Buy-to-Let Mortgages Through a Limited Company in 2026: SPVs, Tax and a Worked Comparison

More landlords now buy rental property through a limited company than in their own names, mostly because of how mortgage interest is taxed. This guide is for UK investors weighing up a buy-to-let limited company in 2026, whether you're buying your first rental or growing a portfolio. It covers how the company is set up, which SIC code to use, how lenders assess company mortgages, the tax on the way in (SDLT), while you hold (Corporation Tax and ATED) and on the way out (dividends), with a worked £ comparison against owning personally.

Quick answer

A buy-to-let limited company (often called an SPV, or special purpose vehicle) is a company set up only to own rental property. It can deduct all its mortgage interest and pays Corporation Tax at 19%–25%, while individual landlords get only a 20% tax credit on interest under section 24. In exchange, you pay the 5% SDLT surcharge on every purchase, dividend tax when you take money out, and usually a higher mortgage rate.

• Use SIC code 68209 (letting own property) — lenders prefer a company that does nothing else

• Lenders stress-test rent against interest at a minimum 5.5% unless you fix for 5+ years; 125% cover is typical for companies

• Directors almost always give personal guarantees

• Separate property income rates of 22%/42%/47% for individuals from April 2027 widen the gap

• Moving properties you already own into a company can trigger Capital Gains Tax and SDLT

What a buy-to-let limited company is

A buy-to-let limited company is an ordinary private company limited by shares, registered at Companies House, whose only business is owning and letting residential property. Lenders and brokers call it a special purpose vehicle (SPV). The company buys the property, takes out the mortgage, signs the tenancy agreements and receives the rent. You own the company through your shares and usually run it as a director.

Because the company is a separate legal person, its profits are taxed under Corporation Tax rather than Income Tax. That's where the advantage comes from. But the money in the company isn't yours to spend freely. To get it out you pay yourself dividends, a salary, or repay money you've lent the company — each with its own tax treatment.

Most specialist lenders want the company to do nothing except hold property. A company that also runs a trading business, such as a building firm or a consultancy, is usually harder to borrow through. That's why landlords often create a new, clean company for property even if they already have a trading company.

Setting up an SPV: structure and SIC codes

You can set up a limited company online in a day or so. Companies House charges £100 for an online incorporation. Since 18 November 2025, new directors and people with significant control must verify their identity with Companies House. When you register, you choose the company's SIC codes, which describe what it does.

Keep the SIC codes to property. Adding unrelated codes can push a lender to treat the company as a trading business and decline it. You can change the codes later with your annual confirmation statement.

Shareholders. Lenders usually want every shareholder with a meaningful stake — often 20% or 25% or more — to be a director and give a personal guarantee. Spouses often hold shares jointly so that dividends can be split between two sets of allowances and tax bands. If you're thinking of giving shares to children or using different share classes, take advice first: it affects tax and lender appetite.

Holding company structures. Some portfolio landlords hold several SPVs under a holding company, or put a new SPV under an existing trading company. This can work, but lenders differ on what they accept, and a group structure affects Corporation Tax: the small profits limits are divided between associated companies. Keep it simple unless there's a clear reason not to.

Ongoing duties. The company must file annual accounts and a confirmation statement at Companies House, a Corporation Tax return with HMRC each year, and keep proper books. A limited company's Corporation Tax is due 9 months and 1 day after the end of the accounting period. Expect higher accountancy costs than for personal ownership, and budget for them in your yield calculations.

Section 24 vs Corporation Tax: why companies win on interest

Before April 2017, individual landlords could deduct mortgage interest from rent. Section 24 of the Finance (No. 2) Act 2015 phased that out. Since 2020 to 2021, individuals deduct no finance costs when working out their rental profit. Instead they get a tax reduction of 20% of the lower of their finance costs, their property profits or their income above the personal allowance.

For a basic-rate taxpayer that broadly works out the same as before. For higher and additional-rate taxpayers it doesn't: they pay 40% or 45% on rent that's partly spent on interest, and get only 20% back. Section 24 can also push people into a higher tax band, because rental profit looks bigger on paper.

Section 24 only applies to property businesses paying Income Tax. HMRC's Property Income Manual confirms that property businesses within Corporation Tax deduct interest under the loan relationship rules, so a company deducts all its mortgage interest and arrangement fees as normal costs.

Interest relief at a glance (2026)

20%

Tax credit on interest for individual landlords

section 24

100%

Interest deductible for a company

loan relationship rules

19%

Corporation Tax on profits up to £50,000

42%

Higher property income rate for individuals

from 6 April 2027

Companies pay Corporation Tax at 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief between. Those limits are shared between associated companies, so if you control a trading company too, each gets a smaller band.

One trap: a close investment-holding company pays the main rate on all its profits, with no small profits rate. A company that lets property to people who aren't connected with it is treated as having an excluded purpose (property investment), so a normal SPV letting to unrelated tenants isn't caught. Letting to family members or other connected people can change that.

From 6 April 2027, individuals in England, Wales and Northern Ireland will pay separate property income rates of 22%, 42% and 47% — two points higher than the main rates. Scotland and Wales can set their own property rates. The government's policy paper doesn't say whether the 20% finance-cost credit will change, so check the final rules. Either way, personal ownership gets more expensive, and companies don't face the change.

Worked comparison: personal vs limited company (2026)

Take a landlord earning a £60,000 salary, so already a higher-rate taxpayer. They own one rented house in England. These figures are illustrative.

One property, higher-rate landlord — 2026 to 2027

	Owned personally	Owned by SPV
Rent	£15,000	£15,000
Running costs (agent, repairs, insurance)	£2,000	£2,000
Extra company accountancy	—	£1,000
Mortgage interest	£8,000 (not deductible)	£8,000 (deductible)
Taxable profit	£13,000	£4,000
Tax before credit	£5,200 (40%)	£760 Corporation Tax (19%)
Section 24 credit	−£1,600 (20% of £8,000)	—
Tax	£3,600	£760
Cash left after tax	£1,400	£3,240 in the company

Rent

Owned personally

£15,000

Owned by SPV

£15,000

Running costs (agent, repairs, insurance)

Owned personally

£2,000

Owned by SPV

£2,000

Extra company accountancy

Owned personally

—

Owned by SPV

£1,000

Mortgage interest

Owned personally

£8,000 (not deductible)

Owned by SPV

£8,000 (deductible)

Taxable profit

Owned personally

£13,000

Owned by SPV

£4,000

Tax before credit

Owned personally

£5,200 (40%)

Owned by SPV

£760 Corporation Tax (19%)

Section 24 credit

Owned personally

−£1,600 (20% of £8,000)

Owned by SPV

—

Tax

Owned personally

£3,600

Owned by SPV

£760

Cash left after tax

Owned personally

£1,400

Owned by SPV

£3,240 in the company

Owned personally, the cash profit is £15,000 − £2,000 − £8,000 = £5,000, but tax is worked out on £13,000. At 40% that's £5,200, less the £1,600 credit: £3,600 of tax, leaving £1,400. That's an effective tax rate of 72% on the real cash profit.

In the company, profit is £4,000 after interest and the extra £1,000 of accounting fees. Corporation Tax at 19% is £760, leaving £3,240 inside the company. If the landlord leaves it there to fund the next deposit, the company wins by £1,840 a year.

If they take it all out as a dividend, the first £500 is covered by the dividend allowance (if they haven't used it elsewhere) and the rest is taxed at the higher dividend rate of 35.75%. That's (£3,240 − £500) × 35.75% = £980, leaving £2,260 in their pocket — still £860 more than owning personally.

From 2027 to 2028, the personal route gets worse: at a 42% property rate, tax on £13,000 is £5,460. If the credit stayed at 20%, the tax bill would be £3,860 and the landlord would keep £1,140.

The company route isn't always better. If the company's mortgage rate is 0.5 percentage points higher, interest on a £160,000 loan rises by £800 and the company's advantage shrinks. A basic-rate taxpayer gains little, because the 20% credit already matches their rate. A cash buyer with no mortgage gets no section 24 benefit at all, and pays two layers of tax — Corporation Tax and dividend tax — to get profits out. Use the rental yield calculator to test your own numbers.

SDLT and the 5% surcharge for companies

In England and Northern Ireland, a company pays the higher rates of Stamp Duty Land Tax on every residential purchase of £40,000 or more, even its first property. An individual buying their first-ever home to let wouldn't pay the surcharge — a company always does. The surcharge rose from 3% to 5% for completions on or after 31 October 2024.

Example: a company buys a £250,000 terraced house. SDLT is 5% of £125,000 (£6,250) plus 7% of £125,000 (£8,750) = £15,000. A first-time individual buyer of the same house as a rental, owning no other property, would pay £2,500.

For a single dwelling over £500,000, companies face a flat 17% rate on the whole price. Relief from that flat rate is available when the property is used in a genuine property rental business to unconnected tenants, so a normal SPV pays the higher rates above instead. The relief can be withdrawn if, within three years, a connected person lives there. Non-UK resident companies pay an extra 2% on top.

Scotland charges Land and Buildings Transaction Tax with its own Additional Dwelling Supplement, and Wales charges Land Transaction Tax with its own higher rates. Check the Revenue Scotland or Welsh Revenue Authority rates if you're buying there.

ATED: the annual charge on high-value company dwellings

The Annual Tax on Enveloped Dwellings applies to UK dwellings owned by a company and worth more than £500,000. For the 2026 to 2027 charging year, the lowest band (£500,001 to £1 million) is £4,600, up from £4,450. Properties owned since before 1 April 2022 are valued at that date for the current five-year period.

Most SPV landlords don't pay it, because properties let commercially to unconnected tenants qualify for property rental business relief. But relief isn't automatic: you must file a relief declaration return each year by 30 April for properties in scope on 1 April, or within 30 days of buying a property that comes into scope later. Missing the return leads to penalties even when no tax is due. If you or a relative live in the flat, relief is lost.

Getting a limited company buy-to-let mortgage

Limited company mortgages are offered mostly by specialist lenders and building societies, often through brokers. Lenders look at the property, the rent and you as a guarantor.

How a limited company buy-to-let mortgage usually works

1. 1

   Set up the SPV first

   Incorporate with a property SIC code such as 68209 and open a business bank account. Lenders want to lend to the company that will own the property.

2. 2

   Speak to a broker or specialist lender

   Expect to need a deposit of typically 25% (75% loan-to-value). Some lenders go higher or lower — confirm with the lender.

3. 3

   Pass the rental stress test

   Lenders check the expected rent covers the interest at a stressed rate. Many use 125% cover for companies.

4. 4

   Give personal guarantees

   Directors and main shareholders usually guarantee the loan personally, so you're still on the hook if the company can't pay.

5. 5

   Complete and register the charge

   The lender's charge over the property is registered at Companies House within 21 days of creation.

Stress tests and interest coverage

The Bank of England's Prudential Regulation Authority sets minimum underwriting standards in supervisory statement SS13/16. Lenders must check the rent covers the mortgage interest by a margin, called the interest coverage ratio (ICR). The PRA notes the industry standard minimum is 125%. Lenders must also allow for interest rates rising by at least 2 percentage points, and assume a rate of at least 5.5%, unless the rate is fixed for five years or more. Borrowers with four or more mortgaged buy-to-let properties are treated as portfolio landlords and face more detailed checks.

In practice, many lenders use 125% at around 5.5% for limited companies, and 145% for higher-rate individual borrowers, because companies aren't affected by section 24. That's a lender practice, not a rule — check each lender's criteria.

Example: to borrow £150,000 interest-only, a lender stressing at 5.5% would assume interest of £8,250 a year. At 125% cover, the rent must be at least £10,312.50 a year (about £859 a month). At 145% — common for higher-rate individuals — it would need to be £11,962.50 (about £997 a month). That difference is why companies can often borrow more against the same rent.

Limited company mortgage rates and fees are generally a little higher than personal buy-to-let rates, and the choice of lenders is narrower. Compare the total cost — including product fees, which can be a percentage of the loan — using the EMI calculator.

Taking profits out of the company

Money the company earns belongs to the company. You can take it out in four main ways:

• Dividends. Paid from profits after Corporation Tax. Each shareholder has a £500 allowance, then pays 10.75%, 35.75% or 39.35% depending on their tax band. See our guide to dividend tax.
• Repaying your director's loan. If you lent the company money for deposits — rather than buying shares — the company can repay it tax-free as cash builds up. Structure the deposit as a loan from the start and document it.
• Salary. Possible, but the company must run PAYE, and a property SPV with no real duties for a director can struggle to justify large salaries.
• Pension contributions. Company contributions to a director's pension can be deductible if they're wholly and exclusively for the business.

Avoid taking money out informally. If you take more than you've lent the company, you have an overdrawn director's loan account, which can trigger a 35.75% temporary tax charge on the company if not repaid within nine months of the year end.

Moving properties you already own into a company

Transferring an existing portfolio into a company is treated as a sale at market value. You may pay Capital Gains Tax on any gain — at 18% or 24% for residential property — and the company pays SDLT on the market value at the higher rates. You'll also need to redeem your personal mortgages and refinance in the company, often with early repayment charges.

Two reliefs are sometimes discussed. Incorporation relief can defer the gain when a whole business is transferred for shares, but HMRC and the courts have set a high bar for a letting activity to count as a business. SDLT partnership relief can apply to genuine partnerships. Both are complex and sometimes marketed aggressively. Get advice from a regulated tax adviser before acting on any scheme that promises to move a portfolio tax-free.

For most landlords, the practical route is to keep existing properties where they are and buy new ones in a company.

Common mistakes

Before you buy through a company

0/7

• Run the numbers at your actual tax band — a basic-rate taxpayer may gain little
• Use property-only SIC codes (68209, plus 68100 if needed)
• Lend your deposit to the company and record it as a director's loan
• Allow for the company SDLT surcharge on every purchase
• Budget for annual accounts, Corporation Tax return and confirmation statement
• Diary the ATED relief return if any property is worth over £500,000
• Check the lender's personal guarantee and shareholder requirements

Share Print

Using a trading company. Putting a rental into your consultancy or building company can block lending and mix risks. Use a separate SPV.

Paying yourself through the wrong route. Drawing cash without declaring a dividend or repaying a loan creates an overdrawn director's loan account and possibly a tax charge.

Forgetting the exit. If the company sells a property, it pays Corporation Tax on the gain, and you pay dividend tax to extract it. Selling the company's shares instead is possible but buyers and lenders can be wary.

Ignoring the Budget. Rates for property, dividends and Corporation Tax can change. The next Autumn Budget is on 28 October 2026. Re-run your comparison afterwards.

Official GOV.UK, HMRC and Bank of England links

• Section 24: how finance cost relief worksHMRC case studies
• SDLT: buying an additional residential propertyCompanies always pay the higher rates
• SDLT: corporate bodies17% rate and reliefs
• Annual Tax on Enveloped DwellingsCharges and reliefs
• Property, savings and dividend tax rate changes22%/42%/47% from April 2027
• Set up a limited companyCompanies House
• PRA SS13/16 buy-to-let underwritingStress test standards

What to do next

Work out your current and next-year tax band, then run the personal-versus-company comparison with your own rent, interest and costs. Check the yield with the rental yield calculator and the return on your deposit with the ROI calculator. If the company route wins, set up the limited company, open a bank account and speak to a broker before you make an offer. For a wider view of the trade-offs, read sole trader vs limited company.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

Is it worth buying a buy-to-let through a limited company?

It often is for higher-rate taxpayers with mortgages, because companies deduct all their mortgage interest and pay Corporation Tax at 19% on profits up to £50,000. Individuals only get a 20% tax credit on interest. But you pay dividend tax to take money out, company mortgages usually cost more, and moving existing properties in can trigger Capital Gains Tax and SDLT. Run the numbers for your situation.

What SIC code should a buy-to-let limited company use?

Most buy-to-let SPVs use 68209 'Other letting and operating of own or leased real estate'. Many add 68100 'Buying and selling of own real estate' if they may sell, or 68320 'Management of real estate on a fee or contract basis' if they manage for others. Lenders that specialise in SPV lending often expect to see 68209 or similar property codes and no unrelated trading.

Do limited companies pay the stamp duty surcharge on buy-to-let?

Yes. In England and Northern Ireland, a company pays the higher rates on every residential purchase of £40,000 or more, even its first. The surcharge has been 5% on top of standard rates since 31 October 2024. A £250,000 house costs £15,000 in SDLT for a company. Scotland and Wales have their own taxes and surcharges.

Does section 24 apply to limited companies?

No. Section 24 of the Finance (No. 2) Act 2015 restricts finance cost relief for landlords paying Income Tax — individuals and partnerships of individuals. Companies pay Corporation Tax and deduct mortgage interest in full under the loan relationship rules. That's the main reason landlords use limited companies for mortgaged property.

What stress test do lenders use for limited company buy-to-let?

Under Bank of England PRA rules, lenders test whether rent covers interest at a stressed rate of at least 5.5% for loans not fixed for five years, with an industry-standard interest coverage ratio of 125%. Many lenders apply 125% to limited companies but 145% to higher-rate individual borrowers. Criteria vary by lender and product.

Do I need to pay ATED on a buy-to-let company property?

Only if a dwelling is worth more than £500,000. Properties let commercially to unconnected tenants usually qualify for relief, but the company must still file a relief declaration return each year by 30 April. If a relative lives there or it's left empty without a rental plan, relief may not apply and the charge for 2026 to 2027 starts at £4,600.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Changes to tax relief for residential landlords: how it's worked out, including case studies — HMRC (GOV.UK) · accessed 9 October 2026
2. 2.PIM2052 — Residential property finance costs restriction — HMRC Property Income Manual · accessed 9 October 2026
3. 3.Stamp Duty Land Tax: corporate bodies — HMRC (GOV.UK) · accessed 9 October 2026
4. 4.Stamp Duty Land Tax: buying an additional residential property — HMRC (GOV.UK) · accessed 9 October 2026
5. 5.SDLT — increase to the higher rates on additional dwellings and the single rate for non-natural persons — HMRC policy paper (GOV.UK) · accessed 9 October 2026
6. 6.Stamp Duty Land Tax: residential property rates — GOV.UK · accessed 9 October 2026
7. 7.Annual Tax on Enveloped Dwellings: the basics — HMRC (GOV.UK) · accessed 9 October 2026
8. 8.Annual Tax on Enveloped Dwellings returns — HMRC (GOV.UK) · accessed 9 October 2026
9. 9.Income Tax: changes to tax rates for property, savings and dividend income — HMRC policy paper (GOV.UK) · accessed 9 October 2026
10. 10.CTM60730 — Close investment-holding companies: excluded purposes — HMRC Company Taxation Manual · accessed 9 October 2026
11. 11.Supervisory Statement SS13/16: Underwriting standards for buy-to-let mortgage contracts — Bank of England — Prudential Regulation Authority · accessed 9 October 2026
12. 12.Standard industrial classification of economic activities (SIC) — condensed list — Companies House (GOV.UK) · accessed 9 October 2026
13. 13.Tax on dividends — GOV.UK · accessed 9 October 2026