Incorporation and companies
Buying your next property in a limited company in 2026
Buying your next buy-to-let in a company in 2026: SDLT surcharges, the 17% rate, company mortgages, tax compared with 2027 personal rates, and extraction.
For many portfolio landlords, the next property won't be bought in their own name. Companies deduct mortgage interest in full, aren't affected by Section 24, and don't pay the new 22%, 42% and 47% property income rates that start in April 2027.
That doesn't make a company the right answer for everyone. This article covers what buying through a company costs in 2026: SDLT, mortgages, tax on profits, and getting money out.
Step 1: SDLT on a company purchase
In England and Northern Ireland, companies pay the higher rates on residential purchases: 5% above the standard rates, even on their first property.
| Price band | Higher rates (companies and additional dwellings) |
|---|---|
| Up to £125,000 | 5% |
| £125,001 to £250,000 | 7% |
| £250,001 to £925,000 | 10% |
| £925,001 to £1.5m | 15% |
| Above £1.5m | 17% |
For a landlord who already owns property, buying personally attracts the same surcharge. So on a £250,000 buy-to-let, SDLT is £15,000 either way.
The 17% rule above £500,000
A company buying a single dwelling for more than £500,000 pays a flat 17% of the price. Relief is available for a genuine property rental business, in which case the higher rates apply instead. On a £600,000 purchase:
- 17% flat rate: £102,000;
- higher rates with relief: £50,000.
The relief is withdrawn if, within three years, the conditions stop being met, for example if a connected person moves in. Properties over £500,000 also bring in ATED, with an annual Relief Declaration Return even where no tax is due.
Scotland and Wales
- Scotland: the 8% Additional Dwelling Supplement applies to most company purchases.
- Wales: companies always pay the Land Transaction Tax higher rates, from 5% to 17%.
Multiple dwellings relief was abolished from 1 June 2024. Use our SDLT calculator for a specific price.
Step 2: mortgages
Lenders treat company buy-to-let as a separate market. In practice:
- many prefer a special purpose company that only holds property;
- directors are usually asked for personal guarantees;
- rates and fees can be higher than personal products;
- some lenders restrict who can be a shareholder.
These are commercial questions, so involve your broker early. The ownership of the shares, which drives the tax, is easier to set at the start than to change later.
Step 3: tax on the rental profit
The illustration below compares £10,000 of rent after running costs, with £6,000 of mortgage interest, in 2027/28. It's an illustration, not a client example.
| Personal, higher rate | Company, all profit paid out to a higher-rate shareholder | Personal, basic rate | Company, paid out to a basic-rate shareholder | |
|---|---|---|---|---|
| Profit after interest | £4,000 | £4,000 | £4,000 | £4,000 |
| Income tax on £10,000 at 42% / 22% | £4,200 | – | £2,200 | – |
| Section 24 credit (22% × £6,000) | (£1,320) | – | (£1,320) | – |
| Corporation tax at 19% | – | £760 | – | £760 |
| Dividend tax on £3,240 (35.75% / 10.75%) | – | £1,158 | – | £348 |
| Total tax | £2,880 | £1,918 | £880 | £1,108 |
Two points stand out:
- Higher-rate landlords save about a third of the tax through a company, even when every pound is paid out. If profits are kept to fund the next deposit, the only tax is the £760 of corporation tax.
- Basic-rate landlords can pay more through a company if they draw all the profit, because dividend tax is added on top.
The dividend figures assume your £500 dividend allowance is already used elsewhere.
Corporation tax rates
Corporation tax is 19% on profits up to £50,000 and 25% above £250,000, with marginal relief between, for the year from 1 April 2026. The limits are shared between associated companies. A company letting to the owners or their family can lose the small profits rate as a close investment-holding company.
Step 4: getting money out
The tax advantage is largest on profits that stay in the company. When you need cash, the main routes are:
- Repaying your director's loan. If you lent the company the deposit, repayments are tax-free. This is usually the first source of cash.
- Interest on that loan. Deductible for the company; taxed on you as savings income, at 22%, 42% or 47% from April 2027. Paid net of 20% tax and reported on form CT61.
- Dividends. 10.75%, 35.75% or 39.35% above the £500 allowance.
- Salary. Only where you genuinely work in the company, and subject to National Insurance considerations.
See extracting profits from a property company for the detail.
Step 5: think about the end, too
- Selling a property: the company pays corporation tax on the gain, with no indexation for property bought after 2017. Getting the proceeds out is taxed again.
- Passing it on: shares in a property investment company generally don't qualify for Business Relief. But a company makes gradual succession easier, for example through growth shares or a Family Investment Company.
- Moving existing properties in later: that's a market-value disposal for CGT and SDLT. Incorporation relief only covers a whole business.
Who a company suits, and who it doesn't
A company tends to suit landlords who:
- are higher or additional-rate taxpayers, or will be once rental income grows;
- don't need the rental profit to live on, and plan to use it for deposits or to repay debt;
- expect to keep buying over several years, so set-up and running costs are spread;
- are thinking about passing value to children gradually.
It suits less well where:
- you're a basic-rate taxpayer who will draw every pound out;
- the purchase is a one-off and you'll sell within a few years;
- a connected person, such as a family member, will live in the property;
- you'd struggle to meet a lender's requirements for company borrowing.
Common misconceptions
- "Companies avoid the SDLT surcharge." They don't. Companies pay the higher rates on every residential purchase.
- "Company tax is always 19%." Only on profits up to £50,000, shared between associated companies, and not for a close investment-holding company.
- "I can take the profit out tax-free." Only by repaying money you've lent the company. Everything else is taxed.
- "I'll move my existing properties in later at no cost." That's a sale at market value for capital gains tax and SDLT.
A checklist before you buy
- Price, and whether the 17% rule or ATED applies.
- Who will own the shares, and in what classes.
- How the deposit is funded: loan, share capital or both.
- Whether you'll need the income or reinvest it.
- Lender requirements for the company.
- Your income in 2027/28, not just today.
- Whether this is the first of several purchases.
How we help
We set up the tax side of company purchases with your broker and solicitor: share ownership, funding, SDLT and extraction. Every plan is reviewed by a Chartered Tax Adviser, the work is on a fixed fee agreed upfront, and we respond the same working day. Read more on buying property through a limited company.
This article is general information, not advice. Tax rules change and their effect depends on your circumstances. Please speak to us before acting.
