Limited Company Buy-to-Let and Section 24: Should Landlords Incorporate in 2026?

Section 24 remains the single biggest reason landlords ask about moving property into a limited company, and the tax gap it creates between personal and corporate ownership hasn’t narrowed in 2026. But incorporation carries real upfront costs, and it isn’t automatically the right answer for every portfolio. This article sets out how the two structures are actually taxed, what incorporation costs before it saves anything, and where limited company buy-to-let mortgages fit into the decision.

How Section 24 taxes individual landlords

Since Section 24 was fully phased in, individual landlords can no longer deduct mortgage interest from rental income before calculating tax. Instead, they receive a tax credit worth only 20% of the interest paid, regardless of their actual tax rate. For a higher-rate (40%) taxpayer, this creates a real cost: a landlord with, say, £18,000 in rental income and £10,000 in mortgage interest is taxed as if they’d earned the full £18,000, then given back only £2,000 in credit — rather than being taxed on the true £8,000 profit. The effect is sometimes called the “phantom profit” problem, and it can also push a landlord’s recorded income over thresholds that affect child benefit or pension annual allowance, even though their real cash profit hasn’t changed.

How limited companies are taxed differently

A limited company holding buy-to-let property continues to deduct mortgage interest as a normal business expense before arriving at taxable profit, then pays corporation tax on what’s left. For landlords on higher personal tax rates with significant borrowing, this structural difference is the entire appeal of incorporation — it restores the old deduct-then-tax logic that individual landlords lost.

What incorporation actually costs

Moving existing personal property into a company is not simply a paperwork exercise. It typically triggers:

• Stamp Duty Land Tax on the transfer at market value, including the 5% additional-property surcharge that applies to buy-to-let purchases (on top of the standard bands of 0% to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5m and 12% above that).
• Potential Capital Gains Tax on any unrealised gain in the property’s value since purchase, though limited incorporation relief may apply to a genuine letting business — this needs proper accountancy advice, not a rule of thumb.
• Refinancing costs onto a limited company buy-to-let mortgage, which historically carries a modest rate premium over personal-name BTL lending, though pricing has narrowed as more lenders compete in this space.
• Ongoing costs of running a company — accountancy fees, filing requirements, and the tax cost of eventually extracting profit as dividends or salary rather than personal rental income.

Whether the Section 24 saving outweighs these costs depends heavily on the size of the portfolio, the borrower’s tax rate, and how long they intend to hold the properties — it is genuinely a case-by-case calculation, not a blanket answer, and should be modelled by a qualified tax adviser or accountant before any transfer takes place.

Financing a limited company portfolio

For landlords who do decide to incorporate, either for new purchases or an existing portfolio, structuring the mortgage side correctly matters as much as the tax decision itself. Our guide to buy-to-let mortgages in 2026: personal vs limited company, which structure wins compares the lending criteria and pricing side by side, and our piece on financing a portfolio incorporation in 2026 and what lenders actually need covers how lenders view an existing portfolio being transferred into a new corporate vehicle, including the refinancing that usually has to happen alongside the transfer.

See our buy-to-let mortgages service page for both personal and limited company lending, and the Buy-to-Let & Portfolio Landlord Hub for related guides on incorporation, remortgaging and portfolio structuring. Landlords with property in and around Rainham and the wider Thames Gateway will find local lending context on our Rainham mortgage broker page.

Get advice before you transfer anything

Speak to Giles Finance before incorporating a portfolio — we can advise on the mortgage and lender side, but always take independent tax advice from a qualified accountant or tax adviser on the Capital Gains Tax and Stamp Duty consequences specific to your circumstances before any transfer.

Buy-to-let lending for letting to tenants is typically unregulated by the FCA (unless it qualifies as a consumer buy-to-let mortgage). Your property may be repossessed if you do not keep up repayments on your mortgage. Nothing in this article constitutes tax advice; tax treatment depends on individual circumstances and may change.

Giles Finance is a trading style of Giles Finance & Consultancy Services, authorised and regulated by the Financial Conduct Authority (FRN 726857).