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Should you put your rental property in a limited company? For many landlords the answer has changed. From April 2027, tax on property income for individuals rises to 22%, 42% and 47%, while a limited company still pays Corporation Tax at 19% to 25% and can deduct mortgage interest in full. But moving property you already own into a company can trigger Capital Gains Tax and Stamp Duty, so the numbers need checking before you act.
This guide explains how a property limited company works, when it saves tax, what it costs to set up or transfer, and a worked example for a Bolton landlord. It reflects the rules for the 2026/27 tax year.
How a property limited company works
A property limited company, often called a special purpose vehicle (SPV), is a company set up to buy and let property. The company owns the houses, collects the rent, pays the mortgage and pays Corporation Tax on its profit. You own the shares and decide when to take money out, usually as dividends or salary.
The key differences from owning property personally are:
| Owned personally | Owned in a limited company | |
|---|---|---|
| Tax on rental profit | 20%, 40% or 45% in 2026/27; 22%, 42% or 47% from April 2027 | Corporation Tax at 19% on profits up to £50,000, 25% above £250,000, with marginal relief in between |
| Mortgage interest | Not deductible; 20% tax credit (22% from April 2027) | Fully deductible as a business expense |
| Taking money out | Profit is yours, already taxed | Dividends taxed again at 10.75%, 35.75% or 39.35% after the £500 allowance |
| Selling a property | Capital Gains Tax at 18% or 24% | Corporation Tax on the gain, then tax on extracting it |
| Admin | Self Assessment return | Company accounts, CT600, confirmation statement and director duties |
Why more landlords are using limited companies
Two changes have pushed landlords towards companies.
Section 24. Since April 2020, individual landlords cannot deduct mortgage interest from their rent. They get a tax credit worth 20% of the interest instead. Higher-rate landlords lose relief at 40% and can be pushed into a higher tax band. Companies are not affected and still deduct interest in full. Our Section 24 explainer shows how the restriction works.
The 2027 property income rates. The Autumn Budget 2025 introduced separate tax rates for property income. From 6 April 2027, individuals pay 22% at the basic rate, 42% at the higher rate and 47% at the additional rate on rental profit. Relief for finance costs will be given at the 22% property basic rate. Corporation Tax rates are unchanged, so the gap between personal and company ownership widens.
When a limited company can save tax
A property company is most likely to save tax if:
- You are a higher-rate or additional-rate taxpayer, or your rental profit pushes you into the higher rate.
- You have significant mortgage borrowing, so Section 24 costs you the most.
- You plan to buy more properties and reinvest profits rather than spend them.
- You do not need all the rental income to live on, so profits can stay in the company and be taxed at Corporation Tax rates only.
- You are thinking about passing property to children, as shares can be easier to pass on gradually than whole properties.
It is less likely to help if you are a basic-rate taxpayer with little borrowing, you need every pound of rent to live on, or you own one property and do not plan to buy more.
The cost of moving existing property into a company
Transferring a property you already own into your company is treated as a sale at market value. That can create two large bills.
Capital Gains Tax. You pay CGT on the gain since you bought the property, at 18% or 24% for residential property, after the £3,000 annual exempt amount. Incorporation relief can defer this gain if your letting activity is a genuine business, for example a portfolio you manage actively for around 20 hours a week. Most landlords with one or two properties will not qualify, so we check this carefully.
Stamp Duty Land Tax. The company pays SDLT on the market value, including the 5% surcharge for additional residential property. Some landlords who own property in a genuine partnership may get relief, but the rules are strict.
You will also usually need to remortgage, as personal buy-to-let mortgages cannot simply move to a company. Limited company mortgages often have slightly higher rates and arrangement fees.
For many landlords the transfer costs outweigh years of tax savings, so a common approach is to keep existing properties personally and buy new ones through a company.
Worked example: a Bolton landlord in 2027/28
Aisha earns a £45,000 salary and owns three terraced houses in Bolton. Rent is £30,000 a year, running costs are £6,000 and mortgage interest is £12,000.
| Personally owned | Limited company | |
|---|---|---|
| Rent | £30,000 | £30,000 |
| Running costs | −£6,000 | −£6,000 |
| Mortgage interest | Not deductible | −£12,000 |
| Taxable profit | £24,000 | £12,000 |
| Tax on profit | £9,026 (£5,270 at 22%, £18,730 at 42%) | £2,280 Corporation Tax at 19% |
| Less finance cost credit (22% of £12,000) | −£2,640 | n/a |
| Tax bill | £6,386 | £2,280 |
| Cash left after mortgage interest and tax | £5,614 | £9,720 retained in the company |
If Aisha leaves the profit in the company to fund another purchase, the company route leaves her around £4,100 a year better off. If she takes all £9,720 out as dividends, she pays about £2,104 of dividend tax (part at 10.75% and part at 35.75%, after the £500 allowance), leaving £7,616. That is still about £2,000 a year more than owning personally.
The example is illustrative only. It uses the announced 2027/28 property rates for England, Wales and Northern Ireland, ignores any transfer costs and assumes Aisha’s salary uses the basic-rate band up to £45,000. Your figures will depend on your income, borrowing and plans, so we model both routes before you decide.
Setting up a property limited company
If you decide to go ahead, these are the steps:
- Choose the right SIC code. Most property companies use 68209 (other letting and operating of own or leased real estate). Lenders look for this code.
- Decide on shareholders. Spouses or adult children can hold shares, which can spread dividends across lower tax bands. Get advice before giving shares to anyone.
- Register the company with Companies House. All directors must verify their identity with Companies House.
- Open a business bank account and keep company and personal money separate.
- Arrange a limited company mortgage. A specialist broker can compare SPV lenders.
- Register for Corporation Tax within three months of starting to trade.
- Set up bookkeeping so rent, repairs and mortgage interest are recorded from day one.
Our company formation service can set up the company, register it for tax and get your books ready.
Ongoing costs and responsibilities
A property company brings more admin than owning personally:
- Annual accounts filed at Companies House within nine months of the year end.
- A Corporation Tax return (CT600) within 12 months and tax paid nine months and one day after the year end.
- A confirmation statement each year.
- Director’s loan account records, as money you lend the company, or take out without a dividend, must be tracked. Our guide to the director’s loan account explains the rules.
- Annual Tax on Enveloped Dwellings (ATED) returns if a property is worth over £500,000. Relief is usually available for properties let to unconnected tenants, but the return must still be filed.
Accountancy fees for a property company are higher than for a personal tax return, so include them when comparing the options.
Frequently asked questions
Is it worth putting a single buy-to-let into a limited company?
Usually not for an existing property, because CGT and SDLT on the transfer can wipe out the savings. For a new purchase, a company can make sense if you are a higher-rate taxpayer with a mortgage and plan to grow your portfolio.
Can I transfer my rental property to my limited company without paying tax?
Only if you qualify for incorporation relief on CGT, which needs a genuine property business, and possibly partnership relief on SDLT. Most landlords with a small portfolio do not qualify, so assume tax will be due and get advice first.
How do I get money out of a property limited company?
Most landlords take dividends, which are taxed at 10.75%, 35.75% or 39.35% after a £500 allowance. You can also take a salary, repay a director’s loan if you lent the company money, or make pension contributions from the company.
Does Making Tax Digital apply to a property company?
No. Making Tax Digital for Income Tax applies to individuals with property and self-employment income. A limited company files accounts and a Corporation Tax return instead. If you still own property personally, the Making Tax Digital rules may apply to that income.
Will the 2027 rate rise make limited companies better for every landlord?
No. The rise widens the gap for higher-rate landlords with mortgages, but basic-rate landlords with little borrowing may still pay less tax owning personally. The right answer depends on your income, borrowing and plans.
Get advice before you incorporate
Choosing between personal and company ownership is one of the biggest tax decisions a landlord makes, and it is hard to reverse. Cangaf’s accountants for landlords model both routes using your real figures, including transfer costs, mortgage rates and how you want to draw income, then set up and run the company if it is right for you. Read our landlord tax guide or get a fixed-fee quote to talk it through.
Official guidance: Stamp Duty Land Tax: residential property rates, Corporation Tax rates and reliefs, Tax relief for residential landlords: how it’s worked out and Annual Tax on Enveloped Dwellings.
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