Should I buy a buy-to-let personally or through a limited company (SPV)? Tax compared for 2026/27

In short: In 2026/27 mortgage interest gives an individual residential landlord only a 20% tax reduction (GOV.UK: finance costs). A company normally relieves qualifying interest under loan-relationship rules. Taxley prepares that company's return with micro-entity accounts for £39.95 and, live since 28 September 2026, files eligible Taxley-prepared accounts at Companies House once the return is paid and the accounts are finished.

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Key facts (checked on 21 October 2026)

Should I buy a buy-to-let personally or through a limited company?

Neither route suits every landlord. Personal ownership taxes 2026/27 rent through Income Tax, and mortgage interest gives only a 20% reduction. A company can set the interest against its profit and pay Corporation Tax, but dividend tax can apply when the cash comes out.

The personal owner pays Income Tax on the rent, and the cash is already theirs. Profit is rent less allowable costs, and interest on a dwelling loan is left out of that profit. A limited company that holds the property, often called a special purpose vehicle, pays Corporation Tax on its own profits. A shareholder may pay Income Tax when profits are paid as dividends. Company interest is a loan relationship, not a property-business expense (HMRC manual PIM2052). A sale is Capital Gains Tax for the individual and Corporation Tax on the company's gain. The company computation is in Corporation Tax for a property rental company.

How is rental profit taxed if I own the property personally in 2026/27?

For 2026/27, rental profit is charged at ordinary Income Tax rates. A higher-rate taxpayer in England, Wales or Northern Ireland pays 40% once income passes the basic-rate band. Property rates of 22%, 42% and 47% start in 2027/28 and do not apply to this year. Scottish bands are different.

The tax year runs from 6 April 2026 to 5 April 2027, and the standard Personal Allowance is £12,570. In England, Wales and Northern Ireland, 20% applies from £12,571 to £50,270, 40% from £50,271 to £125,140, and 45% above that (GOV.UK: Income Tax rates). The £1,000 property allowance cannot be claimed together with expenses (GOV.UK: rental income). From 6 April 2027, property income is charged at 22%, 42% and 47% (Finance Act 2026, section 7). The technical note applies those separate rates to England, Wales and Northern Ireland, while section 8 provides for Scottish and Welsh rate-setting for a tax year after 2026/27. Landlords may be eligible to pay voluntary National Insurance contributions (GOV.UK: landlord National Insurance); the worked example includes none.

How is mortgage interest treated for an individual landlord?

An individual cannot deduct interest on a residential letting loan from 2026/27 rental profit. The relief is a tax reduction at the 20% basic rate. It uses the lowest of the finance costs, the property profits and the income above the Personal Allowance, and it cannot create a repayment.

Section 272A blocks that deduction for 2020/21 and later years. Section 274A gives an individual a tax reduction where a relievable amount exists. The reduction is the basic-rate value of the lowest of the finance costs, including any brought forward, the property profits after losses, and income above the Personal Allowance, ignoring savings and dividends (GOV.UK: finance costs). For 2026/27 that rate is 20%. For an individual, PIM2052 multiplies unrelieved costs by the basic rate for the year, and company interest is not a property-business expense. Unused costs carry forward, and the reduction cannot create a repayment. From 2027/28 the reduction uses 22% (technical note).

How is a company's rental profit taxed in financial year 2026?

A UK company pays Corporation Tax on taxable total profits. For the year from 1 April 2026 the small profits rate is 19% up to £50,000 and the main rate is 25% over £250,000. Mortgage interest is a non-trading loan-relationship debit. That deficit can be set against the same period's profits.

The 25% main rate and 19% standard small profits rate for financial year 2026 are set by Finance Act 2025, sections 13 and 14. Marginal Relief applies between the limits, and a short period or associated companies reduce them (GOV.UK: Corporation Tax rates). The small profits rate applies only if the company is UK resident, is not a close investment-holding company, and augmented profits do not exceed the lower limit (section 18A). A close investment-holding company cannot claim Marginal Relief (GOV.UK: Marginal Relief). Investing in land let commercially is a permitted purpose, but section 18N excludes land let to a connected person or specified family connections (section 18N). A property business is not a trade, so the interest is a non-trading debit (HMRC manual CFM32030).

What tax is due if the company pays the profit out as a dividend?

A company cannot deduct a dividend, and it pays no Corporation Tax on the payment. The shareholder pays Income Tax above a £500 allowance. In 2026/27 the higher dividend rate is 35.75%. Profit left in the company is not charged to dividend tax that year.

The company pays no tax on a dividend, and it cannot count the dividend as a cost (GOV.UK: taking money out). It cannot pay out more than available profits from current and earlier years. From 6 April 2026 to 5 April 2027, the rates above the £500 allowance are 10.75%, 35.75% and 39.35% (GOV.UK: tax on dividends). Finance Act 2026, section 4 sets the ordinary rate at 10.75% and the upper rate at 35.75% for 2026/27 and later years. The additional rate of 39.35% is the rate on that GOV.UK table. The company-law steps are in how to pay a dividend.

How much Stamp Duty Land Tax does a buy-to-let purchase attract?

In England and Northern Ireland, higher rates apply from 1 April 2025: 5% on the first £125,000 and 7% on the next £125,000. A £250,000 purchase at those rates costs £15,000. A company pays the higher rates from £40,000. The 17% rate for certain companies applies only where the price is over £500,000.

Five per cent of £125,000 is £6,250 and 7% of the next £125,000 is £8,750 (GOV.UK: higher rates). An individual pays the higher rates when the purchase leaves more than one home worth £40,000 or more. An only home is charged at nil, then 2%, which is £2,500 on £250,000 (GOV.UK: residential rates). The company still pays £15,000. Where the price is more than £500,000, certain companies pay 17% instead, and rental-business relief is not automatic (GOV.UK: corporate bodies). The example assumes a UK-resident purchaser, so the non-resident 2% surcharge is not added. Scotland and Wales charge other land taxes, which are not calculated here (GOV.UK: Stamp Duty Land Tax).

Annual Tax on Enveloped Dwellings is a yearly charge where a company owns a UK dwelling valued at more than £500,000 (GOV.UK: ATED). A £250,000 flat is under that line, so there is no charge and no return. For 1 April 2026 to 31 March 2027, a dwelling worth more than £500,000 and up to £1 million is charged £4,600. A commercial let to a third party, not occupied or available to anyone connected with the owner, can reduce the charge to nil. A Relief Declaration Return is still required if the relief reduces the charge to nil (GOV.UK: ATED reliefs).

What tax is due when a buy-to-let is sold?

An individual pays Capital Gains Tax. From 6 April 2026 a higher-rate taxpayer pays 24% after any available £3,000 exempt amount. A UK resident must report and pay Capital Gains Tax due on UK residential property within 60 days of completion; no online report is needed if total gains are below the allowance. A company pays Corporation Tax on its gain.

This illustration uses a £20,000 gain after buying, selling and improvement costs, with no other gains or losses and the full exempt amount available. It is not a forecast. From 6 April 2026 a higher or additional rate taxpayer pays 24% (GOV.UK: Capital Gains Tax rates) after the £3,000 exempt amount (GOV.UK: Capital Gains Tax allowances). (£20,000 minus £3,000) times 24% is £4,080. A company pays Corporation Tax on the gain. Buying, selling and improvement costs can be deducted, and maintenance cannot (GOV.UK: company asset sales). Indexation applies only to an asset held before December 2017. Under the same company assumptions, if the gain and other profits stay at £50,000 or below, 19% of £20,000 is £3,800. See company chargeable gains.

What tax does one £250,000 flat produce in 2026/27?

Personal Income Tax on this flat is £3,600, so £1,400 is left. The company pays £950 if the profit stays in, or £2,219.13 if the £4,050 is paid out. Higher-rate stamp duty of £15,000 matches where the buyer already owns a home.

The flat is in England, and the purchaser is UK resident for SDLT. Rent is £15,000, interest is £8,000 and repairs, insurance or agent fees are £2,000, not the purchase or an improvement. The owner's other income is £50,270 in England, Wales or Northern Ireland, using the allowance and basic-rate band, so all this profit is at 40%. No finance costs are brought forward, so the reduction uses all £8,000. The company is UK resident, with no associated companies, and the 12-month period sits wholly in the year from 1 April 2026. The let is commercial and the tenants are not connected, so the 19% rate applies. No salary or National Insurance is included, and the £500 dividend allowance is unused.

Personal owner, Income Tax for 2026/27

Limited company, financial year 2026, then a dividend in 2026/27

£3,550 times 35.75% is £1,269.125, which rounds to £1,269.13. Cash left after personal tax is £5,000 minus £3,600, so £1,400. A shareholder who takes £4,050 keeps £4,050 minus £1,269.13, so £2,780.87. Against personal tax of £3,600, the bill is £2,650 lower if the profit stays in the company and £1,380.87 lower if it is all paid out. That gap is the £8,000 of interest set off, then 19% on the remaining £5,000. Dividend tax gives part of that saving back. In 2027/28 the same profit is £13,000 times 42% minus £8,000 times 22%, which is £3,700, not the 2026/27 bill.

When does owning personally tend to suit, and when does a company?

Personal ownership tends to suit someone who wants the rent this year, or who is buying an only home at standard stamp duty. A company tends to suit an unconnected commercial let where profit stays in the company and only Corporation Tax is paid now.

Personal ownership fits where the £1,400 is needed this year, or where the flat is an only home and standard stamp duty of £2,500 applies instead of £15,000. A company fits where the £4,050 stays in the company, the tenants are not connected, and interest is a large share of the rent. Paying the profit out narrows the tax to £2,219.13 against £3,600. A let to a connected person can remove the 19% rate. Moving an existing property to a connected company is a disposal at market value for Capital Gains Tax (HMRC manual CG14560), while SDLT may also use market value (GOV.UK: property transfers).

Can Taxley file a property company's CT600 and its accounts?

Taxley prepares and files a limited company's Company Tax Return from the rent, costs and mortgage interest. Live since 28 September 2026, it files eligible accounts prepared in Taxley at Companies House once the return is paid and the accounts are finished. It does not file the landlord's Self Assessment return, give tax advice or pay the Corporation Tax.

Taxley (taxley.co.uk), UK online software that prepares and files the Company Tax Return (CT600) with HMRC and the annual accounts with Companies House. The interest is kept out of the UK property profit and recorded as finance costs. The return goes to HMRC with the company's own Government Gateway login. Taxley does not save the password to the account or filing: it is held encrypted while the return is sent and deleted within three days if sending fails. The fee is £39.95 with micro-entity accounts or £129 with small-company accounts. Taxley does not file uploaded accounts at Companies House. VAT returns and personal Self Assessment are outside Taxley, and non-resident companies are not supported. See filing an SPV's accounts and CT600 with Taxley.

Frequently asked questions

Do the 22%, 42% and 47% property rates apply to rental profit in 2026/27?

No. Those rates apply for 2027/28, from 6 April 2027 (Finance Act 2026, section 7). In 2026/27 a higher-rate landlord in England, Wales or Northern Ireland pays 40% on rental profit. The finance-cost reduction for 2026/27 stays at the basic rate of 20%.

Does a company pay the higher SDLT rates on its only flat?

Yes, where the residential property costs £40,000 or more and is not held on a lease with more than 21 years left. An individual pays the higher rates only when the purchase leaves them with another such property. The 17% company rate applies only where the price is more than £500,000.

Does Annual Tax on Enveloped Dwellings apply to a £250,000 company flat?

No. ATED applies where a company owns a UK dwelling valued at more than £500,000. A £250,000 flat is under that line, so these facts produce no charge and no return. For 1 April 2026 to 31 March 2027 the first band, up to £1 million, is £4,600.

Is moving a personally owned flat into a company the same as buying on the market?

No. A transfer to a connected company is normally a market-value disposal for Capital Gains Tax (HMRC manual CG14560), and SDLT may use market value (GOV.UK: property transfers). The £250,000 example is a fresh market purchase, not a transfer.

Does Taxley file the landlord's personal Self Assessment for this rent?

No. Taxley prepares the limited company's Company Tax Return. Live since 28 September 2026, it files eligible accounts prepared in Taxley at Companies House once the return is paid and the accounts are finished. Rent in a personal name belongs on a Self Assessment return, which Taxley does not file.

General information, not personalised tax or accounting advice. Rates and rules checked on 21 October 2026.