26 June 2026
Should I Put My Rental Properties into a Limited Company?
This is a question many landlords are now asking, particularly as tax rules for rental income have become less favourable for individual property owners. Changes such as the restriction of mortgage interest relief have significantly increased tax bills for some landlords, prompting a reassessment of how property portfolios are structured.
For some landlords, holding property through a limited company can offer tax and long‑term planning advantages. For others, it may introduce unnecessary cost, complexity, and administration. Understanding if incorporation is right for you depends on your personal tax position, funding arrangements, and long‑term property goals. we have aimed. In this article, we have aimed to answer the key questions landlords commonly ask when considering if incorporation is the right move for their rental properties.
Why Consider a Limited Company?
When rental properties are held within a limited company, the company becomes the legal owner and rental profits are taxed under corporation tax rules rather than personal income tax.
Corporation tax is currently charged at 19%, increasing up to 25% depending on profit levels. For higher‑rate taxpayers who would otherwise pay income tax at 40% (or more when combined with the loss of personal allowances), this can result in a significantly lower effective tax rate particularly where profits are retained within the company to support future investment.
Can a Limited Company Still Offset Mortgage Interest?
One of the most significant changes affecting private landlords has been the restriction of mortgage interest relief under Section 24 of the Finance Act 2015. Individual landlords can no longer fully deduct mortgage interest from rental income; instead, they receive a basic rate tax credit.
Limited companies are not affected by Section 24. They can continue to deduct 100% of mortgage interest as a legitimate business expense. For landlords with significant borrowing, this remains one of the strongest arguments in favour of incorporation.
Do Limited Companies Pay Stamp Duty?
Yes. Stamp Duty Land Tax, including the 5% surcharge for additional properties, applies if a property is purchased personally or via a limited company.
Transferring personally owned properties into a company is treated as a sale to a separate legal entity. This usually triggers:
- Stamp Duty Land Tax – charged on the current market value, and
- Capital Gains Tax – based on any increase in value since purchase.
As a result, incorporation can involve substantial upfront tax costs. Incorporation Relief may be available in limited circumstances, but strict conditions must be met and professional advice is essential.
Benefits of Using a Limited Company
Corporation Tax Efficiency
Rental profits are taxed at corporation tax rates of between 19% and 25%, which can be significantly lower than higher‑rate income tax.
Full Mortgage Interest Relief
Limited companies can deduct 100% of mortgage interest, improving overall tax efficiency compared to individual ownership.
Easier Portfolio Growth
Many landlords use a company structure to retain and reinvest profits, supporting long‑term portfolio growth.
Estate and Succession Planning Flexibility
Transferring shares in a company can be more flexible and, in some cases, more tax‑efficient than transferring property directly.
Limited Liability Protection
Operating through a company can help protect personal assets if the rental business encounters financial difficulty.
Drawbacks of Using a Limited Company
Setup and Transfer Costs
Transferring existing properties can trigger Capital Gains Tax and Stamp Duty Land Tax, along with legal and refinancing costs.
Higher Mortgage Rates
Limited company buy‑to‑let mortgages typically have higher interest rates and fewer lender options.
Accessing Profits
Profits belong to the company and must be extracted via salary or dividends, both of which have tax implications.
Ongoing Administration
Companies must file statutory accounts, corporation tax returns, and maintain full accounting records, increasing compliance requirements.
Is It Worth Setting Up a Limited Company?
Incorporation is becoming increasingly common, particularly among landlords who are higher‑rate taxpayers or who plan to expand their portfolio over time. In these cases, long‑term tax efficiency and reinvestment opportunities can outweigh the additional complexity and cost.
For landlords with one or two properties, modest borrowing, or a preference for simplicity, continuing to hold property personally may remain the most appropriate option.
A Practical Summary
Using a limited company for rental properties can improve tax efficiency and support long‑term growth, but it is not a one‑size‑fits‑all solution. While corporation tax rates and full mortgage interest relief can produce meaningful savings, these benefits must be weighed against upfront tax charges, higher borrowing costs, and increased administration. The right structure depends on your income level, portfolio size, funding arrangements, and future objectives.
Decision Checklist – Is a Limited Company Right for You?
A limited company may be suitable if most of the following apply:
- You are a higher‑rate taxpayer or approaching the £50,000 threshold
- You have significant mortgage interest and are impacted by Section 24
- You plan to reinvest profits and grow your property portfolio
- You are comfortable with additional reporting and compliance
- You want flexibility for estate or succession planning
Remaining a private landlord may be more appropriate if:
- You own one or two rental properties
- Your rental income is taxed at the basic rate
- You rely on rental profits personally
- You want to avoid transfer taxes and refinancing costs
Speak to a Professional
This article is intended as a general guide only and should not be relied upon as tax advice. Property tax rules are complex and subject to change, and the correct structure will depend on your individual circumstances.
Morrissey Chartered Accountants provide tailored advice to landlords and property investors. To discuss your options and ensure you are using the most appropriate and tax‑efficient structure, contact our team on 028 4461 7130.
