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Landlords face a tricky question in 2027: Should you keep your portfolio as it is, grow it, or start selling? This question is particularly relevant in 2027 because rental profits in England, Wales and Northern Ireland are set to be taxed at new property income tax rates of 24%, 44% and 49%.
This means who owns the property matters more than it has for several years. More specifically, it’s about whether you own it as an individual or via a limited company.
Incorporation isn’t automatically the best choice, though. A limited company could reduce tax on rental profits for some landlords and increase overall costs for others. There is no one-size-fits-all recommendation. Buying your next property through a company is also a very different decision from moving properties you already own.
In this blog, I’ll run through the latest changes and what they mean for landlords.
What is changing for landlords in April 2027?
From April 6th 2027, property income will be taxed at its own set of rates, separate from employment, pension or trading income. According to HMRC's policy paper published on 29 October 2026, the rates for individuals in England, Wales and Northern Ireland will be:
The 2025 Budget first announced these separate property rates, which are two percentage points above the main income tax rates. Then, in the 2026 Autumn Budget, a further two percentage points were added.
This change affects individual landlords, including those who own jointly with a spouse or partner. But it doesn’t change corporation tax on profits made by a property company.
What is happening to property allowance?
Small amounts of property income may be covered by the £1,000 property allowance. Above that level, landlords generally compare the allowance with deducting their actual allowable expenses, which is usually more valuable for a mortgaged buy-to-let.
Landlords owning property personally from 2027
First, let’s look at what happens when you own a rental property personally. In this scenario, the profit is added to your other income and taxed at the property rates listed above.
You can, of course, deduct allowable running costs like letting fees, repairs, insurance and other service charges.
Mortgage interest
Mortgage interest is different, however; under the residential finance-cost rules, it’s not deducted from profit. Instead, you receive a tax credit at the property's basic rate (24%), regardless of the rate you actually pay.
This means if you're a higher-rate taxpayer, you are only getting a reduction in relief from 44% to 24% on your mortgage interest, and from 49% to 24% if you are an additional rate taxpayer.
Mortgage capital repayments
Mortgage capital repayments are not a deductible expense under either ownership structure (personal or limited company)
Worked example for landlord with personal ownership
Let’s assume a landlord with £55,000 of employment income and two Sheffield properties, each let at £1,250 a month:
Because the landlord is already a higher-rate taxpayer, the £24,000 is taxed at 44%. The interest only earns relief at the basic rate. That gap is why taxable profit and cash retained can differ, and why highly mortgaged higher-rate landlords will likely feel the 2027 changes most.
The biggest advantages of personal property ownership
The main advantages of personal property ownership, compared with ownership through a company, are simplicity and access.
- The rental profit is yours to spend once income tax is paid and there are no company accounts or filings.
- Residential mortgages in personal names may also be cheaper.
- When it comes to selling the property, gains are subject to capital gains tax with an annual exempt amount available.
Owning property through a Limited Company in 2027
Limited companies pay corporation tax on profits; they do not pay income tax like landlords do with personal ownership.
The main rate is 25%, with a 19% small profits rate for profits up to £50,000 and marginal relief between £50,000 and £250,000. Those thresholds are shared between associated companies.
Using a dedicated property company (SPV)
Most limited company buy-to-let mortgage lenders require a special purpose vehicle (SPV): a company set up specifically to buy, hold and let property, rather than carry on an unrelated trade. Requirements vary.
We don’t recommend adding buy-to-let property to a pre-existing trading company. If company ownership is right for you, we recommend using a separate, dedicated property company rather than your existing trading business. Always make sure to discuss the structure with your accountant and mortgage broker before proceeding.
Finance costs
The key difference for mortgaged landlords is finance costs.
A company is not subject to the residential finance-cost restriction, so mortgage interest is generally deducted in full when working out taxable profit, subject to the normal rules on interest and borrowing.
Taxation of profits
Profit kept inside the limited company is taxed only once, leaving more to put towards deposits, repairs, or paying debts. For landlords focused on growth, this becomes a key advantage of the limited company structure.
Extracting cash from the property company
Cash extraction is where things become trickier. Unlike personal ownership, where income is personal and taxed accordingly, profits through the company reach you via salary, dividends, director’s loan repayments, or other remuneration methods.
Dividends are taxed again in your hands: 10.75% at the basic rate, 35.75% at the higher rate and 39.35% at the additional rate, after a £500 dividend allowance. This is why comparing personal income tax with corporation tax alone gives a misleading answer; the tax on extraction has to be included too.
Company running costs
Companies inherently cost money to run. If opting for a limited company structure, landlords will have to factor in annual accounts, a corporation tax return, Companies House filings and typically higher accountancy fees. Buy-to-let mortgages for companies have historically carried higher rates and arrangement fees, and lenders normally ask for personal guarantees from directors.
Limited Company vs Personal Ownership: Landlord cash flow comparison
In this highly mortgaged example, a company could leave the landlord more cash, even after the profit is paid out as a dividend. That advantage narrows once extra company running costs are included, and it reverses where there is little or no mortgage.
Assumptions: £55,000 employment income uses the personal allowance and basic-rate band; identical interest in both structures; finance-cost credit at 24% (to be confirmed); dividend rates unchanged in 2027/28; no extra company running costs; mortgage capital repayments ignored because they are not deductible in either structure.
Borrowing drives most of the difference. The scenarios below keep rent and running costs the same and change only the mortgage and the company's extra running costs. Company figures assume all profit is paid out as a dividend.
Company buy-to-let mortgages often carry higher interest rates than personal ones, which could narrow the company's advantage further. The £1,500 cost figure is illustrative; actual accounting and filing costs vary.
Buying vs transferring existing property
Buying a new property through a limited company is a relatively clean starting point, but moving a personal property you own into a company is different. Incorporating an existing portfolio is not tax-free, and a transfer to a company you control is normally treated as a sale at market value, which can trigger:
- Capital gains tax
- Stamp duty land tax
- Refinancing costs
Some reliefs can reduce these costs in certain situations, but they have strict conditions which HMRC scrutinises closely. Never assume they will apply. For many landlords, the up-front cost of transferring outweighs years of annual savings.
When might a Limited Company be right for a landlord?
A company tends to look stronger when several of these indicators apply together, but none of them is enough to reach a conclusion on its own.
A company could also be beneficial where several family members want to own the portfolio together. For this, shares can be issued in different classes and transferred gradually. Any flexibility needs careful drafting with appropriate advice.
When might personal ownership be best for a landlord?
We often find personal ownership is a better choice for a landlord with one property, little or no borrowing, and a need to spend the rental income.
In those cases, the finance-cost restriction matters less, and paying the profit out of a company adds a second layer of unwanted tax.
Personal ownership may also be good for landlords planning to sell within a few years. Company set-up and running costs will need time to be recovered, and selling property held in a company can mean corporation tax on the gain followed by further tax when the proceeds are extracted.
Where transferring an existing property would trigger a large capital gains tax or SDLT bill, staying put and buying any future properties through a company may be a sensible compromise. Many landlords end up with a mixed structure for exactly this reason.
Frequently asked questions for landlords
Is rental income taxed more heavily from April 2027?
Yes, for individual landlords in England, Wales and Northern Ireland. Property income will be taxed at 24%, 44% and 49%, two percentage points above the rates announced at Budget 2025, and 4% above the 2026/27 rates that you will pay this year. Landlords in Wales and Scotland should check the devolved position.
Can a company deduct mortgage interest?
Generally, yes. A company is not subject to the residential finance-cost restriction that limits individuals to a basic-rate tax credit, so interest is usually deductible from profit. Capital repayments are not deductible.
Can I transfer an existing rental property into my company?
You can, but it is usually treated as a sale at market value. That could create capital gains tax for you and stamp duty land tax for the company, as well as refinancing costs. Reliefs exist in limited circumstances and should not be assumed.
Is a limited company better if I want to reinvest the profit?
It could be. Profit retained in a company is taxed at corporation tax rates, which leaves more available for reinvestment than income tax at 44% or 49%. The benefit depends on borrowing levels, running costs and your long-term plans.
What happens when I take money out of the property company?
It is usually taxed again. Dividends are taxed at 10.75%, 35.75% or 39.35% after a £500 allowance, and salary carries income tax and National Insurance. Any comparison should include this extraction tax.
Sources
- HMRC: Income Tax – changes to tax rates for property and savings income (published 29 October 2026)
- HM Treasury: changes to tax rates for property, savings and dividend income (26 November 2025)
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