A record 66,587 buy-to-let limited companies were formed in 2025 as landlords reassessed how they structure their property portfolios.
However, tax advisers and mortgage experts warn that incorporation is not always the most cost-effective option, with some investors facing substantial upfront costs that can outweigh the potential benefits.
A key driver is the introduction of higher property income tax rates in April 2027. These will mean rental profits earned by unincorporated landlords will be taxed at rates of 22%, 42% and 47%, depending on income levels. At the same time, the rollout of Making Tax Digital for Income Tax is increasing reporting obligations for many landlords, adding another layer of administration.
The result is that more investors are exploring whether holding property through a limited company could offer a more efficient long-term structure.
The attraction is obvious
Since the introduction of Section 24, individual landlords can no longer deduct the full cost of mortgage interest from rental income before tax is calculated. Instead, they receive a basic-rate tax credit. Limited companies are not subject to the same restriction and can generally deduct mortgage interest and finance costs as a business expense before corporation tax is applied.
For landlords carrying significant borrowing, that difference can have a major impact on profitability. Corporation tax rates can also be lower than the personal tax rates paid by higher earners, and profits retained within a company can be reinvested into future property purchases rather than withdrawn immediately.
Increase in enquiries relating to limited company structures
Simon Thomas, Managing Director of Ridgefield Consulting, told London Daily News that his firm had seen a noticeable increase in enquiries relating to limited company structures and portfolio restructuring since details of the tax changes were announced.
He said: “As more landlords move into higher-rate tax bands, the ability to pay corporation tax at between 19% and 25% rather than personal property income tax rates of up to 47% is making incorporation increasingly attractive.”
43% of mortgaged buy-to-let purchases for Limited companies
The growing popularity of company ownership is also changing the mortgage market. Limited companies accounted for 43% of mortgaged buy-to-let purchases in March 2026, up from 35% in 2024 and just 7.5% in 2018, according to analysis by Paragon Bank.
As demand has grown, lenders have expanded their product ranges, making limited company borrowing more accessible than it once was. In many cases, investors can now borrow at up to 85% loan-to-value through a limited company, similar to personal-name buy-to-let borrowing.
However, incorporation is far from a guaranteed win.
“Whilst a limited company structure can offer tax efficiencies in certain circumstances, it is not a one-size-fits-all solution,” Thomas warned. “A company is a separate legal entity with its own tax treatment and ongoing responsibilities, and moving personally held property into a company structure can trigger high costs, including Stamp Duty Land Tax, Capital Gains Tax considerations and remortgaging fees.”
Those costs can be significant. Transferring an existing property into a company is generally treated as a sale for tax purposes, potentially triggering both Capital Gains Tax and Stamp Duty liabilities. Existing mortgages may also need to be refinanced onto limited company products, while legal and professional fees can quickly add up.
Practical considerations
There are also practical considerations. Most lenders prefer properties to be held within special purpose vehicle (SPV) companies created solely for property investment, and directors are usually required to provide personal guarantees. Mortgage rates are often slightly higher than equivalent personal buy-to-let products, although the gap has narrowed considerably in recent years.
That does not mean incorporation is the wrong choice. For higher-rate taxpayers, landlords with larger portfolios and investors planning to reinvest profits into future acquisitions, a company structure can offer meaningful long-term advantages. Equally, landlords with one or two properties, limited borrowing or plans to draw most of their rental income each year may find the additional costs and administration outweigh the benefits.
Proactive planning is key
“Proactive planning is key,” Thomas said. “In many cases, incorporation may be appropriate, but equally, there are alternative approaches that may be more suitable depending on individual circumstances.”
The key question for investors is not whether incorporation works, but whether it works for their particular circumstances.
