Holding London Buy-to-Let in a Limited Company: 2026 Guide

The incorporation boom is reshaping the rental market

If you have looked at buying a rental property this year, you have almost certainly come across the term “SPV” — a special purpose vehicle, or limited company set up purely to hold property. It is no longer a niche structure reserved for large portfolios. Companies House records show a record number of buy-to-let companies were incorporated in 2025, taking the total on the register past 443,000 — almost five times the figure of a decade ago. At IREIS Properties we now field this question from London landlords almost every week.

The driver is tax. Under Section 24 of the Finance Act 2015 (fully phased in from 2020/21), individual landlords cannot deduct mortgage interest as a business expense; instead a 20% basic-rate tax credit is applied to finance costs, so higher-rate taxpayers receive less effective relief. A limited company is not caught by Section 24, which restores the ability to set the full interest bill against rental income. Consult a qualified UK tax adviser before acting on this.

How the tax maths actually works

Inside a company the mechanics change. Rent comes in, allowable costs — including 100% of mortgage interest — come off, and the profit that remains is charged to Corporation Tax rather than Income Tax. For the 2025/26 year the Corporation Tax rates are 19% on profits up to £50,000 and 25% above £250,000, with a tapered “marginal relief” band in between. For a higher-rate landlord used to paying 40% on rental profit, that gap is the headline attraction.

The catch is getting the money out. Profit left inside the company is taxed once; profit you draw as dividends is taxed again in your own hands. The structure therefore tends to favour landlords who are reinvesting rather than spending the income, or who are building a portfolio to pass on. This is exactly the kind of trade-off IREIS Properties walks clients through before they commit to a wrapper they may hold for decades.

The costs and trade-offs to weigh

A corporate structure is not free. Limited-company buy-to-let mortgages typically carry slightly higher rates and arrangement fees than personal lending, and lenders usually require personal guarantees from the directors. You will also have annual company accounts and a corporation tax return to file, which most landlords pay an accountant to handle.

Stamp duty is the same trap whether you buy personally or through a company: companies pay the higher rates for additional dwellings on residential purchases, so model the cost up front with our UK Stamp Duty Calculator rather than guessing at a figure. Moving an existing personally-owned property into a company is a sale at market value, which can crystallise Capital Gains Tax — for 2025/26, residential property gains are taxed at 18% or 24% depending on your income band — alongside a fresh stamp duty charge. Rates are subject to change; consult a qualified UK tax adviser. For most landlords incorporation makes more sense on the next purchase than on retro-fitting the last one.

Is an SPV right for you?

There is no universal answer. As a rough guide, the company route tends to reward higher-rate taxpayers, geared portfolios where mortgage interest is a large slice of costs, and investors with a long hold horizon who plan to reinvest. A basic-rate taxpayer with a single mortgage-free flat may gain little and add cost. Run your own numbers with our rental yield calculator, and read our companion London buy-to-let landlord guide for 2026 and our note on yields, tax and the Renters’ Rights Act for the wider picture.

Setting up the vehicle itself is quick — registration through Companies House takes about a day — but the structuring decisions around it are where good advice earns its keep. The underlying demand remains firm: ONS data published in May 2026 put the average London rent at £2,290, up 2.0% over the year, against a UK average of £1,381. The tenants are there; the real question is simply how best to own the asset.

Talk it through before you incorporate

Incorporation is a long-term commitment, not a quick tax trick — the right answer depends on your tax band, your borrowing and what you plan to do with the income. IREIS Properties helps London landlords weigh the structure against their own circumstances, point them to qualified tax and mortgage advisers, and never relies on a one-size-fits-all rule.