The short answer
From 6 April 2027, landlords who own property in their own name pay 24%, 44% or 49% income tax on rental profits, after the 28 October 2026 Budget. Limited companies aren't affected. They pay corporation tax at 19% to 25% and can deduct all their mortgage interest.
That makes a company look tempting. But moving a property you already own into a company counts as selling it to the company at market value, so it usually brings stamp duty and capital gains tax up front. In our worked example below, moving one £250,000 flat costs £31,080 to save between £1,304 and £4,600 a year.
For most landlords with a few properties, a company makes more sense for the next purchase than for the ones they already own. This guide is general information, not tax advice.
Key facts
-
Property income rates from 6 April 2027: 24% basic, 44% higher and 49% additional, for property owned personally in England, Wales and Northern Ireland. GOV.UK
-
Corporation tax: 19% on profits of £50,000 or less, 25% above £250,000, with marginal relief in between. GOV.UK
-
Taking money out of a company: dividends over the £500 allowance are taxed at 10.75%, 35.75% or 39.35% in 2026-27. GOV.UK
-
Capital gains tax on homes: 18% or 24%, after a £3,000 tax-free allowance. GOV.UK
-
Stamp duty: a company buying a home pays the higher rates for additional properties, 5% on top of the normal rates. GOV.UK
-
Incorporation relief now has to be claimed: for transfers from 6 April 2026, you claim it in your Self Assessment return for the year of the transfer. It no longer applies automatically. GOV.UK
What would a company save?
Take Priya, a higher-rate taxpayer with one flat in England. Her rent less allowable costs, before mortgage interest, is £20,000 a year, and her mortgage interest is £8,000.
In her own name, 2027-28: £20,000 at 44% is £8,800, less a £1,920 mortgage interest credit (24% of £8,000). Tax: £6,880.
In a company: the company deducts all £8,000 of interest, so its profit is £12,000. Corporation tax at 19% is £2,280.
- If she leaves the profit in the company (to pay down the mortgage or save for the next deposit), the tax is £2,280. That's £4,600 a year less.
- If she takes it all out as dividends, the £9,720 left after corporation tax is taxed at 35.75% after the £500 allowance: £3,296 more. Total £5,576, or £1,304 a year less.
The saving depends on whether she needs the rent to live on. Most landlords who rely on the income end up nearer the lower figure.
What does it cost to move it into a company?
Priya bought the flat for £180,000. It's now worth £250,000. Selling it to her own company means:
- Stamp duty for the company: £15,000 on £250,000 at the higher rates for additional properties. Check your own figure with the buy-to-let stamp duty calculator (choose "A limited company").
- Capital gains tax for Priya: a £70,000 gain, less the £3,000 allowance, at 24%. That's £16,080.
That's £31,080 before legal fees, mortgage fees and any early repayment charge on her current mortgage.
How long to win it back:
- About 7 years if she leaves the profit in the company (£31,080 ÷ £4,600).
- About 24 years if she takes it all out (£31,080 ÷ £1,304).
And the saving above assumes the same mortgage cost. Limited company buy-to-let mortgages often have higher rates and fees, and every extra £1,000 of interest a year eats into it. A company also has yearly accounts and a Companies House confirmation statement to file.
Can I avoid the stamp duty and capital gains tax?
Sometimes, but not usually with a small portfolio.
- Incorporation relief can put off the capital gains tax if you move a whole property business into a company in exchange for shares. Letting a few properties, especially through an agent, usually isn't enough. The courts have looked for a lot of hands-on work. From 6 April 2026 you have to claim the relief in your tax return; it no longer happens automatically.
- Stamp duty relief for partnerships exists, but the rules are complex and HMRC watches them closely.
Both need a specialist tax adviser, and many schemes sold to landlords have been challenged. Be wary of anyone promising a tax-free move.
When does a company make sense?
It tends to suit landlords who:
- pay higher or additional rate tax on their rental profits
- have large mortgages, so the full interest deduction matters
- reinvest the profit rather than live on it
- plan to buy more, because a new purchase in a company avoids the cost of moving an existing one
It rarely suits landlords who:
- pay basic rate tax (24% from April 2027 against 19% in a company, before dividend tax)
- have large gains built up in their current properties
- need the rent as income
- plan to sell within a few years
What about the next one I buy?
If you're buying another property anyway, buying it in a company costs the same in stamp duty as buying it personally: both pay the 5% higher rates. That's why many landlords keep what they own and buy new ones through a company.
Company buy-to-let mortgages are often priced higher, so run both versions through the buy-to-let mortgage calculator before you decide.
Wales and Scotland have their own property transaction taxes, and both can set their own property income rates, so the numbers above are for England and Northern Ireland.
What should landlords do now?
- Work out your profit before mortgage interest for each property, and your interest. Those are the two figures any comparison starts from.
- Check what you'd pay to move each one: today's value, what you paid, and the stamp duty at company rates.
- Decide what happens to the profit. Leaving it in a company and taking it out give very different answers.
- Talk to an accountant before you change anything. The new rates don't start until 6 April 2027, so there's time.
If your rent and costs are already in AskPortfoliq, ask "what was my rental profit for 2025-26?" on WhatsApp, Telegram or the web. It shows your profit before mortgage interest and your interest, property by property, so you can take real figures to your accountant.