UK Landlord LTD vs Personal Ownership (2026/27)
Landlord limited company vs personal ownership 2026/27: Section 24 vs Corporation Tax, SDLT and CGT on incorporating, s.162 relief, dividends and exit.
Income Tax figures use the rest-of-UK bands and the property-tax figures are SDLT, which applies in England and Northern Ireland. Scotland (LBTT and Scottish Income Tax rates) and Wales (LTT) differ.
Personal vs Ltd ownership comparison
| Factor | Personal ownership | Limited company |
|---|---|---|
| Mortgage interest | Not deductible; a 20% basic-rate tax reduction instead (ITTOIA s.272A) | Deductible in full against rental profits under the loan relationship rules |
| Tax rate on profits | Income Tax at 20% / 40% / 45% (Scottish rates differ); no National Insurance on rental income | Corporation Tax 19% up to £50,000, 25% above £250,000, marginal relief between |
| SDLT on a purchase (England and NI) | Standard residential rates, plus the 5% higher-rates surcharge if you already own a home | Companies pay the 5% surcharge on every residential purchase; a 17% rate applies above £500,000 unless a relief (for example for a property rental business) is claimed |
| Moving existing properties into a company | - | SDLT on market value (FA 2003 s.53) and a CGT disposal at market value, unless s.162 relief applies |
| Gains on sale | CGT at 18% / 24%, with a £3,000 annual exempt amount | Gains taxed in the company at Corporation Tax rates; no annual exempt amount |
| Getting money out | Profit is yours once taxed | Dividends taxed at 10.75% / 35.75% / 39.35% above the £500 dividend allowance |
| Pension contributions | Rental income is not relevant earnings, so relief is limited to other earnings (or £2,880 net if none) | A company contribution for a director may be deductible if wholly and exclusively for the business, with no NI |
| Annual tax on enveloped dwellings | Not applicable | ATED can apply to company-owned dwellings valued over £500,000; reliefs, including for property rental businesses, are claimed on a return |
Corporate SDLT per HMRC - SDLT: corporate bodies; BADR trading-company condition per GOV.UK.
Related guides
- UK Section 24 Mortgage Interest 2026/27 - detailed worked examples.
- UK Landlord Rental Income Tax 2026/27 - rental tax fundamentals.
- UK Limited Company MVL Closure 2026/27 - exit mechanics.
- UK Property Income 2027 Reform - separate rates from 2027.
- UK Sole Trader vs Limited Guide - parallel decision for non-property.
Frequently asked questions
What is Section 24 and why does it matter?
Section 24 of Finance (No. 2) Act 2015 inserted s.272A into ITTOIA 2005. Since 2020/21 individual landlords cannot deduct finance costs on residential lets; instead they get a tax reduction of 20% of the lower of the finance costs, the property profits and their adjusted total income above the Personal Allowance. Limited companies are not affected: they deduct interest in full. Commercial property is outside the restriction. Former furnished holiday lets have been inside it since 6 April 2025. A basic-rate landlord loses little directly, but because rent is no longer reduced by interest, taxable income rises and can move into the higher-rate band or affect income-based thresholds.
When does incorporation make sense?
There is no statutory threshold. It tends to be considered where a landlord pays higher-rate tax, has substantial residential mortgage interest, plans to keep and grow the portfolio, and can leave profits in the company. It tends not to pay where the upfront SDLT and CGT cannot be relieved, mortgages would need refinancing, the properties will be sold soon, or most of the profit is needed personally (because dividends are taxed again). Model your own numbers and take advice.
What does incorporating cost?
Three main items. (1) SDLT (England and NI; LBTT in Scotland and LTT in Wales): a company buying from a connected person pays on at least market value (FA 2003 s.53), and companies pay the 5% surcharge. On a £400,000 property that is £30,000 at 2026/27 rates. (2) Capital Gains Tax: moving properties to the company is a disposal at market value; incorporation relief under TCGA s.162 can postpone the gain if a business is transferred as a going concern with all its assets (other than cash) for shares, and from 6 April 2026 the relief must be claimed. (3) Finance: existing personal buy-to-let mortgages do not move to a company, so refinancing costs and rates need checking with lenders.
What is Section 162 incorporation relief?
TCGA 1992 s.162 postpones the gain when a person other than a company transfers a business as a going concern, with the whole of its assets (or all except cash), to a company wholly or partly in exchange for shares. The postponed gain reduces the base cost of the shares. Where part of the consideration is not shares, only part of the gain is postponed. Whether a letting activity is a "business" is a question of fact: the Upper Tribunal in Ramsay v HMRC [2013] UKUT 0226 (TCC) set out the factors HMRC now uses (CG65715). For transfers from 6 April 2026 a claim must be made, normally with the tax return, giving the details in CG65735.
How does company ownership compare on profit?
Worked example (England, 2026/27): £100,000 rent, £70,000 mortgage interest, no other income or costs. Personal: Income Tax after the Section 24 credit is £13,432, leaving £16,568. Company: profit £30,000 after interest; Corporation Tax at 19% is £5,700, leaving £24,300 in the company. If all of that were paid out as a dividend to a shareholder with no other income, the dividend tax would be £1,207, leaving £23,093. The result changes with other income, finance costs, running costs and how much is drawn, so run your own figures.
What about a Members' Voluntary Liquidation (MVL) exit?
In an MVL, distributions to shareholders are normally capital, taxed as a gain rather than as dividends. Business Asset Disposal Relief needs a trading company, and HMRC treats investment (including letting property) as non-trading, so a property investment company will not usually qualify: gains are then taxed at 18% or 24%. ITTOIA 2005 s.396B can treat a winding-up distribution as income where the shareholder has at least a 5% interest in a close company and, within two years, carries on a similar activity, with avoiding Income Tax as a main purpose. Take advice before liquidating.
What about family income shifting?
A company can have different share classes, and dividends paid to a spouse use their own allowances and bands. Example (England, 2026/27): £30,000 of dividends to a spouse earning £30,000 costs £5,604 in dividend tax; the same dividends to a spouse earning £80,000 cost £10,546. The settlements rules apply: a gift of shares to a spouse only escapes them if it is an outright gift carrying the right to the whole income and is not wholly or substantially a right to income (ITTOIA 2005 s.626), so non-voting dividend-only shares can be caught. Income from a settlement by a parent that is paid to their own minor child is generally taxed on the parent (ITTOIA 2005 s.629).
What is the furnished holiday let position in 2026?
The furnished holiday lettings regime was abolished from 6 April 2025 for Income Tax and CGT (1 April 2025 for Corporation Tax). Former holiday lets are now part of the ordinary property business: finance costs are restricted under Section 24, new spending gets replacement of domestic items relief instead of capital allowances (existing pools continue), BADR and other trading reliefs no longer apply, and the profits are no longer relevant earnings for pension relief. Where a qualifying holiday-let business ceased before abolition, BADR can still apply to a disposal within the normal three years after cessation. Incorporating removes Section 24 but does not by itself make s.162 relief available.