Is a limited company finally worth it for landlords after Budget 2026?
In a nutshell: For some landlords, yes. From April 2027 rental income in your own name is taxed at 24%, 44% or 49%, while a company still pays Corporation Tax from 19% and deducts mortgage interest in full. A company tends to win if you’re a higher rate taxpayer and leave the profit in it to buy more, but taking money out means dividend tax, and moving properties you already own can cost a lot more than it saves.
The Budget announcements make it worth comparing personal ownership with a company using actual figures. The wider tax gap can favour a company, but your mortgage, other income and plans for withdrawing profits determine the outcome.
In this article:
- Does Budget 2026 make a company better for landlords?
- How is rental profit taxed in a company?
- What does it come to on real numbers?
- When does a company make sense?
- When is your own name still the better bet?
- What does it cost to move existing properties into a company?
- Should my next purchase go straight into an SPV?
- Limited companies after Budget 2026: frequently asked questions
Does Budget 2026 make a company better for landlords?
It makes a company relatively more attractive, because the rise only hits individuals and trusts. Whether it’s better for you depends on your band and what you do with the profit.
From 6 April 2027, property income in your own name will be taxed at 24%, 44% and 49%, up from 20%, 40% and 45% today, with the Section 24 credit on interest rising to 24%. These rates are due to be legislated in the Finance Bill 2026-27. I go through the full detail in Budget 2026: landlord tax rises to 24%, 44% and 49% from April 2027.
This measure does not change Corporation Tax rates; company and shareholder taxation still need to be assessed separately.
How is rental profit taxed in a company?
In two layers: Corporation Tax on the company’s profit, then dividend tax when you take money out for yourself.
Layer one, the company. Mortgage interest is a normal business cost, so there’s no Section 24. The company pays Corporation Tax at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between.
Corporation Tax qualification: the £50,000 and £250,000 limits assume a full accounting year and are reduced for associated companies. The 19% rate requires eligibility for the small profits rate; not every investment company qualifies.
Layer two, the UK resident shareholder. Dividends above the available £500 annual allowance are taxed at 10.75%, 35.75% or 39.35% in 2026/27 and, under the published Budget 2026 table, 2027/28. The allowance is shared across all dividend income and dividends still use tax bands. Different rules may apply to non-UK residents.
That second layer is the bit people forget when someone at a barbecue tells them a company only pays 19%.
What does it come to on real numbers?
If you leave the profit in the company, the company usually comes out well ahead. If you take it all out every year, the gap narrows, and for a basic rate taxpayer it can go the other way.
Calculation assumptions: the Personal Allowance is already used by other income, all income in each example falls within the stated band, finance cost relief is fully available, and losses or allowance withdrawals do not alter the result. These residential letting examples exclude Scottish taxpayers.
We also assume a UK tax resident shareholder, an unused £500 dividend allowance, a company eligible for the small profits rate, a full accounting year and no associated companies reducing the £50,000/£250,000 thresholds. Interest costs are equal in both structures. Retained profit shows funds available to reinvest inside the company before any later tax on extraction.
These are simplified examples for 2027/28. They assume the same mortgage rate either way, leave out the company’s running costs, assume your dividend allowance isn’t used elsewhere, and assume dividend rates stay at their 2026/27 levels. All income sits within one band.
Example 1: one property, rent £12,000, interest £6,000, other costs £1,000
| £ tax a year | Own name, 2026/27 | Own name, from April 2027 | Company, profit left in | Company, all paid out |
|---|---|---|---|---|
| Basic rate taxpayer | 1,000 | 1,200 | 950 | about 1,330 |
| Higher rate taxpayer | 3,200 | 3,400 | 950 | about 2,220 |
Where the figures come from:
- Own name from April 2027: £11,000 profit before interest at 24% is £2,640, less a 24% credit on £6,000 (£1,440), which leaves £1,200. At 44% it’s £4,840 less £1,440, so £3,400.
- Company: £12,000 less £6,000 less £1,000 leaves £5,000 of profit. Corporation Tax at 19% is £950, leaving £4,050.
- All paid out: £4,050 less the £500 allowance is £3,550. At 10.75% that’s about £380, at 35.75% about £1,270, plus the company’s £950.
So a basic rate taxpayer who takes everything out pays about £130 more through a company, before you even count the accountancy fees.
Example 2: higher rate taxpayer, £20,000 profit before interest, £10,000 interest
| £ tax a year | Own name, 2026/27 | Own name, from April 2027 | Company, profit left in | Company, all paid out |
|---|---|---|---|---|
| Higher rate taxpayer | 6,000 | 6,400 | 1,900 | about 4,620 |
In your own name: £20,000 at 44% is £8,800, less 24% of £10,000 (£2,400), which leaves £6,400. In a company: £10,000 of profit after interest, Corporation Tax at 19% is £1,900, leaving £8,100. Paid out, that’s £7,600 above the allowance at 35.75%, about £2,720, so roughly £4,620 in total. That’s around £1,780 a year less than in your own name, even taking everything out, and £4,500 less if it stays in the company.
When does a company make sense?
Mainly when you’re a higher rate taxpayer with a decent mortgage who plans to keep buying and doesn’t need the rent to live on.
From the clients I work with, a company tends to come out ahead when:
- your job or business already puts you in the higher or additional rate band,
- the mortgage interest is large compared with the rent,
- you want to keep the profit in the company and use it towards the next deposit,
- you’re buying new property rather than moving what you already own.
Retaining profit is the real engine here. Money left in the company has only paid 19% (or up to 25% on bigger profits), so you’ve got more to reinvest than you would after 44% or 49% in your own name.
When is your own name still the better bet?
When your income stays in the basic rate band, you want the profit out every year, or you’ve only got one or two properties with a small mortgage.
Dividend tax and administration can absorb much of the saving on a modest profit. A company requires annual accounts, a Corporation Tax return and a confirmation statement. Our property SPV accounts start from £500 a year plus VAT and Self Assessment from £180 plus VAT, depending on scope. A shareholder may still need Self Assessment. A full comparison must include additional costs, irrecoverable VAT and the tax relief available on allowable fees.
What does it cost to move existing properties into a company?
Potentially a lot. Moving a property you own into your company can trigger Capital Gains Tax and Stamp Duty Land Tax, plus new mortgage and legal costs.
What to price up before you decide:
- Capital Gains Tax. The transfer can trigger CGT on any growth in value since you bought.
- Stamp Duty Land Tax in England and Northern Ireland. A transfer to a connected company is generally assessed at market value. Companies normally pay the higher residential rates, including a five percentage point surcharge, even on a first purchase. For dwellings over £500,000, check the 17% corporate rate and property rental business relief. A 2% non-resident surcharge may also apply. Scotland and Wales have different transaction taxes.
- Refinancing. Your existing mortgage won’t usually move across, so you’re looking at a new company mortgage and possibly early repayment charges on the old one.
- Legal fees. Conveyancing for each property, plus advice on the structure.
- Incorporation relief can defer CGT; it does not automatically remove SDLT. It requires a qualifying business transferred as a going concern, all business assets other than optional cash, and consideration wholly or partly in newly issued shares. The number of properties alone does not establish eligibility.
The annual saving from Example 2 is around £1,780 to £4,500. If moving the property costs tens of thousands up front, it can take years to break even. Some landlords will still find it worth it. Many won’t. It has to be worked out individually.
Should my next purchase go straight into an SPV?
Often that’s the cleaner option: buy the new property in a company and leave the existing ones where they are.
Buying new property directly through a company avoids a later personal-to-company transfer and the potential CGT and transaction costs of that transfer. SDLT is still payable on the initial purchase. Individuals buying an additional dwelling and companies may both face the higher SDLT rates, but the result is not identical in every case. Compare mortgage rates, fees and guarantees before deciding. See Buy-to-let: limited company or personal name?
Run your own numbers first
No rule of thumb replaces your own figures.
Your other income, your mortgage, whether you need the rent to live on and your plans for the next five years all change the answer. That’s why I’d rather see your actual rent, interest and income than guess.
Limited companies after Budget 2026: frequently asked questions
Are limited companies affected by the 2027 rise?
No. The new 24%, 44% and 49% rates apply to individuals and trusts. A company still pays Corporation Tax at 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between.
Can I move my properties into a company without paying tax?
Not usually. A transfer can trigger Capital Gains Tax and Stamp Duty Land Tax. Incorporation relief can defer the CGT, but only where there’s a genuine property letting business. You need to work it out on your own properties.
Is a company buy-to-let mortgage more expensive?
Terms depend on the lender and borrower. Compare interest rates, product fees, early repayment charges and personal guarantees. The tax examples assume equal interest costs solely to isolate the tax comparison.
Does a company pay more stamp duty on a buy-to-let?
Often the higher SDLT rates apply to both a company and an individual buying an additional dwelling, but not in every case. A company normally pays higher residential rates on its first purchase too. The corporate 17% regime, rental business relief and non-resident surcharge may also need checking.
How do I get money out of a property company?
Profits are often withdrawn as dividends, subject to distributable reserves and the shareholder’s tax position. For a UK resident, the available £500 dividend allowance and the 10.75%, 35.75% or 39.35% rates apply. Repayment of a genuine loan made to the company is a separate transaction and is not automatically a dividend.
The key points
Budget 2026 widened the gap between your own name and a company, because only individuals face the 24%, 44% and 49% rates from April 2027. A company tends to win for higher rate landlords who keep the profit in it and buy new property through it. It often loses for basic rate landlords who take everything out, and moving existing properties can cost more than it saves. Whether it pays has to be worked out individually.
Wondering if a company would pay for you? Book a free 15 minute call with Marcin Udała ACMA. No obligation, by phone or video. Fill in the short form with your rent, interest and income, and we’ll tell you what’s worth working out. Rather pick up the phone? Call 0161 505 2712.
More about how we work with landlords: accountancy for property investors.
Sources and verification
- HMRC: Property and savings income rates announced in Budget 2026
- HM Treasury: Budget 2026 rates and allowances
- HMRC: Technical note on property income and finance cost relief
- HMRC: SDLT for corporate bodies
- HMRC: Incorporation relief conditions
- Corporation Tax Act 2010: Part 3A
This isn’t tax advice. The article is for general information only and reflects the Budget announcements as they stood when it was published. The new rates still need to be passed by Parliament. Decisions about how you hold your properties are best made on your own figures and paperwork.
Managing Director at Accountancy4You. A CIMA qualified accountant who lets property himself and works with landlords and businesses across the UK.