Buy-to-Let: Limited Company vs Personal Name

Limited company buy-to-let has gone from a niche structure to the default choice for many new landlords — but it is not automatically the right answer. Buying personally is simpler and usually cheaper on rate; buying through a company is usually kinder on tax and often supports a larger loan. The right choice depends on your income tax band, your plans for the rent, and how big you want your portfolio to become.

If you are new to landlord lending, our guide to buy-to-let mortgage affordability explains how rental-based lending works in general. This guide focuses purely on the company-versus-personal question.

How the tax treatment differs

The single biggest driver of the limited company trend is how mortgage interest is taxed.

In your personal name, you cannot deduct mortgage interest from rental income before tax. Since April 2020, when the Section 24 changes were fully phased in, interest relief is restricted to a 20% basic-rate tax credit. A basic-rate taxpayer is broadly unaffected, but a higher-rate taxpayer pays 40% tax on rental profits calculated beforeinterest, then only gets 20% of the interest back. On a heavily mortgaged property, that can mean paying tax on a "profit" that barely exists in cash terms — in extreme cases, paying tax on a rental loss.

In a limited company, mortgage interest is a fully deductible business expense, exactly like any other cost. Profits are then subject to corporation tax — 19% at the small profits rate (up to £50,000 of profit), 25% at the main rate (above £250,000), with marginal relief in between. For most single-property or small-portfolio companies, the effective rate sits at or near 19%.

The catch is extraction. Corporation tax is not the end of the story if you want to spend the rent: taking money out via dividends or salary adds a second layer of personal tax on top. Landlords who reinvest profits inside the company to fund the next deposit get the full benefit of the structure; landlords who live off the rental income each month may find the combined tax bill is closer to — or worse than — the personal position.

One line worth repeating: this is general information, not tax advice. Your own numbers, other income and long-term plans matter enormously, so pair any structural decision with advice from an accountant.

Stress tests: why a company can often borrow more

Buy-to-let lending is sized on the rent, not your salary. Lenders apply an interest coverage ratio (ICR): the rent must cover the mortgage payment, calculated at a stressed interest rate, by a set margin.

Here is where the structure matters. Because of the Section 24 tax drag described above, personal-name applications from higher-rate taxpayers are typically stressed at 145% of the mortgage payment. Limited company applications — and basic-rate taxpayers — are typically stressed at 125%. With buy-to-let stress rates commonly around 5-5.5% at the time of writing, that 20-point ICR difference changes the maximum loan substantially on identical rent.

Stress rates, ICRs and the treatment of five-year fixed products all vary by lender, so the gap is wider with some lenders than others. You can model your own figures with our buy-to-let mortgage calculator.

SPVs, lenders, rates and personal guarantees

Almost all limited company buy-to-let lending is done through an SPV — a special purpose vehicle. That simply means a company set up to do nothing but hold property, registered at Companies House with property SIC codes (typically 68100, 68209 or 68320). Setting one up costs little and takes minutes online; lenders prefer SPVs over trading companies because the risk is clean and easy to assess.

The lender landscape splits roughly in two. Specialist lenders commonly active in limited company buy-to-let at the time of writing include Paragon, Kent Reliance, Precise, Fleet, Foundation and Landbay. Mainstream buy-to-let names such as BM Solutions and The Mortgage Works have historically focused on personal-name lending, though product ranges change regularly.

Expect to pay for the structure. Limited company rates are typically around 0.5-1% higher than equivalent personal-name products, arrangement fees are often larger (and sometimes percentage-based), and most lenders require personal guarantees from the directors — so the company structure does not put your personal assets fully out of reach if things go wrong. The tax saving has to be big enough to absorb those extra costs, which is precisely why higher-rate taxpayers tend to benefit and basic-rate taxpayers often do not.

Stamp duty and transferring existing properties

A common misconception is that buying through a company avoids the stamp duty surcharge. It does not. The additional-property surcharge — raised from 3% to 5% in October 2024 — applies whether you buy personally or through a company, and a company pays it even on its first purchase.

Moving existing personally held properties into a company is where costs really bite. HMRC treats the transfer as a disposal at market value, which means capital gains tax on any gain since you bought, plus stamp duty (including the 5% surcharge) for the company on the way in — and usually a new mortgage with new fees. For one or two properties, those costs typically swamp the future tax savings. For larger portfolios, incorporation relief can defer the CGT where there is a genuine property business, but the rules are complex and fact-specific: this is firmly accountant territory.

If you are keeping your current home and buying a rental — or converting your home to a rental while buying a new one — the mechanics are different again; see our guide to let-to-buy.

How to decide which structure suits you

There is no universal answer, but the decision usually turns on four questions:

1. What is your income tax band? Basic-rate taxpayers keep most of the benefit of personal ownership and avoid the higher company rates and fees. Higher and additional-rate taxpayers feel the full force of Section 24 personally, which is what makes the company case.

2. Will you reinvest the profits or live off them? Companies shine when profits stay inside the company to fund the next purchase. If you need the rent as monthly income, the extraction taxes erode the advantage.

3. How big will the portfolio get? One or two properties held personally is simple and cheap. A growing portfolio compounds the tax savings of a company — and the lower 125% ICR helps every subsequent purchase leverage further.

4. What about inheritance planning? Company shares can offer more flexibility for passing wealth on (for example through different share classes) than directly held property, which is a meaningful factor for some families.

As a rule of thumb: a basic-rate taxpayer with one or two rentals is often better off personally; a higher-rate taxpayer building a portfolio is often better off in a company. Either way, take accountant advice before committing — the wrong structure is expensive to unwind.

On the lending side, the picture is just as fragmented: stress rates, ICRs, minimum incomes and limited company appetite differ lender by lender. Checking your actual figures across the market shows you which structure unlocks the loan you need.

Frequently asked questions

Last updated: June 2026