Buy-to-Let in 2026: Should You Buy Personally or Through a Limited Company?

A practical UK guide to weighing tax, mortgages, admin and long-term plans.

It is the question almost every UK landlord asks at some point: is it better to own buy-to-let property in my own name or through a limited company? Five years on from the full bite of Section 24, and after the additional-property stamp duty surcharge jumped to 5% in October 2024, the answer has shifted decisively for many investors. But the right structure still depends on your income, your borrowing needs, and what you want the portfolio to do for you in 20 years’ time.

This blog post walks through the trade-offs as they stand in the 2026/27 tax year, with a worked example and a side-by-side comparison.

Buying personally

Owning a rental in your own name is the simplest route. You buy the property, the rent lands in your account, and you declare the profit on your self-assessment return. The headline issue, though, is Section 24.

The Section 24 problem

Since April 2020, individual landlords have not been able to deduct mortgage interest from rental income. Instead, you pay income tax on the gross rental profit and then receive a 20% basic-rate tax credit on the finance costs. For a higher-rate (40%) or additional-rate (45%) taxpayer with a leveraged portfolio, this can push effective tax rates above 70% of true cash profit – or even create a tax bill on a property that is loss-making in cash terms.

Where personal ownership still wins

•      Mortgages are cheaper and more plentiful. Personal BTL rates are typically 0.5–1.0 percentage points lower than limited-company rates, with fewer arrangement fees.

•      Admin is light: one self-assessment return, no company accounts, no Companies House filings.

•      On sale you can use your annual Capital Gains Tax exempt amount (£3,000 for 2026/27) and any unused spouse’s allowance.

•      If you are a basic-rate taxpayer with little or no mortgage, Section 24 barely affects you and personal ownership is often the cleaner option.

Buying through a limited company

The alternative is to set up a Special Purpose Vehicle (SPV) – a limited company whose only purpose is holding rental property – and buy through that. Roughly two thirds of new BTL purchases now go through a company structure, and for higher-rate taxpayers with mortgages the maths usually speaks for itself.

The tax picture

Companies are not affected by Section 24. Mortgage interest is fully deductible as a business expense, alongside repairs, letting agent fees, insurance and accountancy costs. Whatever is left is taxed at corporation tax rates: 19% on profits up to £50,000, 25% on profits above £250,000, with marginal relief in between. For a portfolio comfortably inside the small-profits band, the effective tax rate on rental profit is roughly the same as a basic-rate individual landlord – but without the Section 24 distortion.

The catch is getting money out of the company. From April 2026 the dividend tax rates rise: 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% above. The dividend allowance stays at £500. Pay yourself a dividend and you are taxed twice – once on the company profit, once on the way out. Leave the money inside the company to repay debt or buy the next property and that second layer disappears, which is why the structure suits investors in growth mode rather than those who need every penny to live on.

Other advantages

•      Mortgage interest deductibility means the structure scales with leverage – the more you borrow, the bigger the relative tax win versus personal ownership.

•      Shares can be split between spouses or adult children at any ratio you choose, including using alphabet shares for flexible dividends.

•      Succession planning is easier: you can gift shares progressively rather than transferring whole properties, and the company itself never “dies”.

•      Profits retained in the company can be reinvested without first being filtered through personal income tax.

The trade-offs

•      Mortgages are dearer. Expect to budget an extra 0.5–1.0% on the rate and roughly £2,000 in arrangement fees per property. Lenders almost always require personal guarantees from the directors.

•      Running costs: annual accounts, a corporation tax return (CT600), a confirmation statement, and accountant fees that typically range from £800–£1,800 a year for a small portfolio.

•      No personal CGT allowance on sale. The company pays corporation tax on the full gain, and then you pay dividend tax to extract the proceeds.

•      If you incorporate an existing personally-held portfolio, you can trigger both CGT and the 5% SDLT surcharge. Incorporation Relief can defer the gain, but from April 2026 it is no longer automatic – it must be actively claimed and the conditions met carefully. 

A worked example

Take a higher-rate-taxpayer landlord with a single property generating £18,000 of rent and £9,000 of mortgage interest, with £2,000 of other costs.

Personally, taxable profit is £16,000 (£18,000 minus the £2,000 of allowable costs). Income tax at 40% is £6,400. They get a 20% basic-rate tax credit on the £9,000 interest, worth £1,800. Net tax: £4,600, leaving £2,400 of cash profit (£7,000 cash minus £4,600 tax).

Through a company, taxable profit is £7,000 (rent minus all costs including interest). Corporation tax at 19% is £1,330. Cash retained in the company: £5,670. If they leave it there to fund the next deposit, that is the end of the story. If they pay it all out as a dividend at 35.75% from April 2026, the personal tax is roughly £1,955, leaving £3,715 in their pocket – still meaningfully ahead of personal ownership, and the gap widens fast as leverage rises.

Other factors worth weighing

•      Time horizon: Companies suit long-term, reinvest-and-compound investors. Personal ownership suits those buying one or two properties they may sell within a decade.

•      Existing portfolio: Moving personally-held property into a company is expensive. For most existing landlords, it is cheaper to leave older properties in their name and buy new ones through a company.

•      Borrowing capacity: Lenders stress-test BTL mortgages on rental cover. Limited-company mortgages are often easier to pass because the tax assumptions are gentler, which can mean more borrowing per property.

•      Estate planning: Property in a company is not eligible for Business Property Relief from inheritance tax – a common misconception. But the share structure gives you far more flexibility to gift, freeze value or use trusts.

•      Pensions and other income: If rental profit would tip you into a higher tax band, lose your personal allowance (£100,000 threshold) or trigger the High Income Child Benefit Charge, a company can keep that income off your personal tax return.

So which one?

There is no universally right answer, but the broad rule of thumb in 2026 looks like this. If you are a basic-rate taxpayer buying one or two properties without much borrowing, personal ownership is usually still the simplest and cheapest. If you are a higher-rate or additional-rate taxpayer, intend to build a portfolio with leverage, and plan to keep reinvesting for the long term, a limited company will almost always come out ahead – even after the higher mortgage costs and the April 2026 dividend rate rises.

Where it really matters, get a property accountant to model your specific numbers before you commit. The structure you choose at purchase is hard and expensive to change later, and the right decision is the one that fits your tax position, your borrowing plans and the life you want this portfolio to fund.