Why landlords use companies
A company deducts all its mortgage interest and pays corporation tax at 19% to 25%. That's often much less than a higher-rate landlord pays personally under Section 24. The catch comes when you take money out: dividends are taxed again, at 10.75%, 35.75% or 39.35% depending on your income.
So a company works best when you can leave profit inside it to pay down debt or buy more property.
Worked example
A landlord earning £85,000 has £48,000 of rent, £9,000 of costs and a £450,000 mortgage. Personally, their rental profit pushes them over £100,000, so they lose most of their personal allowance and keep about £1,700 a year after tax. Through a company paying a slightly higher mortgage rate and £1,500 more for accounts, with half the profit paid out as dividends, they keep about £9,900 between their pocket and the company: around £8,200 a year better off.
Moving property you already own
Transferring to a company counts as a sale at market value. You pay capital gains tax on any rise in value and the company pays stamp duty with the surcharge. In the example above that's roughly £139,000, which takes about 17 years to win back. That's why most landlords use companies for new purchases instead.
Questions landlords ask
Are buy-to-let mortgages more expensive for companies?
Usually a little. Rates are often slightly higher and the choice of lenders smaller, though the gap has narrowed. Lenders will normally want personal guarantees from directors.
Can I avoid capital gains tax when moving properties into a company?
Incorporation relief can apply if your letting activity counts as a business, which normally means substantial hands-on work. It's complex and HMRC looks at it closely, so get specialist advice.
What does a company cost to run?
Expect extra accountancy fees for annual accounts and a corporation tax return, plus a small Companies House filing fee. This calculator lets you set that cost.
Is this tax advice?
No. It's an estimate to help you decide whether to speak to an accountant. Your circumstances, plans for the properties and family situation all matter.
Sources
Last updated 1 October 2026.