Not every landlord needs a limited company – Abbs
The rush into limited companies has become one of the defining stories of the buy-to-let (BTL) market.
Hamptons counted 66,587 new companies set up to hold rental property in 2025, 8% more than the year before, and by the end of the year, 443,272 were active across the UK – almost five times the number recorded in 2016.
Read those figures in isolation and you might conclude that any landlord still holding property in their own name has simply not caught up. That conclusion would be wrong, and it is worth explaining why.
Take a typical landlord we might see: someone in her late 50s, with two terraced houses bought in the early 2000s and only small mortgages remaining. Her rental income tops up a pension, rather than funding an empire, she has no plans to buy again, and she expects to sell within five years. On paper, she is exactly the sort of landlord who may feel under pressure to consider incorporation, yet moving her properties into a company could hand her an HMRC bill she never needed to pay. She is not behind the times; she has simply done the maths.
The pull towards a company can be strong, and for the right landlord, it is compelling. Since the mortgage interest changes took full effect, landlords who own personally can only claim a basic-rate credit on their finance costs, while a company deducts its interest in full before paying corporation tax at 19% for small profits or 25% at the main rate, with marginal relief between the two, rather than income tax that can reach 45%.
The squeeze on personal thresholds sharpens the point.
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Hamptons calculates that had allowances kept pace with inflation since they were frozen in April 2021, the personal allowance would now stand at £15,995 rather than £12,570, and higher-rate tax would begin at £63,968 rather than £50,270. Every year, the freeze pulls more landlords into the 40% band, and every year, the corporate route looks a little more attractive as a result. Paragon Bank found that 43% of mortgaged BTL purchases in 2025 went through a limited company, up from 35% the year before and from just 7.5% in 2018.
Yet the traffic is overwhelmingly in new purchases, not existing ones, and the reason is the cost of the journey. Transferring a property you already own into a company is treated as a disposal and a purchase, so capital gains tax can fall due on the way out and stamp duty land tax in England and Northern Ireland – now carrying a five-percentage-point higher-rate surcharge for additional/company residential purchases – on the way in.
Incorporation is not the best fit for everyone
Take a landlord who bought a semi-detached property in Nottingham for £90,000 20 years ago. The growth that makes the property such a success is precisely what makes it so expensive to move, and the combined bill can comfortably run into five figures before a single pound of tax saving arrives. For holdings like these, leaving well alone is not timidity but sound judgement.
There is also a large group of landlords for whom the company advantage was never really there.
A basic-rate taxpayer with modest income beyond their rents barely notices the interest restriction. A landlord with little or no debt has almost no interest to relieve, so the company’s headline benefit evaporates. Anyone approaching a sale or retirement would only bring forward a tax charge by restructuring now. And the double tax point matters more than the marketing suggests, because a company pays corporation tax on its profit and the owner pays again when the money comes out.
That second charge is about to bite harder, since dividend tax rose by two percentage points from April 2026, taking the ordinary rate to 10.75% and the upper rate to 35.75%. For a landlord who needs to live on their rental income rather than roll it up inside a company, the gap between the two structures is far narrower than the headline rates imply.
Personal ownership brings quieter comforts as well.
There are no business accounts to file, no corporation tax return, and no accountancy retainer eating into a modest profit. The eventual sale proceeds are yours directly, with your capital gains allowance intact, and in many cases, the choice of lenders remains broader, with underwriting that tends to be simpler and pricing that can be keener. For a landlord with one or two properties, those savings in cost and time can outweigh anything a company would deliver.
None of this is to pretend personal ownership comes without cost. The landlord taxed on property profit before finance costs, with only a basic-rate finance-cost credit, is in a tighter financial position, and it is about to become more so, because from April 2027, property income in England, Wales and Northern Ireland moves onto its own rates of 22%, 42% and 47%, in place of the standard 20%, 40%, and 45%, with finance cost relief given at 22%.
A higher earner building a mortgaged portfolio for the long term will usually find the company sums win, and win by more each year. The position will vary depending on personal circumstances and landlords should take independent tax advice before making structural changes.
Which is why, in practice, this is not a binary choice for many landlords. The pattern we see across our lending is a blend, with older, low-debt properties left in personal names where the gains are large and the savings small, and new purchases made through a company where the numbers clearly point that way. The properties carrying the biggest unrealised gains are usually the very ones best left untouched.
The incorporation boom is here, but the right structure depends on income, borrowing, the age and size of the holdings, and how long you intend to keep them, and the landlords who get it right are the ones who run their own numbers early and take proper tax and mortgage advice before committing either way.
