Is a Property Company Right for Your Portfolio? A Decision Checklist

A property company is worth incorporating into when a landlord is a higher or additional rate taxpayer, holds geared property, can leave the rental profits inside the company, and either qualifies for section 162 incorporation relief or is buying future properties rather than moving existing ones. Fail any one of those four tests and property company incorporation usually costs a landlord more than it saves, because the entry costs are paid once and in cash while the tax saving arrives slowly over years. Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice, sees portfolios where incorporation is obviously right, portfolios where it is obviously wrong, and a large middle group where the answer turns on three or four specific facts. This article sets out the checklist, works through the numbers on a typical portfolio, and shows which portfolio sizes justify the cost.

Key Takeaways

• A limited company pays corporation tax at 19% on profits up to £50,000 and 25% above £250,000 in 2026/27, against income tax of up to 45% for a personally held portfolio.
• Section 24 restricts mortgage interest relief for individual landlords to a 20% basic rate tax reducer, while a company deducts finance costs in full against profit.
• Transferring an existing property to your own company is a disposal at market value, triggering capital gains tax at 24% for a higher rate taxpayer plus stamp duty land tax at the 5% higher rates for additional dwellings.
• Extracting company profit as dividends costs a further 35.75% at the upper rate in 2026/27, which removes most of the corporation tax advantage for landlords who need the rental income to live on.
• Buying future properties through a new company avoids capital gains tax and stamp duty on incorporation entirely, and is the right answer for most landlords with an existing portfolio.

Who actually benefits from a property company in 2026/27?

The landlord who benefits from a property company is a higher or additional rate taxpayer with mortgaged properties who intends to reinvest rental profits rather than spend them. Every part of that description matters.

Gearing is the driver. Section 24 of the Finance (No. 2) Act 2015 denies an individual landlord a deduction for mortgage interest and replaces it with a 20% tax reducer, so a higher rate taxpayer effectively pays tax on rent used to pay the bank. A company suffers no such restriction.

Take a portfolio producing £60,000 of rent with £30,000 of mortgage interest and £6,000 of other costs. Held personally by a 40% taxpayer, taxable profit is £54,000, tax is £21,600, and the interest tax reducer returns £6,000, leaving £15,600 payable. Held in a company, taxable profit is £24,000 and corporation tax at 19% is £4,560, a difference of £11,040 a year. That gap closes fast if the money comes out: distributing the remaining £19,440 as a dividend costs 35.75% at the upper rate in 2026/27, roughly £6,950, cutting the real advantage to around £4,100.

What does moving an existing portfolio cost?

Incorporating an existing portfolio costs capital gains tax and stamp duty land tax on day one, both calculated on market value even though no money changes hands. This is the single largest reason a limited company buy-to-let structure fails to pay for itself.

Consider three properties worth £300,000 each, bought for £200,000 each. The gain of £300,000, less the £3,000 annual exempt amount, produces capital gains tax of £71,280 at the 24% rate, payable within 60 days of completion. Stamp duty land tax at the 5% higher rates costs £20,000 per property, so £60,000 across the portfolio. Add legal fees and remortgaging costs and the entry bill approaches £140,000, against an annual saving of around £11,000 before extraction. That is a payback period of well over a decade.

Section 162 incorporation relief can remove the capital gains tax element where the portfolio is a genuine business, and transferring six or more dwellings in a single transaction can cap stamp duty at the non-residential rates, but both routes have demanding conditions. For a full overview of how those reliefs work, see our guide to property company incorporation.

Which portfolio sizes justify incorporation?

Portfolio size is a proxy for whether the tax saving can outrun the entry cost, and the thresholds are fairly consistent. One or two properties held by a basic rate taxpayer almost never justify a company, because the corporation tax advantage is small and the annual cost of accounts, a corporation tax return and a confirmation statement eats into it.

Three to five geared properties held by a higher rate taxpayer sit in the middle. Incorporation works only where the stamp duty problem is solved through a genuine partnership, or where the landlord buys the next property through a new company and leaves the existing ones alone.

Six or more properties, run with real management time and a business-like structure, is where full incorporation becomes credible. The section 162 business test is more likely to be met, the multiple dwellings route improves the stamp duty analysis, and the annual saving is large enough to absorb professional fees.

What else changes the answer?

Mortgage finance, extraction plans and succession intentions all move the decision, sometimes decisively. Company buy-to-let mortgages typically carry higher rates and arrangement fees than personal products, and the extra interest can consume a meaningful slice of the tax saving on a heavily geared portfolio.

Extraction is the more common trap. A landlord who needs the rent to fund household spending pays corporation tax and then dividend tax, and the combined burden approaches personal rates. A landlord who reinvests rental profit into further deposits keeps the full benefit of the 19% or 25% rate.

Succession planning pulls the other way and often justifies a company on its own, because shares can be gifted gradually, different classes issued to family members, and future growth directed to the next generation in a way that bricks and mortar cannot easily replicate.

Frequently Asked Questions

Is it worth putting my buy-to-let in a limited company?

It is worth it if you are a higher or additional rate taxpayer with mortgaged property who will reinvest the rental profit rather than draw it out. A company deducts mortgage interest in full and pays corporation tax at 19% to 25%, but transferring an existing property triggers capital gains tax and stamp duty land tax on market value.

Can I transfer my rental property into a company without paying tax?

Only if section 162 incorporation relief applies, which requires the letting activity to amount to a genuine business transferred as a going concern wholly in exchange for shares. Incorporation relief defers the capital gain into the base cost of the shares. It does not remove stamp duty land tax, which is charged at the 5% higher rates on market value regardless.

How much stamp duty does a limited company pay on a buy-to-let?

A limited company pays standard residential stamp duty land tax plus the 5% higher rates for additional dwellings from its very first purchase. On a £300,000 property that is £20,000. Companies buying a single dwelling above £500,000 face a flat 17% charge unless property rental business relief applies.

Should I buy my next property through a company instead?

Buying future properties through a new limited company is usually the better route for landlords with an existing portfolio, because it captures the corporation tax advantage on new acquisitions without triggering capital gains tax or stamp duty on the properties already owned. Most landlords end up running a personal portfolio and a company portfolio side by side.

How much does running a property company cost each year?

A small property company typically costs between £900 and £2,000 a year in accountancy fees, covering statutory accounts, a corporation tax return, a confirmation statement and directors' self-assessment. Company mortgage products also tend to price higher than personal buy-to-let products, which should be factored into the comparison before incorporating.

How Blue Tick Can Help

Blue Tick Accountants models property company incorporation for landlords across the UK, comparing the personal and corporate position over a realistic holding period rather than a single year, and testing whether section 162 relief and the multiple dwellings stamp duty route are genuinely available. Where incorporation is the wrong answer, the practice says so and structures future purchases instead. Head to our website and book a meeting now.

Conclusion

Incorporation rewards landlords who are geared, taxed at higher rates, and content to leave profits inside the company. It punishes landlords who move an existing portfolio without qualifying for section 162 relief, and it disappoints anyone who needs the rent to live on. Work out the entry cost in cash, the annual saving after extraction, and the payback period before committing. For most landlords with property already in personal names, the sensible move is to buy the next one through a company and leave the rest alone.

About the Author

This guide was written by Leon, founder of Blue Tick Accountants, a Guildford-based UK tax advisory and accountancy practice that advises landlords, limited company owners and the self-employed across the UK on structuring, incorporation and property tax. It was last reviewed for the 2026/27 tax year.

This article is intended for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are subject to change and their application will depend on your individual circumstances. You should always seek advice from a qualified professional before taking action. Blue Tick Accountants accepts no liability for decisions made on the basis of this content.

Related reading: Property Company vs Personal Ownership: A Full Tax Comparison.