Since Section 24 removed full mortgage interest relief for individual landlords, the question of whether to hold buy-to-let property through a limited company has become one of the most common, and most misunderstood, decisions in property investment.
The short answer: it depends entirely on your tax band, mortgage level, portfolio size, and whether you plan to hold or sell. There is no universal rule. Here is how to think through it.
The problem: Section 24 and higher-rate taxpayers
Individual landlords can no longer deduct mortgage interest from their rental profit. Instead, they receive a 20% tax credit. If you pay tax at the basic rate (20%), the net effect is broadly neutral. But if you are a higher-rate (40%) or additional-rate (45%) taxpayer, you are paying significantly more tax on the same rental income.
Worse, the non-deductible mortgage interest inflates your taxable income, which can push you from the basic rate into the higher-rate band, increasing the tax on all your income, not just property. Our Section 24 explainer walks through the full mechanism with worked examples.
When a limited company makes sense
A property SPV (Special Purpose Vehicle) pays Corporation Tax at 19-25% on rental profits and can deduct 100% of mortgage interest. For the right profile, the annual savings are substantial.
You are a higher-rate or additional-rate taxpayer
The gap between personal tax rates (40-45%) and Corporation Tax (19-25%) is where the savings live. If you are a basic-rate taxpayer, the difference is marginal and rarely worth the added complexity.
You have a lot of mortgage debt
Section 24's impact is directly proportional to your finance costs. A landlord with £500,000 in outstanding mortgages at 5% pays £25,000 per year in interest, none of which is deductible personally. In a company, it is fully deductible.
You plan to hold properties long-term
The upfront costs of transferring property into a company (CGT and SDLT) can be high. You need several years of annual tax savings to break even. If you intend to sell within 3-5 years, incorporation rarely makes financial sense.
You want to reinvest profits into more property
Profits retained in a company are taxed at Corporation Tax rates only. Personally, all rental profit is taxed at your marginal rate whether you withdraw it or not. A company structure lets you compound faster.
When personal ownership is still better
- -You are a basic-rate taxpayer. Section 24's 20% tax credit already compensates for the lost deduction.
- -Properties are mortgage-free. No finance costs means Section 24 has zero impact.
- -You plan to sell soon. Personal CGT rates on residential property (18-24%) can be lower than the combined Corporation Tax + dividend tax when extracting the same gain from a company.
- -You want simple administration. A company requires annual accounts, a Corporation Tax return, and a Confirmation Statement. Personal ownership requires only your Self Assessment.
The practical middle ground
Many landlords keep their existing personally held properties in place and purchase all new acquisitions through an SPV. This avoids the CGT and SDLT cost of transferring, while ensuring every new property benefits from full mortgage interest deductibility from day one.
Over time, as older properties are sold naturally, the portfolio gradually shifts towards the company structure. Combined with management accounts tracking rental yields and tax positions across both structures, this phased approach can keep the transfer costs lower.
Frequently asked questions
Can I transfer my existing properties into a company tax-free?
Not entirely. Transferring triggers CGT on the gain and SDLT on the market value. Incorporation Relief (s162) may defer the CGT if HMRC accepts your lettings as a business, but SDLT remains payable. See our SPV Incorporation for UK Landlords guide for the full breakdown.
How do I take money out of a property company?
The same way as any limited company director: a combination of salary and dividends. The right split depends on your other income and the company's profit. Our Salary vs Dividends 2026 article covers the mechanics, and the Director Pay calculator helps you compare extraction options.
Does Making Tax Digital affect this decision?
Indirectly. MTD for ITSA applies to individual landlords with qualifying income over £50,000 from 6 April 2026, requiring quarterly digital updates. Properties held in a limited company are not subject to MTD for ITSA (they file Corporation Tax returns instead). For some landlords, this reduced compliance burden is an additional reason to favour company ownership for new purchases.