Key Takeaways

• How you hold a buy to let property directly affects how much tax you pay on rental income and eventual profits.
• Since April 2020, higher rate taxpayers who own property personally have faced a significant restriction on mortgage interest relief — a change that has pushed many investors towards limited companies.
• Limited company mortgages tend to carry higher interest rates, but the gap has been narrowing and specialist products are becoming more accessible.
• A limited company structure is not automatically better, it depends on your tax position, portfolio size, and long term goals.
• Getting advice from both a mortgage broker and an accountant before you decide could save you a considerable amount of money.

It is one of the most common questions property investors ask in 2026, and for good reason. Should you buy your next buy to let in your own name, or through a limited company? The answer, frustratingly, is that it depends. But that is not a reason to avoid the question because getting this wrong can cost you far more in tax and fees than most people realise.

The good news is that once you understand what actually changes depending on how you hold property, the decision becomes much clearer. This guide walks you through the key differences so you can make an informed choice.  A qualified accountant and a specialist mortgage adviser can help you on this matter.

What the Question Is Really About

At its core, this decision comes down to two things: how much tax you pay on rental income and profits, and what mortgage products you can access. Everything else like the admin, the limited liability, the company structure are secondary for most property investors.

The structure you choose today will shape your tax position for years to come, and it is not always easy to change your mind once properties are in place. So it is worth thinking it through carefully before you commit.

The Tax Case for a Limited Company

Since April 2020, landlords who hold property in their personal name have been unable to deduct mortgage interest from their rental income before calculating tax. Under the mortgage interest relief restriction, commonly known as Section 24. You now receive only a 20% tax credit on your finance costs rather than a full deduction. For basic rate taxpayers, the practical impact is limited. For higher rate and additional rate taxpayers, it can be significant. 

Limited companies are not subject to Section 24. They can still deduct mortgage interest as a legitimate business expense, meaning rental profit is taxed at corporation tax rates rather than personal income tax rates. As of 2026, the main rate of corporation tax is 25%, with a small profits rate of 19% for companies with lower earnings. For a higher rate taxpayer paying 40% on personal income, that difference can add up considerably over time.

You can read exactly how HMRC applies the mortgage interest restriction, including worked examples, on the government’s website. However, do consult this with your tax advisor. 

The Mortgage Reality for Limited Companies

Here is where many investors get a surprise. While the tax argument for a limited company can look compelling on paper, the mortgage market has not fully caught up. Limited company mortgages, often arranged through what is known as a Special Purpose Vehicle, or SPV, tend to carry higher interest rates than equivalent personal mortgages, and the range of available products is narrower. 

Most lenders will also require a personal guarantee, which means the separation between you and the company offers less financial protection than it might appear. In practice, your personal finances are still on the line.

That said, the picture is improving. According to UK Finance, lender appetite in the limited company space has grown steadily, and rates have moved closer to personal mortgage equivalents. For investors building a larger portfolio over time, the tax savings can still outweigh the higher borrowing costs but that calculation needs to be modelled carefully for your specific circumstances, which is where specialist buy to let mortgage advice makes a real difference.

When Buying in Your Personal Name Still Makes Sense

A limited company is not the right answer for everyone. If you are a basic rate taxpayer, Section 24 affects you far less, and the additional complexity and running costs of a company structure may not justify the switch. Similarly, if you are buying your first investment property and plan to hold it for a relatively short period, keeping things in your personal name tends to be simpler and cheaper overall.

There is also the question of what you intend to do with the rental income. If you plan to draw it straight out to live on, you will pay personal income tax on any salary or dividend from the company anyway. The limited company structure is most powerful when you leave profits inside to reinvest, effectively using a lower tax rate to compound your returns over the long term.

If you are unsure which side of the line you fall on, speaking with an experienced mortgage adviser will help you see the actual numbers rather than relying on rules of thumb.

The Hidden Costs Investors Often Overlook

Setting up a limited company is straightforward, but running one carries ongoing costs that can eat into your returns. You will need an accountant to file annual accounts and a corporation tax return. This typically costs several hundred pounds a year as a minimum. Add Companies House filing obligations, potential payroll administration if you take a salary, and the legal costs on each purchase, and the overheads mount up faster than many investors anticipate.

One of the most expensive mistakes is assuming you can easily move existing personally held properties into a company later. In most cases, this is treated as a sale for Stamp Duty Land Tax purposes and may also trigger a Capital Gains Tax liability. The cost of restructuring later can be substantial, which is why getting the decision right at the point of purchase matters so much.

Conclusion

There is no single right answer to the limited company question, and anyone who says otherwise is oversimplifying. The structure that works best for you depends on your income, how many properties you own or plan to buy, what you need from the rental income now, and where you want to be in ten years.

What is clear is that the decision has lasting financial consequences. It is far easier and cheaper  to get it right at the start than to unpick it later. Taking the time to get proper advice from both a mortgage broker and an accountant who understands property investment is one of the most valuable things you can do before signing anything.

Everyone’s situation is different, and what works perfectly for one investor may be the wrong call for another. If you are thinking about whether a limited company is the right route for your next purchase, the team at Kingsgate Finance is here to help you work it out. Get in touch with us today for a straightforward conversation with one of our advisers. No obligation, No jargon, just honest guidance.

Frequently Asked Questions

Q1. Can I move my existing buy to let properties into a limited company?

You can, but in most cases it is treated as a sale, which can trigger Stamp Duty Land Tax and a Capital Gains Tax liability. It is rarely a straightforward or cheap process, so it is worth getting accountancy advice before exploring this route.

Q2. Do limited company mortgages have higher interest rates than personal mortgages?

Generally yes, though the gap has been narrowing. A specialist mortgage adviser can pull current rates across both options so you can compare them properly for your situation.

Q3. What is a Special Purpose Vehicle and do I need one?

An SPV is a limited company set up specifically to hold property, registered with the appropriate Companies House category code. Most buy to let lenders prefer or require this structure rather than a general trading company.

Q4. Does owning property through a limited company affect my personal credit profile?

Not directly, but most lenders will require a personal guarantee on a limited company mortgage, so your personal financial position is still assessed as part of the application.

Q5. Do I still need a personal tax return if my properties are in a company?

Yes. The company files its own corporation tax return, but as a director and shareholder you will need to complete a personal Self Assessment return to declare any salary or dividends you draw from the business.