Whether you should rent your property through a limited company is a question that has genuinely changed its answer over the past decade. For most of the 2010s, the received wisdom was that personal ownership was simpler and usually more tax-efficient. Then Section 24 arrived — restricting mortgage interest relief for individual landlords — and the calculation shifted sharply for anyone borrowing to fund their portfolio.

We work with landlords at various stages: some with a single property, some building portfolios of ten or more. The structure question comes up constantly, and we've seen both sides of it play out in practice. The limited company route is not automatically better, and the costs and complications are real. But for the right landlord, the tax savings are substantial enough to be worth the additional overhead. What we want to do here is lay out the logic clearly, so you can approach the decision with the right framing rather than the wrong one.

The headline difference is straightforward. Rental profits earned personally are subject to Income Tax at your marginal rate — 40% if you're a higher-rate taxpayer, 45% at the additional rate. Rental profits earned inside a limited company are subject to Corporation Tax, which currently sits at 25% for profits above £50,000 and 19% for profits at or below the small profits threshold of £50,000.

For a landlord with meaningful net rental income, that rate differential matters. A portfolio generating £40,000 of net profit after allowable expenses costs a higher-rate taxpayer £16,000 in Income Tax personally. Inside a company paying the small profits rate, that same profit attracts £7,600 in Corporation Tax — a saving of £8,400 before you even factor in dividend strategy.

There is an important caveat here: that saving is only fully realised if you leave the profits inside the company rather than drawing them as salary or dividends. The moment you extract money, it becomes personal income and you pay personal tax on it. So the limited company structure is most advantageous when you are genuinely reinvesting profits — growing a portfolio, reducing mortgage debt inside the company, or building a cash reserve — rather than drawing everything out each year. If you need the rental income to fund your lifestyle, the efficiency gap narrows considerably.

Before the Section 24 rules were phased in between 2017 and 2020, individual landlords could deduct mortgage interest from rental income before calculating their tax bill. That made leveraged property investing relatively tax-efficient even for higher-rate taxpayers.

Under the current rules, individual landlords can no longer deduct mortgage interest as an expense. Instead, they receive a flat 20% tax credit on the interest paid. For a basic-rate taxpayer, this is roughly equivalent to the old position. For a higher-rate taxpayer, it is not — you are effectively paying 40% tax on profits calculated before interest, then receiving a 20% credit. In practice, this means some higher-rate landlords end up with tax bills that exceed their actual cash profit after interest payments.

Limited companies are not subject to Section 24. Mortgage interest remains a fully deductible business expense, which means the company calculates its taxable profit after deducting interest — exactly as individual landlords used to before the restriction. This is the single biggest structural reason why the limited company question has become so prominent, and it disproportionately benefits higher-rate taxpayers with significant mortgage debt on their properties.

If you own properties outright with no borrowing, Section 24 has no bearing on your position and the tax differential between personal and company ownership is smaller — though the Corporation Tax rate versus your Income Tax rate still applies to the net profit.

Every article on this topic correctly notes that limited companies involve more administration and cost. What the simpler versions of the comparison often understate is how those costs actually stack up in practice.

Accounting and compliance costs

A company requires annual statutory accounts filed at Companies House, a Corporation Tax return, and typically ongoing bookkeeping. These are not large costs, but they are real ones — and they sit on top of whatever personal tax work you were already doing. Budget realistically for this rather than assuming it is negligible.

Mortgage availability and rates

Buy-to-let mortgage products for limited companies have historically been more restrictive than personal buy-to-let products, and rates have often been marginally higher. The market has improved considerably as the limited company route has become more common, but you should stress-test the mortgage position for any properties you intend to hold or purchase in a company. Your mortgage broker needs to be in the conversation alongside your accountant.

No Capital Gains Tax annual exempt amount

Individuals benefit from a Capital Gains Tax annual exempt amount when they sell a property. Limited companies do not — they pay Corporation Tax on chargeable gains from property disposals. Depending on how long you hold the property and how the rules look when you come to sell, this can be a meaningful disadvantage.

Average gross buy-to-let rental yields across the UK were around 7.18% in Q4 2025, so for most landlords the rental income economics are workable — but the exit economics matter too, and that is where the company structure can create friction.

In our experience, the limited company structure tends to pay off most clearly when a landlord meets several of the following conditions simultaneously.

You are a higher-rate or additional-rate taxpayer. The Section 24 restriction bites hardest here, and the gap between Corporation Tax and your personal marginal rate is at its widest. Basic-rate taxpayers still have a case, but it is less compelling.

You carry significant mortgage debt against your portfolio. If interest payments are substantial relative to gross rents, the Section 24 restriction can create a genuinely absurd personal tax position. The company structure resolves it.

You are building a portfolio rather than drawing all income. The tax efficiency of a company is largely premised on profits accumulating inside it. If you intend to reinvest proceeds into further properties or reduce debt, the structure works. If you are drawing the income to live on, the efficiency erodes.

You are starting fresh rather than transferring existing properties. This is critical. If you are buying your first investment property, or adding new ones, the limited company route is straightforward. If you already hold properties personally and want to transfer them into a company, you are looking at a Stamp Duty Land Tax charge on the current market value of each property, plus a potential Capital Gains Tax liability on any gain since acquisition. That double tax hit frequently makes the transfer uneconomical unless specific reliefs apply — and they often do not.

This is the part of the conversation that tends to be glossed over in the simpler versions of this debate, and it is the part that matters most to landlords who already own property in their personal name.

When you transfer a property from personal ownership into a limited company, HMRC treats it as a disposal at market value. If the property has increased in value since you bought it, you pay Capital Gains Tax on that gain — at the rates applicable to residential property, which are currently 18% for basic-rate taxpayers and 24% for higher-rate taxpayers on residential gains. Simultaneously, the company pays Stamp Duty Land Tax on the acquisition at market value, using the buy-to-let surcharge rates.

On a property worth £350,000 with a historic gain of £100,000, the combination of these two charges could easily amount to £30,000 to £40,000 before you have generated a single pound of tax saving from the new structure. You would need to be confident that the ongoing Corporation Tax saving is large enough, and the holding period long enough, to recoup that cost.

For some landlords with large, highly leveraged portfolios and long investment horizons, the numbers do work. For others — particularly those with one or two properties who might sell within five to ten years — the transfer cost wipes out the structural advantage for many years into the future. This is a modelling exercise, not a rule of thumb, and it is exactly the kind of analysis we carry out with clients before they make any structural decision.