16th February 2026
The surge in landlords incorporating isn't random — it's a direct response to tax changes, especially Section 24, which removed full mortgage‑interest relief for individual landlords. Limited companies are not affected in the same way, which is why incorporation has exploded in recent years.
Key Advantages of Using a Limited Company
1. Full Mortgage Interest Deductibility
For individuals:
You can no longer deduct mortgage interest from rental income.
Instead, you get only a 20% tax credit.
For companies:
Mortgage interest is treated as a business expense.
It is fully deductible before profit is calculated.
This is the single biggest driver behind the shift.
2. Lower Corporation Tax vs Higher‑Rate Income Tax
If you’re a higher‑rate or additional‑rate taxpayer, this matters.
Corporation tax is generally lower than 40% or 45% personal tax bands.
Profits inside a company are taxed at corporation tax rates, not personal income tax rates.
This can make a big difference for landlords with multiple properties or high gearing.
3. Ability to Retain Profits in the Company
If you don’t need to take all the rental income personally, you can:
Leave profits in the company
Use them to buy more properties
Pay less tax overall
This is a major advantage for portfolio growth.
4. More Flexible Tax Planning
A company allows:
Dividends (which can be more tax‑efficient)
Splitting shares with a spouse
Paying yourself a mix of salary and dividends
Passing shares to children more easily than transferring property
This flexibility simply doesn’t exist as a sole landlord.
5. Limited Liability Protection
The company is a separate legal entity.
Your personal assets are more protected if something goes wrong.
Useful for landlords with multiple tenants, HMOs, or higher‑risk properties.
6. Professional Image and Easier Scaling
Lenders increasingly offer specialist limited‑company buy‑to‑let mortgages.
Often easier to borrow at scale
Sometimes better suited to portfolio landlords
The number of buy‑to‑let companies has risen dramatically — over 390,000 in the UK — showing how mainstream this structure has become.
But There Are Downsides
1. Extra Paperwork and Regulation
You must deal with:
Annual accounts
Corporation tax returns
Confirmation statements
Director responsibilities
Separate business bank accounts
This is the "price of admission" for the tax benefits.
2. Higher Mortgage Rates (Sometimes)
Limited‑company mortgages can be:
Slightly more expensive
More restricted in choice
Though the gap has narrowed in recent years.
3. Costs of Running the Company
Expect:
Accountancy fees
Legal fees for setup
Potential costs if transferring existing properties (stamp duty, CGT)
4. Extracting Money Can Be Taxed
If you want to take profits out of the company, you may pay:
Dividend tax
Income tax (if you pay yourself a salary)
This is why incorporation works best for landlords who don’t need all the rental income personally.
Does It Actually Save Tax?
Yes — but only in the right circumstances.
It usually saves tax if:
You are a higher‑rate or additional‑rate taxpayer
You have mortgages
You plan to grow a portfolio
You don’t need to withdraw all profits personally
You want to reinvest profits into more properties
It may NOT save tax if:
You are a basic‑rate taxpayer
You own properties outright (no mortgage interest to deduct)
You need to take all profits out of the company
You only have one small rental property