Guides · Buy-to-let
Limited company buy-to-let and the April 2027 property tax rise
From 6 April 2027, landlords who hold property in their own name pay new, higher property income tax rates. With a Budget on 28 October and more than 469,000 buy-to-let companies now registered in Britain, here is what the change means, who it affects, and what to check on the mortgage side if you buy or refinance through a company.
Avantigo Capital · October 2026
What is changing in April 2027
Property income received by individuals in England, Wales and Northern Ireland gets its own tax rates, each two points above standard income tax:
| Band | Standard income tax | Property income from April 2027 |
|---|---|---|
| Basic | 20% | 22% |
| Higher | 40% | 42% |
| Additional | 45% | 47% |
The tax credit individual landlords get for mortgage interest also moves up, to 22%. That softens the blow for heavily mortgaged landlords, but higher-rate taxpayers still only get relief at the basic rate on their interest, as they have since the Section 24 changes.
These rates apply to individuals. A limited company pays corporation tax on its rental profit and deducts mortgage interest in full as a business cost.
Why landlords keep moving into companies
Estate agent Hamptons counted more than 469,000 buy-to-let companies at the end of August 2026, and estimates that roughly three-quarters of new buy-to-let purchases now go through a company. Their research also shows the pace of new company formations easing, because much of the past boom was existing landlords transferring properties they already owned.
In other words: incorporation is now the normal route for new purchases, while transferring an existing portfolio is a more case-by-case decision.
A simple worked example
Illustrative only. A higher-rate taxpayer with one property: £20,000 rent after running costs, £12,000 of mortgage interest.
| Held personally (2027/28) | Held in a company | |
|---|---|---|
| Taxable profit | £20,000 (interest not deducted) | £8,000 (interest deducted) |
| Tax before interest credit | £8,400 at 42% | £1,520 at 19% corporation tax |
| Interest credit | −£2,640 (22% of £12,000) | n/a |
| Tax on the property | £5,760 | £1,520 while profit stays in the company |
The company figure is not the whole story. Taking money out as salary or dividends is taxed again, and dividend rates have also gone up. The company structure works best for landlords who are building a portfolio and leaving profits in to fund the next deposit. For someone who needs every pound of rent as income, the gap is much narrower.
Transferring existing property: the costs people miss
Moving a property you already own into a company is treated as a sale at market value. That can mean capital gains tax on the gain so far and stamp duty (including the surcharge for additional property) on the transfer, plus legal costs and a new mortgage. Some partnerships can qualify for relief, but that needs specialist tax advice, not guesswork. This is the main reason the transfer wave is slowing.
Limited company buy-to-let mortgages: what to check
- Structure. Most lenders want a special purpose vehicle (SPV): a company whose only business is holding property, typically with SIC codes 68100, 68209, 68320 or 68201.
- Personal guarantees. Directors are normally asked to guarantee the loan personally.
- Stress test. Lenders usually test rent at 125% of the interest cost at a notional rate, sometimes lower for five-year fixes. Higher rates in 2027 would make this tighter, so a five-year fix can unlock more borrowing.
- Pricing. Company rates are usually a little higher than personal ones, but lender choice in this market is now wide.
- Speed. If you're buying at auction or below market value, a bridge into the company followed by a term mortgage is a common route. See bridging finance.
Should you act before the Budget?
The April 2027 rates are already law in principle, whatever is said on 28 October. Speculation about further changes, such as aligning capital gains tax with income tax, is just that until announced. The sensible order is: speak to your accountant about structure, then line up the finance. We can give you indicative mortgage terms so your accountant is working with real numbers.
Talk it through
Planning a purchase, or refinancing a company portfolio before rates move? Send us the outline and we'll come back with realistic terms.
This guide is general information, not tax or financial advice; tax treatment depends on your circumstances and may change. Speak to a qualified accountant or tax adviser before changing how you hold property. Figures are illustrative and correct to the best of our knowledge in October 2026; sources include HM Treasury Budget 2025 measures, Hamptons research on buy-to-let company formations and published accountancy commentary. Avantigo Capital Ltd is not authorised or regulated by the Financial Conduct Authority and arranges only unregulated bridging loans, commercial mortgages and buy-to-let mortgages for limited companies and other corporate borrowers. Buy-to-let mortgages for individuals and consumer buy-to-let are referred, with your consent, to an FCA-authorised firm. Your property may be repossessed if you do not keep up repayments on a loan secured on it.