Limited Company Buy-to-Let Tax: Is Incorporating Worth It? (2026/27)
Last updated 24 June 2026 · 9 min read · By the LandlordTaxAi Editorial Team
The short answer
A company landlord pays Corporation Tax on rental profit — 19% up to £50,000 and 25% above £250,000 (with marginal relief between) — and can deduct mortgage interest in full (no Section 24). But extracting profit as dividends is taxed again personally at 10.75%/35.75%/39.35% for 2026/27.
Holding buy-to-lets in a limited company has become hugely popular, mainly to escape the Section 24 mortgage-interest restriction. But "company" isn’t a magic tax cut — it’s a different system with its own trade-offs, including a second layer of tax when you take the money out.
This guide lays out exactly how company buy-to-let is taxed in 2026/27 and when it actually pays. For the personal-tax comparison, see the rental income tax calculator.
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Buy-to-Let Profit Calculator
Estimate your rental profit to compare a personal versus company structure for 2026/27.
Result
- Taxable profit (rent − expenses)
- £11,200
- Income Tax at 40%
- £4,480
- Less mortgage interest credit (20%)
- − £1,000
- Tax due on this property
- £3,480
- Income after tax
- £7,720
Company landlords pay Corporation Tax (19–25%) with no Section 24. Estimate only — take advice before incorporating.
How company rental profit is taxed
A limited company pays Corporation Tax on its rental profits, not income tax. The rate depends on the company’s total profits:
| Company profits | Corporation Tax rate (2026/27) |
|---|---|
| Up to £50,000 | 19% (small profits rate) |
| £50,001 – £250,000 | Main rate with marginal relief (≈26.5% on the slice) |
| Over £250,000 | 25% (main rate) |
The big win: a company deducts all its mortgage interest as a business expense. Section 24 doesn’t apply to companies — which is why geared higher-rate landlords look at incorporating.
The second layer: getting money out
Profit left in the company is only taxed once, at Corporation Tax rates. But most landlords want the cash — and extracting it triggers a second tax charge personally.
Taking dividends uses your £500 dividend allowance, then dividend tax for 2026/27 of 10.75% (basic rate), 35.75% (higher rate) or 39.35% (additional rate) — rates that rose in April 2026.
- Dividend allowance 2026/27: £500
- Dividend rates 2026/27: 10.75% / 35.75% / 39.35%
- Salary is an alternative but brings PAYE and NIC
- Leaving profit in the company defers the personal tax
A company suits landlords who reinvest profits (buying more property) rather than drawing them out — because that defers the dividend tax. If you need the income to live on, the second layer can erode the benefit.
Other company costs and considerations
Incorporation isn’t free, and a few extra factors swing the decision.
- Mortgages for companies often carry higher rates and fees than personal buy-to-let
- Accountancy and filing — company accounts and a CT return cost more than a personal return
- ATED can apply if the company holds residential property worth over £500,000 (relief usually available for genuine lets — see ATED charge calculator)
- Transfer costs if moving existing properties in — CGT and SDLT (see incorporation tax cost calculator)
There’s no one-size answer. Company structures favour higher-rate, highly-geared landlords building a portfolio; basic-rate landlords drawing income often do better personally. Always take professional advice before incorporating.
Compare company vs personal properly
LandlordTaxAi models your tax both ways — personal with Section 24 or company with Corporation Tax and dividends — so you incorporate only if the numbers truly stack up.
See how it worksA worked example
A company makes £20,000 rental profit after deducting all mortgage interest in 2026/27. The owner is a higher-rate taxpayer who draws it all as a dividend.
| Company profit | £20,000 |
| Corporation Tax at 19% | −£3,800 |
| Profit available as dividend | £16,200 |
| Less £500 dividend allowance | taxable £15,700 |
| Dividend tax at 35.75% | −£5,612 |
| Net in owner’s pocket | ≈ £10,588 |
Two layers of tax leave about £10,600 of the original £20,000. A company shines when interest is high (no Section 24) and profits are reinvested, not drawn.
Frequently asked questions
How is a limited company buy-to-let taxed?
The company pays Corporation Tax on rental profit — 19% up to £50k, 25% over £250k — and deducts mortgage interest in full. Extracting profit as dividends is taxed again personally.
Do companies avoid Section 24?
Yes. Section 24 only restricts individual landlords. Companies deduct all mortgage interest as a normal expense — the main reason landlords incorporate.
What’s the dividend tax for 2026/27?
After a £500 allowance: 10.75% basic, 35.75% higher and 39.35% additional rate. These rates increased in April 2026.
Is a company always cheaper?
No. The second layer of dividend tax can outweigh the Corporation Tax saving — especially if you draw the profit out. Companies suit reinvesting, higher-rate, geared landlords.
Does ATED apply to my company?
Only if it holds a residential dwelling worth over £500,000. Genuine commercial lets usually qualify for relief, but you must still file an ATED return.
Should I move my existing properties into a company?
Be careful — the transfer can trigger CGT and SDLT. It’s a major decision; get advice and model the incorporation cost first.
Written and reviewed by the LandlordTaxAi Editorial Team. Our guides are reviewed against current HMRC guidance and updated when the rules change. Operated by LandlordTaxAi, United Kingdom. Follow us on LinkedIn.
Last reviewed: 24 June 2026 · Researched against primary UK sources for the 2026/27 tax year: https://www.gov.uk/corporation-tax-rates; https://www.gov.uk/guidance/corporation-tax-marginal-relief; https://www.gov.uk/government/publications/changes-to-tax-rates-for-property-savings-dividend-income/changes-to-tax-rates-for-property-savings-dividend-income. This article is informational only and does not constitute tax advice. Check the latest details on GOV.UK or with a qualified accountant.