Should I Move My Personal Buy-to-Let Property into a Limited Company?

This is one of the most common and important questions landlords ask today. There is no universal “yes” or “no” answer; the right decision depends entirely on your tax position, portfolio size, time horizon, and long-term objectives.

What matters most is whether the long-term tax benefits outweigh the upfront and ongoing costs and exactly how long it takes to reach that break-even point.

TL;DR (Quick Summary)

Moving a buy-to-let (BTL) property into a limited company can be tax-efficient for higher-rate taxpayers, primarily due to full mortgage interest deductibility and lower corporation tax rates. However, immediate costs like Stamp Duty Land Tax (SDLT) and Capital Gains Tax (CGT) mean it only makes sense if long-term savings recover these costs within a reasonable timeframe (typically 4–6 years).

Why Landlords Move BTL Properties into a Limited Company

The main driver is tax efficiency, particularly since the 2020 restriction on mortgage interest relief for personal owners.

• Personal Ownership: Rental profits are taxed at your marginal income tax rate (now reaching 42% or 47% for many landlords in 2026). Furthermore, mortgage interest relief is restricted to a 20% credit, which can result in paying tax on “profits” you never actually see.
• Limited Company Ownership: Mortgage interest is a fully deductible business expense. Profits are subject to Corporation Tax (currently 19%–25%), which is significantly lower than higher-rate personal tax. You also gain flexibility by retaining profits in the company or extracting them strategically via dividends or salary.

Experience Insight: In our experience modelling UK property scenarios, higher-rate taxpayers often reach a break-even point within four to six years, provided they reinvest profits or have a multi-property strategy.

The Upfront Costs: The Barrier to Entry

Transferring a property is treated by HMRC as a sale at market value. You must account for:

1. Stamp Duty Land Tax (SDLT)

The company must pay SDLT on the market value. As a corporate entity, the 3% additional property surcharge applies. For many, this is the largest immediate cash outlay.

2. Capital Gains Tax (CGT)

You are “selling” the asset to your company, which triggers CGT on the increase in value since you bought it.

• Reliefs: If you operate a genuine property business, Section 162 Incorporation Relief may allow you to defer this tax by rolling the gain into company shares.
• Previous Residence: If you lived in the property, Principal Private Residence (PPR) relief can reduce exposure.

3. Ongoing Compliance

Operating a company requires annual statutory accounts, Corporation Tax returns (CT600), and compliance with Making Tax Digital (MTD), which becomes mandatory for many landlords in April 2026.

Succession Planning & the April 2026 Changes

A limited company is an excellent vehicle for passing wealth using “alphabet shares.” However, landlords must be aware of the Inheritance Tax (IHT) reforms taking effect on 6 April 2026.

The 100% Business Property Relief (BPR) will be capped at £2.5 million per estate (transferable between spouses to £5 million). For large portfolios, any value above this threshold will attract a 20% effective IHT rate. Proactive planning before this deadline is essential.

Mortgage and Professional Advice

This is a specialist area where a “siloed” approach fails. A mortgage broker might find you a great rate, but an accountant might find that the tax on that specific structure is ruinous.

At WIS Mortgages, we coordinate directly with WIS Accountancy. This ensures that the mortgage feasibility, break-even timelines, and tax exposure are all modelled from the same data set.

Key Findings

• Tax Efficiency: Incorporation is a “long game” for higher-rate taxpayers.
• Upfront Costs: SDLT and CGT are the primary hurdles.
• MTD Readiness: Ensure your structure is compliant with the 2026 digital filing rules.
• Collaboration: You need a combined mortgage and tax strategy, not two separate ones.

FAQ

1. Is it always better to use a limited company?

No. If you are a basic-rate taxpayer or own only one property with a small mortgage, the administrative costs may outweigh the benefits.

2. Do I pay SDLT even if no money changes hands?

Yes. HMRC bases SDLT on the market value of the property at the time of transfer.

3. Can I avoid CGT?

You may be able to defer it using Incorporation Relief if you can prove you are running an active property business (typically involving 20+ hours of work per week).

4. Can a mortgage broker give me tax advice?

No. Under FCA and CIMA regulations, tax and mortgage advice must be provided by qualified professionals in their respective fields.

Disclaimer: Mortgage advice is provided by WIS Mortgages (FCA regulated). Tax advice is provided by WIS Accountancy (CIMA regulated). This article is for educational purposes and does not constitute personalised financial advice.