Guide · 7 min read
Limited company or your own name?
A company pays less tax on rental profit, but getting money out costs tax too, and running one costs money. Here's how the numbers compare.
In short
- A company deducts mortgage interest in full and pays corporation tax, from 19%. In your own name, Section 24 applies.
- But the profit belongs to the company. Taking it out as dividends costs more tax, and a company costs money to run.
- On our example deal, a basic-rate taxpayer keeps more owning personally. A higher-rate taxpayer keeps more through a company.
- A company tends to suit higher-rate taxpayers and people building a portfolio who'll leave the profit in to buy more. For a basic-rate taxpayer with one property, it rarely pays.
How each is taxed
In your own name
The rent, less running costs, is added to your other income and taxed at your income tax rates. Mortgage interest isn't taken off; you get a credit of 20% of it instead. Whatever's left after tax is yours to spend.
Through a limited company
The company takes off every cost, interest included, and pays corporation tax on the rest: 19% on profits up to £50,000, 25% above £250,000, and a rate in between for profits between the two. The money left is the company's, not yours.
To spend it, you usually pay yourself dividends. The first £500 a year is tax-free, then dividends are taxed at 10.75% in the basic rate band, 35.75% in the higher band and 39.35% in the additional band.
A worked example
The same £180,000 house let for £1,100 a month, with a 75% mortgage at 5%. We've allowed £1,200 a year for the company's accountant, filing and bank, and assumed the same mortgage rate both ways.
| Basic-rate landlord £30,000 salary | Higher-rate landlord £60,000 salary | |
|---|---|---|
| Own name | £2,978 | £883 |
| Company, profit kept in | £2,043 | £2,043 |
| Company, profit paid out as dividends | £1,877 | £1,491 |
| Basic-rate | Higher-rate | |
|---|---|---|
| Income tax, owning personally | £744 | £2,839 |
| Corporation tax, in a company | £479 | £479 |
| Dividend tax, if paid out | £166 | £552 |
| Stamp duty, either way | £10,100 | £10,100 |
For the basic-rate landlord, Section 24 costs little, so the company's running costs and dividend tax make it the worse choice. For the higher-rate landlord it's the other way round: the company keeps £1,160 a year more, or pays out £608 more after dividend tax. Stamp duty is the same here because a landlord who already owns a home pays the higher rates either way.
Your answer depends on your income, the size of the mortgage and how much profit you'd take out, so run your own numbers.
Beyond the tax bill
- Mortgages. Fewer lenders lend to companies, and rates and fees are often a little higher. Lenders usually want the directors to guarantee the loan personally.
- Running costs and paperwork. Yearly accounts, a confirmation statement and a corporation tax return, usually done by an accountant.
- Your money is tied up. Profit kept in the company can buy the next property, but every pound you take out is taxed again.
- Selling. A company pays corporation tax on a gain instead of capital gains tax, and you pay tax again to take the proceeds out.
- Stamp duty on dear homes. Above £500,000 a company can face a flat 17% rate unless it claims relief as a letting business. See Stamp duty on a buy-to-let.
If you already own property
Moving a property you own into a company counts as selling it to the company at its market value. The company pays stamp duty at the higher rates, and you may owe capital gains tax on the rise in value since you bought. Some reliefs exist for people running a genuine property business, but they have strict conditions. This is the point to pay for advice from an accountant who specialises in property.
Every figure on this page is worked out by the NestInsights calculator, using the tax rules in force on 10 October 2026. The rules were checked against GOV.UK and the Welsh Revenue Authority on 8 October 2026. This guide explains how the rules work; it isn't financial or tax advice, so check your own case with an accountant or adviser.