Should I Incorporate My Buy-to-Let? The 2026 Numbers

43% of all buy-to-let mortgage purchases in the UK now go through a limited company. That figure, from Paragon Bank's landlord research, was 7.5% in 2018. The shift is structural, not a trend.

The reason is not complicated. Section 24 has made personal ownership noticeably more expensive for higher-rate taxpayers, and the maths increasingly favours a company structure for anyone building or growing a portfolio.

But "it works for 43% of buyers" does not mean it works for you. The right answer depends on your tax position, your exit strategy, and whether you are starting fresh or moving existing properties across. Those are very different problems.

This article walks through the actual 2026 numbers so you can make that call with evidence rather than instinct.

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The Section 24 Problem: A Worked Example

Section 24 of the Finance Act 2015 is the root cause of most incorporation conversations. It has been fully in effect since the 2020/21 tax year and will not be reversed.

Under the old rules, a landlord could deduct 100% of mortgage interest directly from rental income before calculating tax. Under the current rules, individual landlords receive a basic rate (20%) tax credit on their finance costs instead. That sounds similar. It is not.

Here is why it matters in practice.

Scenario: Higher-rate taxpayer, one property

• Annual rental income: £18,000
• Annual mortgage interest: £9,000 (interest-only at current BTL rates)
• Other allowable expenses (agent fees, insurance, maintenance): £2,500
• Taxable profit under old rules: £18,000 minus £9,000 minus £2,500 = £6,500
• Tax at 40%: £2,600

Under Section 24, the calculation changes:

• Rental income: £18,000
• Deductible expenses (excluding mortgage interest): £2,500
• Taxable profit: £15,500
• Tax at 40%: £6,200
• Less 20% tax credit on mortgage interest (20% of £9,000): £1,800
• Net tax bill: £4,400

That same property now generates a tax bill of £4,400 instead of £2,600, a difference of £1,800 per year, purely because of how mortgage interest is treated. On a property generating £18,000 gross, that is a significant drag on net cashflow.

A limited company would deduct the full £9,000 mortgage interest as a business expense and pay corporation tax on the remaining £6,500 at 19%: a tax bill of approximately £1,235.

The tax saving from using a company in this example is around £3,165 per year. Over five years, that is over £15,000 before even accounting for any changes in rates or rents.

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Corporation Tax vs Income Tax: The Rate Comparison

For 2026, the relevant rates are as follows, verified from GOV.UK and HMRC:

Corporation Tax (from 1 April 2023, confirmed for 2026):

• Small profits rate: 19% (profits of £50,000 or less)
• Main rate: 25% (profits above £250,000)
• Marginal relief taper applies between £50,000 and £250,000

Income Tax (2025/26 tax year):

• Basic rate: 20% (£12,571 to £50,270)
• Higher rate: 40% (£50,271 to £125,140)
• Additional rate: 45% (above £125,140)

Most small-portfolio landlords with a buy-to-let SPV will sit comfortably within the 19% small profits band. A property generating £6,500 net profit after all expenses and mortgage interest sits well below £50,000.

The comparison that matters most is not just the headline rates. It is the effective cost of mortgage interest under each structure. In personal name, a 40% taxpayer gets 20% relief on mortgage interest. In a company, they get full relief. At current BTL mortgage rates (averaging around 5% for a two-year fix), that difference on a £200,000 mortgage costs roughly £2,000 per year in extra personal tax.