one or two properties, these one-off costs wipe out years of savings. New purchases are a different decision, because there's nothing to transfer.
Who it tends to suit
Higher-rate taxpayers with large mortgages who plan to reinvest profits and build a portfolio over many years. It suits basic-rate landlords, or those who need all the income personally, less often.
Frequently asked questions
Do companies pay the new property income rates?
No. The 24%/44%/49% rates are income tax rates for individuals. Companies pay corporation tax.
Can I just transfer my buy-to-let into a company?
You can, but it's treated as a sale at market value, usually with Stamp Duty and Capital Gains Tax due. Take professional advice first.
Sources
- GOV.UK: Corporation Tax rates
- GOV.UK: Income Tax rates and allowances, current and past
- GOV.UK: Stamp Duty Land Tax residential property rates
- GOV.UK: Capital Gains Tax rates and allowances
- HM Treasury: Budget documents, 28 October 2026
Sources last checked 9 November 2026. See all our sources and how we keep pages up to date.