Personal vs Limited Company for BTL in 2026: The Real Numbers
About 80% of new UK BTL purchases now go through limited companies. We model the after-tax cash flow under both structures across extract / retain / hybrid strategies — and show the crossover year your structure actually overtakes.
Roughly 80% of new UK BTL purchases now go through a limited company (an "SPV"). The reason is Section 24: companies deduct mortgage interest in full, pay corporation tax (19%–25% by profit band) and then face a separate decision about extracting profit as dividends. The right answer depends heavily on your tax band, the rate premium SPV mortgages carry, and how long you hold.
The two parallel tax stacks
Personal route
- Profit for tax = rent − allowable expenses (no interest deduction).
- Tax at your marginal rate, minus the Section 24 reducer.
Company route
- Profit = rent − allowable expenses − full interest.
- Corporation tax: 19% to £50k, 25% above £250k, marginal-relief band between.
- To extract: dividends taxed (after £500 allowance) at 8.75 / 33.75 / 39.35% on top of other income.
- To retain: cash stays in the company, compounds untaxed personally. Useful for portfolio building.
When does Ltd win? The four levers
- Your income band. Basic-rate landlords often see personal still win after extraction costs.
- The rate premium. SPV BTL mortgages typically cost +0.5–1% over personal BTL — material on a leveraged deal.
- Extraction need. If you need the cash, you pay dividend tax. If you can retain, you skip that layer entirely.
- Time horizon. Retained profit compounds; Section 24 keeps biting. Longer horizons favour Ltd.
Run the comparison
Our Personal vs Limited Company calculator runs both stacks year-by-year and surfaces the crossover year — when the chosen company strategy first beats personal. Pair it with the Portfolio Incorporation Costcalculator if you already own personally and are considering transferring in.
