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The short answer: if you’re a higher-rate taxpayer building a portfolio for the long term, a limited company now wins more often than not, and the November 2025 Budget tilted the scales further. But moving existing properties into a company can cost more than it saves, so the right answer depends on where you’re starting from.
This is the question we’re asked more than any other, so let’s give it a proper answer rather than the usual list of pros and cons.
What changed in the November 2025 Budget
From April 2027, rental income you hold in your personal name will no longer be taxed at the normal income tax rates. It gets its own higher rates: 22% at basic rate, 42% at higher rate and 47% at additional rate. That’s a 2 percentage point surcharge simply for holding property personally.
Rental profits inside a limited company are untouched by this. Companies pay corporation tax at 19% on profits up to £50,000, rising to 25% above £250,000, with marginal relief in between (an effective 26.5% on the slice in the middle). For most landlords, company profits sit in the 19% band.
Section 24: the tax on income you never received
If you have a mortgage and pay higher-rate tax, Section 24 is probably costing you real money. As an individual landlord you cannot deduct mortgage interest as an expense. You get a 20% basic-rate credit instead. A company deducts the full interest cost before tax, exactly as any business would. Put the two together, full interest relief and lower tax rates, and the company case for leveraged higher-rate landlords is strong and getting stronger.
A worked example
Take a higher-rate landlord with £30,000 of rent, £12,000 of mortgage interest and £3,000 of other costs. Held personally, they’re taxed on the rent after the £3,000 costs, so on £27,000. At 40% that’s £10,800, reduced by a 20% credit on the £12,000 interest (£2,400). Tax bill: £8,400.
Held in a company, the profit is £30,000 less £12,000 interest less £3,000 costs, so £15,000. Corporation tax at 19% is £2,850. That’s a difference of over £5,500 in a single year, before you’ve extracted a penny.
The catch is extraction. To spend company money personally you take a salary or dividends, and dividends carry their own tax (the rates rose to 10.75% and 35.75% in April 2026). If you need every pound of rent to live on, some of that saving is given back. If you’re reinvesting to grow, the money compounds inside the company almost untouched.
Why you shouldn’t rush to transfer existing properties
Transferring a property you already own into your own company is a sale at market value in HMRC’s eyes. That can trigger capital gains tax at up to 24% on the growth to date, and the company pays stamp duty on the way in, including the 5% additional dwellings surcharge. For a portfolio with significant gains, those two charges can wipe out a decade of tax savings.
There is a route called incorporation relief that can defer the capital gains charge, but it’s only available where your property activity is a genuine business, not passive investment, and the bar is higher than most online guides suggest. There’s also stamp duty to consider, and there may be relief from it too, but only where your property activity is run as a genuine business partnership. Take advice before relying on either. The cleanest use of a company is usually for your next purchase, not your existing ones.
When personal ownership still wins
Personal ownership can still be right if you’re a basic-rate taxpayer with no plans to grow, though watch the 22% property rate from 2027. It suits landlords with little or no mortgage debt, so Section 24 barely touches them. It suits anyone who needs all the rental income to live on, because extracting from a company is taxed again.
What to do next
Don’t copy what someone in a Facebook group did. Their tax position isn’t yours. The right structure depends on your tax rate, your borrowing, your plans for the money and your timeline. Model it once, properly, before you buy the next one, and you set yourself up for years. We do exactly that modelling for clients before they commit.
Deciding how to hold your next purchase? Book a free discovery call and we’ll model personal versus company on your actual numbers.
Free resource: download our free guide, 12 Tax Deductions Property Investors Miss Out On.
Frequently asked questions
Is it too late to set up a company if I already own property personally?
No. Most investors keep their existing personal properties and buy new ones through a company, which avoids the capital gains and stamp duty cost of transferring.
Do lenders charge more for limited company buy-to-let?
Company mortgage rates are often slightly higher than personal ones, but the tax saving usually outweighs the rate difference for higher-rate, leveraged landlords. Model both.
Can my spouse and I both take dividends from the company?
Yes, if you’re both shareholders. Splitting dividends across two people can use two sets of allowances and lower-rate bands, which is part of the planning.
What’s the 26.5% corporation tax rate I’ve heard about?
It’s the effective rate on profits between £50,000 and £250,000, caused by marginal relief. Below £50,000 you pay 19%.
