Buy-to-let through a limited company is popular because companies are not caught by the restriction on mortgage interest that individual landlords face. But there are costs on the way in and on the way out. Here is how a property company is taxed for 2026/27.
Written by James Whitfield · Last checked 19 October 2026 · Checked against 2026/27 HMRC rates · Editorial standards · Methodology
A company letting residential property pays corporation tax on its rental profit at 19% up to £50,000, with marginal relief up to £250,000 and 25% above. Unlike an individual landlord, it deducts mortgage interest in full; individuals only get a 20% tax reduction for finance costs.
Getting money out costs dividend tax of 10.75% to 39.35%, and buying residential property through a company carries a 5% Stamp Duty Land Tax surcharge. Letting to unconnected tenants means the company is not a close investment-holding company, so the 19% small profits rate is available.
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The company's rental profit is rent less allowable costs: mortgage interest, letting agent fees, repairs, insurance and accountancy. Corporation tax is then charged at the normal rates.1
The restriction on finance costs for residential landlords applies to individuals, not companies. An individual can no longer deduct mortgage interest from rental income; they get a tax reduction at the basic rate of 20% instead. Companies carrying on a property business are not affected.2
A close company whose business is making investments in land let commercially is not a close investment-holding company, so it can use the small profits rate and marginal relief. Letting to a person connected with the company (for example the director's family) is not commercial letting for this purpose.3
A higher-rate taxpayer with a £60,000 salary owns a buy-to-let flat producing £30,000 of rent a year, with £12,000 of mortgage interest and £4,000 of other costs. Compare holding it personally with holding it in a company for 2026/27 (England).
| Personally: rental profit before interest | £26,000.00 |
| Personally: income tax at 40% | £10,400.00 |
| Personally: less 20% credit on £12,000 interest | −£2,400.00 |
| Personally: cash kept after tax | £6,000.00 |
| Company: profit after interest and costs | £14,000.00 |
| Company: corporation tax at 19% | £2,660.00 |
| Company: profit after tax (if retained) | £11,340.00 |
| Company: dividend tax if all paid out (35.75%, £500 allowance) | £3,875.30 |
| Company route, all paid out as dividends | £7,464.70 |
In this example the company route leaves £1,464.70 more even after paying out every pound, and £5,340 more while profit stays in the company to repay debt or buy more property. The gap narrows for basic-rate landlords and for those with small mortgages, and the company has extra running costs (accounts, filing, a Company Tax Return) that are not included here.
Companies buying residential property in England and Northern Ireland pay a 5% Stamp Duty Land Tax surcharge on top of the standard rates. A flat 17% rate applies to residential property over £500,000 bought by certain companies, but relief is available where the property is used in a property rental business.4
The Annual Tax on Enveloped Dwellings applies to companies owning UK residential property worth more than £500,000. For 2026/27 the charge for a property worth £500,001 to £1 million is £4,600. Property rental businesses can claim relief, but they still have to file a Relief Declaration Return, due by 30 April for properties within the scope on 1 April.5
Transferring a property you already own to your own company is treated as a disposal at market value, so Capital Gains Tax can be due on any gain even though no cash changes hands, and the company pays SDLT on the market value. UK residential property gains must be reported and the tax paid within 60 days of completion.7 Run the numbers before transferring a portfolio.
For individuals in England, Wales and Northern Ireland, separate property income rates of 22%, 42% and 47% take effect from 6 April 2027.6 They do not apply to companies, which pay corporation tax, so the gap between personal and company ownership widens from 2027/28 for landlords who keep profit in the company.
Corporation tax on its rental profit: 19% up to £50,000, marginal relief between £50,000 and £250,000, and 25% above for 2026/27. Dividend tax is due when profit is paid out to shareholders.
Yes, in full. The restriction that limits individual landlords to a 20% tax reduction on finance costs does not apply to companies.
Yes, if it lets property commercially to unconnected tenants. Such a company is not a close investment-holding company, so the small profits rate and marginal relief apply.
Yes. Companies pay a 5% SDLT surcharge on residential purchases in England and Northern Ireland, and a 17% flat rate can apply above £500,000 unless a relief such as the property rental business relief applies.
No. The new 22%, 42% and 47% property rates from 6 April 2027 apply to individuals' property income. Companies continue to pay corporation tax.
The rates and rules on this page are drawn from the official UK government sources below, using the confirmed 2026/27 figures. Each link opens the relevant HMRC, GOV.UK or Companies House page in a new tab.
The limited company tax calculator turns this guidance into a concrete estimate for corporation tax, dividends and personal take-home, based on 2026/27 HMRC rates.