Buy-to-Let Limited Company: Tax, Costs and How It Works (2026)

Most new buy-to-let purchases now go through companies. How the tax works, what a company costs to run, and why moving property you already own rarely pays.

Updated 10 October 2026

The short version

A company deducts all its mortgage interest, so Section 24 doesn't apply. It pays corporation tax at 19% to 25% on what's left.
Taking money out is taxed again, mostly as dividends at 10.75%, 35.75% or 39.35% after a £500 allowance.
It works best for higher-rate taxpayers buying new property who can leave profit in the company to grow.
Moving property you already own is treated as a sale, with capital gains tax and stamp duty, so it rarely pays.

How a company is taxed

The company pays corporation tax on its profit after all costs, including mortgage interest: 19% on profits up to £50,000, 25% above £250,000, and a sliding rate in between. What's left belongs to the company. You can then:

Leave it in to pay down debt or buy more property. No further tax until you take it out.
Take dividends, taxed at 10.75%, 35.75% or 39.35% depending on your other income, after the £500 dividend allowance.
Repay your director's loan. If you lent the company the deposit, it can pay that back to you tax-free. This is often the main way landlords take cash out in the early years.
Pay yourself a salary, but only for real work, and with National Insurance to consider.

Borrowing money from your own company and not repaying it within 9 months of the year end triggers a temporary 35.75% tax charge, refunded when you repay.

Worked example

A landlord earning £85,000 has £48,000 of rent, £9,000 of costs and a £450,000 interest-only mortgage at 4.6%. Using the 2027/28 rates, the rental profit takes them over £100,000, so they lose most of their personal allowance, and they keep about £1,700 a year after tax. Through a company paying 5.1% on the same mortgage and £1,500 more for accounts, and paying out half the profit as dividends, they keep about £9,900 between their pocket and the company: around £8,200 a year better off. Try your own figures in the limited company calculator.

What a company costs to run

Mortgages: company rates are typically 0.25 to 1 percentage point higher, with similar fees. Lenders usually want personal guarantees from the directors. Many test the rent at 125% of the interest for companies, where a higher-rate taxpayer borrowing personally is often tested at 145%.
Accounts: a specialist accountant often costs £1,000 to £2,000 a year for a small portfolio, plus a small annual Companies House filing fee.
Family lets: letting to family or other connected people can lose the 19% small profits rate and bring other complications.

Moving property you already own

Transferring a property to your own company counts as selling it at market value:

You pay capital gains tax on any rise in value, at 18% or 24%, within 60 days. See our capital gains tax guide.
The company pays stamp duty on the market value, with the 5% surcharge.
The mortgage usually has to be refinanced, with fees and possibly early repayment charges.

If the landlord above moved a property worth £900,000 that they bought for £650,000, they'd pay about £59,000 of capital gains tax and the company about £80,000 of stamp duty: roughly £139,000, before refinancing costs. At £8,200 a year better off, that takes about 17 years to win back. That's why most landlords use companies for new purchases only.

Incorporation relief can defer the capital gains tax, but only if you're transferring a genuine business, not just investments. HMRC generally looks for around 20 hours a week of work on it, and since April 2026 the relief has to be claimed. HMRC says schemes using hybrid partnerships or LLPs to avoid tax on moving property into a company don't work, and users may face extra tax, interest and penalties. Get specialist advice before trying anything like this.

Higher-value properties

A company buying a home over £500,000 normally pays a flat 17% stamp duty, unless it's for a property rental business, which most buy-to-let companies are. Companies holding homes worth over £500,000 also face the Annual Tax on Enveloped Dwellings, from £4,600 a year. Letting to unconnected tenants gives relief, but you must still file a relief declaration each year, usually by 30 April.

Is it right for you?

A company is usually worth a look if you're a higher-rate taxpayer, you're buying with a mortgage, and you plan to reinvest rather than live off the rent. It's less useful for basic-rate taxpayers, cash buyers, or anyone who needs all the income now. Inheritance planning works differently with company shares, so take advice if that matters to you.

Questions landlords ask

Is a limited company better for buy-to-let?

Often, for higher-rate taxpayers buying new property with a mortgage, because the company deducts all its interest and pays corporation tax instead of income tax. If you need to take all the profit out, dividend tax narrows the gap.

Can I transfer my existing buy-to-let into a company?

Yes, but it's treated as a sale at market value. You pay capital gains tax and the company pays stamp duty with the surcharge, so it rarely pays unless you qualify for incorporation relief by running a genuine business.

What are the tax rates for a buy-to-let company?

Corporation tax is 19% on profits up to £50,000 and 25% above £250,000, with a sliding rate in between. Dividends you take out are taxed at 10.75%, 35.75% or 39.35% after a £500 allowance.

Are limited company buy-to-let mortgages more expensive?

Usually slightly: typically 0.25 to 1 percentage point higher than personal buy-to-let rates, and lenders want personal guarantees. Many lenders use an easier rent test for companies, which can let you borrow more.

Owning rental property through a limited company