Limited company buy-to-let: when it actually pays

UK-wide. Stamp duty figures are SDLT (England and Northern Ireland); Scotland and Wales have their own equivalents with their own surcharges.

The core arithmetic

Same property both ways: £18,000 rent, £3,000 running costs, £6,000 mortgage interest, owner a higher-rate taxpayer.

	Owned personally	In a company, profit retained	In a company, profit drawn
Rent	£18,000	£18,000	£18,000
Running costs	−£3,000	−£3,000	−£3,000
Mortgage interest	Not deductible	−£6,000	−£6,000
Taxable profit	£15,000	£9,000	£9,000
Tax at 40% / corporation tax at 19%	−£6,000	−£1,710	−£1,710
Section 24 credit	+£1,200	—	—
Dividend tax on extraction	—	—	−£2,606
Left over	£4,200 in your hand	£7,290 in the company	£4,684 in your hand

That table is the whole argument. If you are reinvesting, the company keeps 73% more of the same rent working for you. If you need the money to live on, the advantage shrinks to something that a slightly worse mortgage rate could wipe out entirely.

What it costs to run

Cost	Reality
Corporation tax	19% on profits to £50,000, 25% above £250,000, with marginal relief between — producing an effective 26.5% on the slice in the middle.
Mortgage rates and fees	Limited company products typically price above personal buy-to-let, with a smaller lender pool and higher arrangement fees. This is the cost people most often leave out.
Personal guarantees	Almost every lender will require one. The limited liability is not as complete as the structure suggests.
Accountancy and filing	Annual accounts, a corporation tax return and a confirmation statement, every year, per company.
Extraction	Dividends are taxed again in your hands. Dividend rates rose two percentage points in April 2026.

Moving existing property in: the part that usually decides it

Transferring a property you own personally into your own company is a disposal at market value, even though no money changes hands and you own both sides.

• Capital gains tax on the gain, at 18% within your basic rate band and 24% above it, payable within 60 days of completion.
• Stamp duty paid by the company on the market value, including the 5% additional property surcharge.
• Early repayment charges on the existing mortgage, plus fees and legals on the new one.

The reliefs, and why they are not a shortcut

Two reliefs are commonly raised, and both are narrower than the marketing suggests.

Incorporation relief can defer the capital gains tax where an actual business is transferred as a going concern in exchange for shares. The critical word is business: HMRC and the tribunals look for substantial, regular activity, not passive ownership of a few lets. A landlord with two properties and an agent will not qualify.

Partnership stamp duty relief can reduce the SDLT where an existing genuine partnership incorporates. It requires a real partnership that existed and operated as one before the transfer, evidenced properly. Retrospectively declaring a partnership to access the relief is exactly the arrangement HMRC challenges.

Both are legitimate where the facts genuinely fit. Neither is a scheme you can bolt on, and both need specialist advice before you commit, not after.

Who it suits

Situation	Verdict
Higher-rate taxpayer, buying new property, building a portfolio, reinvesting profit	Usually yes. This is the case the structure is built for.
Higher-rate taxpayer, one or two properties, needs the income now	Marginal. The extraction tax and running costs eat most of the gain.
Basic-rate taxpayer	Usually no. Section 24 costs you little, so the main benefit does not apply.
Existing personally-held portfolio, no relief available	Usually no. The transfer cost is the answer, and it is normally decisive.
Planning to pass property to children	Worth advice. Shares can be gifted incrementally in a way a property cannot, which is a genuine advantage — but this is inheritance planning, not tax arbitrage.

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