Buy to let through a limited company: your complete guide

A limited company buy-to-let mortgage is a loan designed for purchasing rental properties through a company structure rather than in your personal name. The limited company is named on the mortgage and listed as the property owner.

In practice, the company borrows the money and owns the property. Rental income goes to the company, and it pays corporation tax on profits rather than you paying income tax personally. When you want to access profits, you take them as dividends or salary, each with its own tax implications.

How it differs from a personal buy-to-let mortgage

With a personal buy-to-let mortgage, you own the property in your own name. Rental income counts as personal income and you pay income tax at your marginal rate (20%, 40%, or 45%). Since April 2020, you can no longer deduct mortgage interest from rental income before calculating tax.

With a limited company structure, the company owns the property and pays corporation tax on profits. Mortgage interest payments can be offset as business expenses. This is the key difference that makes incorporation attractive to many landlords.

Who uses limited company buy-to-let mortgages?

• Higher-rate taxpayers who would pay 40% or 45% income tax on rental profits personally, but only 19-25% corporation tax through a company
• Portfolio landlords building or expanding a portfolio of properties, who want to reinvest profits without triggering personal tax
• New investors starting fresh who want a tax-efficient structure from day one rather than transferring existing properties later
• Couples and families who want flexibility in how shares are owned and profits distributed

Around 75% of new rental property purchases in England and Wales now go into a limited company structure, according to Hamptons research.

The shift towards limited company ownership has been dramatic. Between the beginning of 2016 and the end of 2020, more companies were set up to hold buy-to-let properties than in the previous 50 years combined. This was driven by a specific tax change that fundamentally altered the economics of personal property ownership.

The Section 24 mortgage interest tax changes

Section 24 of the Finance Act 2015 changed how UK landlords are taxed on buy-to-let properties. Before these changes came into full effect in April 2020, individual landlords could deduct 100% of their mortgage interest from rental income before calculating tax.

Now, landlords receive a tax credit equal to 20% of their mortgage interest costs, regardless of their income tax band. Rental income is taxed before mortgage interest is taken into account. This hit higher-rate taxpayers hardest. Section 24 only affects individual landlords: if you own property through a limited company, you can still claim full mortgage interest relief.

Corporation tax versus income tax

For the 2025/26 tax year, Corporation Tax rates are: 19% for companies with taxable profits of £50,000 or less, and 25% for companies with taxable profits above £250,000. Companies with profits between £50,001 and £250,000 benefit from marginal relief, resulting in an effective rate between 19% and 25%.

Compare this to personal income tax rates of 20% (basic rate), 40% (higher rate), or 45% (additional rate). For a higher-rate taxpayer, the difference between paying 40% income tax and 19-25% corporation tax is significant.

A practical tax comparison

Consider a rental property generating £24,000 annual income with £7,000 in mortgage interest:

• Limited company: Corporation tax at 19% on £17,000 (£24,000 minus £7,000) gives a tax bill of £3,230, leaving £13,770 profit
• Higher-rate taxpayer (personal): Income tax at 40% on £24,000 equals £9,600, minus a 20% tax credit on £7,000 finance costs (£1,400), giving a tax bill of £8,200 and profit of just £8,800

That is a difference of nearly £5,000 in annual profit from a single property. Across a portfolio, these figures become very significant.

Before committing to a limited company structure, it is worth comparing the two main options side by side to understand the full picture.

When a limited company makes sense

• You are a higher-rate (40%) or additional-rate (45%) taxpayer who would pay significantly more income tax on rental profits
• You plan to grow your portfolio and want to reinvest rental profits without triggering personal tax
• You are buying new properties and can avoid the stamp duty and capital gains tax costs of transferring existing ones
• You have a long-term investment horizon and do not need to access all profits immediately
• You want flexibility in ownership for inheritance planning

When personal ownership makes more sense

• You are a basic-rate taxpayer and the corporation tax savings are minimal
• You own properties outright without mortgages, so Section 24 does not affect you
• You need regular access to rental income and would face dividend tax extracting it from a company
• You only have one or two properties and the admin costs outweigh the benefits
• You are planning to sell soon and want access to the personal capital gains tax allowance

Some landlords use a hybrid approach: keeping existing properties in their personal name while buying new ones through a company. This avoids transfer costs while gaining tax efficiency on new purchases.

A Special Purpose Vehicle (SPV) is a company set up solely to hold property and do nothing else. Unlike a trading company, an SPV exists purely to buy, hold, and let residential property. It has no employees other than directors, no other business activities, and very simple accounts.

Buy-to-let lenders offering mortgages to corporate vehicles mostly prefer SPVs because they are easier to understand and underwrite, and are perceived as lower risk. According to research, 63% of lenders now offer buy-to-let mortgages for limited companies, a proportion that continues to grow.

Setting up an SPV costs £12 through Companies House and takes just a few minutes online. The acceptable SIC codes for buy-to-let SPVs are:

• 68100: Buying and selling of own real estate
• 68209: Other letting and operating of own or leased real estate (most commonly used)
• 68320: Management of real estate on a fee or contract basis

SPVs are accepted from day one of being set up. You do not need any trading history to apply for a mortgage immediately after formation.

Can existing companies qualify?

If you already have a company and want to know whether it meets SPV criteria, lenders look for a SIC code related to letting property and no sign of revenue from activities other than letting. If the company has traded in another field in the past, some lenders will still lend provided this is historic, the SIC code is correct, and an accountant confirms the company will only let property going forward. However, using an existing trading company is more complicated, and you may face higher rates or fewer options.

Limited company buy-to-let mortgages have specific eligibility requirements that differ from personal mortgages. Understanding these before you apply will save time and avoid unnecessary credit searches.

Company structure requirements

The company must be set up as an SPV with a property-related SIC code (68100, 68209, or 68320). Partnerships and LLPs are not accepted, and companies must be registered in England, Wales, or Scotland.

Director and shareholder requirements

All directors and shareholders with a holding of more than 20%, or anyone classified as a person of significant control (PSC), must be party to the mortgage. The maximum number of applicants is two. Applicants must have a combined 75% of the shareholding and voting rights, and all applicants will need to provide a personal guarantee.

Personal guarantees

Almost all limited company buy-to-let mortgages require directors to provide personal guarantees. This means that if the lender repossesses a property with debt still outstanding, the guarantor is liable for the remaining balance. While the company owns the property, you are personally responsible if things go wrong. Independent legal advice is required before signing.

Income and affordability

Since SPVs are typically newly formed with no income history, lenders assess affordability based on the directors' personal income. Many lenders need to see two years of profitable accounts showing an income of £25,000 to £80,000 or more. Lenders use an Interest Coverage Ratio (ICR) to check whether rental income covers mortgage payments: 125% for limited company properties and 145% for personally owned properties.

Deposit requirements

The minimum deposit for a limited company buy-to-let mortgage is usually 15-20% of the property value, but most lenders require 25% for the most competitive rates. Properties with an EPC rating of A-C may qualify for a 20% minimum deposit, while D-E rated properties typically require 25%. Higher deposits unlock better rates and more lender options.

Limited company buy-to-let mortgages typically carry slightly higher interest rates and fees than personal buy-to-let mortgages, though the gap has narrowed as competition has increased. Some lenders now offer the same rates regardless of applicant type.

As of early 2026, typical limited company buy-to-let rates at 75% LTV with good credit are: 2-year fixed rates from around 5.5-6.5%, and 5-year fixed rates from around 5.2-6.0%. SPV mortgages are more complex and involve additional paperwork, so rates and fees tend to be 0.5-1% above standard mortgage rates.

Setup costs for a £300,000 property

Including a deposit of £75,000, you would need approximately £100,000 to complete the purchase.

Ongoing costs

Running a limited company involves ongoing costs that personal ownership does not:

• Accountancy fees: £300-£1,000 annually for preparing and filing accounts and Corporation Tax returns
• Confirmation statement: £13 annually to Companies House
• Business bank account: Some charge monthly fees of £5-£15, though free accounts exist

These costs are tax-deductible as company expenses, but they reduce your net return compared to personal ownership.

Advantages

• Tax efficiency for higher-rate taxpayers: Corporation tax at 19-25% is substantially lower than the 40-45% income tax rate that higher earners pay on rental profits
• Full mortgage interest relief: Unlike individual landlords who lost full relief under Section 24, limited companies can deduct mortgage interest as a business expense
• Profit retention for reinvestment: Profits can stay in the company to fund further property purchases without triggering personal tax
• Succession planning: Company shares can be transferred to family members more easily than property ownership, which can help with inheritance tax planning
• Portfolio growth: Many lenders view incorporated landlords as more professional, which can help when building larger portfolios

Disadvantages

• Higher mortgage rates and fees: Rates are typically 0.5-1% above standard mortgage rates, with higher arrangement fees
• Stamp duty on every purchase: Limited companies pay the standard rate plus the 5% surcharge on every purchase, with no first-property exemption
• Extracting profits triggers additional tax: Dividend tax at 8.75%, 33.75%, or 39.35% applies when taking money out, which can erode the corporation tax advantage
• Administrative costs: Company formation, annual accountancy fees of £300-£1,000, and Companies House filing obligations add up
• No personal CGT allowance: Individuals get an annual Capital Gains Tax allowance of £3,000, but companies do not
• Transfer costs for existing properties: Moving personally owned properties into a company triggers stamp duty at market value plus potential capital gains tax, making it uneconomic for many landlords

Several common mistakes can cost landlords time and money when setting up a limited company buy-to-let structure.

• Choosing the wrong SIC code: If your company is registered under a non-property SIC code, your options are restricted to fewer specialist lenders at higher rates. Always use a property-related code (68209, 68100, or 68320) when setting up your SPV.
• Misunderstanding the personal guarantee: Limited liability does not fully protect you from losses. With buy-to-let mortgages, you are required to personally guarantee the debt. If the lender repossesses a property with outstanding debt, the guarantor is liable for the remaining balance.
• Underestimating extraction costs: Calculating the corporation tax saving is straightforward, but taking money out of the company triggers dividend tax. If you need all rental income for living expenses, the combined corporation tax plus dividend tax may exceed what you would pay with personal ownership.
• Applying directly instead of using a broker: Limited company buy-to-let is a specialist area. Not all lenders offer these products, and some only work through intermediaries. A specialist broker can save money and access lenders you would not reach directly.
• Rushing to incorporate without advice: The decision to use a limited company affects your tax position for years and is not easily reversed. Professional tax advice (typically £300-£500 for a consultation) is minimal compared to making a costly structural decision.