Limited Company Buy-to-Let Mortgages (2026): Rates, Tax & How to Set Up
Most new buy-to-let mortgages are now taken through limited companies — full mortgage-interest deduction, corporation-tax rates, and a borrowing boost from gentler stress tests. The complete guide: the real tax maths (both directions), the SPV setup steps, current rates and lender rules, and the expensive transfer trap.
Buying through a company — or deciding whether to?
Limited company BTL is a specialist, broker-led market: many of the sharpest lenders don’t deal with the public at all. Get matched with a whole-of-market broker who arranges SPV mortgages weekly — free.
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Quick answer
A limited company buy-to-let mortgage is a BTL loan made to a company — almost always a Special Purpose Vehicle (SPV) set up just to hold property — rather than to you personally. The company buys the property, collects the rent, pays the mortgage, and you own the company. Why most new BTL borrowing now goes this way: companies deduct mortgage interest in full before paying corporation tax (19% on profits to £50,000; 25% above £250,000, tapered between), while personal landlords have been stuck since Section 24 with a flat 20% interest credit — a structural gap that grows with every pound of interest a higher-rate taxpayer pays. The quieter advantage on the mortgage side: lenders typically stress-test company applications at a 125% interest coverage ratio versus 145% for higher-rate personal borrowers — the same rent supports meaningfully more borrowing. The costs of admission: rates run ~0.2–0.75 percentage points above personal BTL (a gap that’s been narrowing, with some lenders now pricing identically), deposits of 25%, personal guarantees from directors as standard, plus accounts and filings (~£600–£1,500/year in accountancy). Two honesty notes before the detail: basic-rate taxpayers often gain little or nothing (the 20% credit already matches their tax rate, and dividend tax applies on extraction), and transferring properties you already own into a company is usually prohibitively expensive — HMRC treats it as a market-value sale, triggering capital gains tax and stamp duty (~£20,000 SDLT on a £300,000 property). Buying new purchases through an SPV is the clean move; retro-fitting rarely is. Position as of July 2026 — and structure decisions deserve a chartered tax adviser, not just an article.
Your home may be repossessed if you do not keep up repayments on your mortgage.
In this guide
How limited company buy-to-let works
The structure is simple once seen: you incorporate a company, put your deposit in (usually as a director’s loan — an important detail, because the company can repay it to you later tax-free as your capital comes back out), and the company applies for the mortgage, buys the property, and receives the rent. You control everything as director and shareholder; you extract profit as salary or dividends when you choose — or leave it inside the company, compounding at corporation-tax rates toward the next deposit, which is the growth engine serious portfolio-builders actually use. Lenders overwhelmingly want the borrowing company to be an SPV — a Special Purpose Vehicle that does nothing except hold property, registered with the property SIC codes (68100 or 68209, with some lenders also accepting 68320); a general trading company that also sells widgets muddies risk assessment, and most of the BTL market declines them or demands restructuring. The SPV doesn’t need trading history — lenders assess the directors behind it (your income, credit, landlord experience), which is why brand-new companies get mortgages on day one and why personal guarantees are standard: the company borrows, but you stand behind it.
The tax case — honestly, in both directions
| Personal name | Limited company | |
|---|---|---|
| Mortgage interest | Not deductible — 20% credit only (Section 24) | Fully deductible business expense |
| Tax on profits | Income tax: 20% / 40% / 45% | Corporation tax: 19% to £50k, 25% above £250k |
| Taking money out | It’s already yours | Dividend tax on extraction: 8.75% / 33.75% / 39.35% (£500 allowance) |
| Reinvesting profits | Taxed in full first | Retained at CT rates — the compounding advantage |
| Selling up | CGT at 18% / 24% | CT on the gain, then dividend tax to extract — can exceed 40% effective |
| Running costs | Minimal | Accounts & filings ~£600–£1,500/yr |
Read as a whole, the table explains who wins where. The company dominates for higher-rate taxpayers with meaningful mortgage debt who reinvest: full interest deduction plus 19–25% retained-profit tax versus 40%+ on turnover-ish personal figures is a chasm, and it widens with leverage. The company underwhelms for basic-rate taxpayers (the 20% credit already equals their tax rate, so Section 24 barely bites them, while dividend tax and accountancy fees are real) and for anyone extracting every pound immediately — 25% corporation tax followed by 33.75% dividend tax on the remainder lands close to where higher-rate income tax started. And on exit, the personal route’s clean 18/24% CGT beats the company’s double-layer unless you’re selling the company itself. None of this is one-size-fits-all — which is precisely why the structure decision belongs with a chartered tax adviser running your numbers, while this page’s job is the mortgage side of the equation.
The borrowing advantage: 125% vs 145%
The part most tax articles miss entirely
Lenders test BTL affordability with an interest coverage ratio (ICR): rent must exceed the stressed mortgage interest by a margin — typically 145% for higher-rate personal borrowers, but only 125% for limited companies (because the company’s interest is fully deductible, lenders need less headroom for tax). Worked example at a 5.5% stress rate on £1,200/month rent: personally at 145%, the rent supports interest of ~£828/month → a maximum loan around £180,000; through a company at 125%, it supports ~£960/month → around £209,000. Same property, same rent, ~£29,000 more borrowing — often the difference between a purchase working and not, especially in lower-yield areas where the 145% test strangles personal applications. For many higher-rate landlords this, not the tax, is the immediately decisive advantage.
The ICR maths varies lender by lender
Stress rates, coverage ratios and rental assessments differ across the specialist market — and most of it is intermediary-only. One whole-of-market pass finds the lender whose maths fits your numbers. Free.
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Rates, lenders and criteria in 2026
Rates: limited company products price ~0.2–0.75 percentage points above equivalent personal BTL — a premium that has narrowed steadily as the market has grown, with some lenders now pricing the two identically; for higher-rate taxpayers with real mortgage debt, the interest-deduction saving typically dwarfs it. The lender landscape: this is a specialist-led, intermediary-heavy market — the sharpest SPV pricing lives with lenders who only work through brokers, several mainstream banks sit it out entirely (Santander’s small-landlord BTL, for instance, doesn’t lend to companies at all), and comparison sites see a fraction of the shelf, which is why the “limited company BTL comparison” searches genuinely can’t be answered by a table on the open web. Criteria patterns: deposits from 25% (a handful stretch to 80% LTV at a price), personal guarantees universal, directors’ income and credit assessed as if personal applicants, new SPVs welcome, and the full menu extends to HMOs, holiday lets, portfolios and company remortgages — usually with more appetite than the personal market, since specialist lenders built their books for exactly this borrower. Interest-only remains the standard BTL structure inside companies too, and directors whose income is itself corporate — limited company directors and the self-employed — fit naturally, since these lenders read accounts for a living.
Setting up an SPV, step by step
- Incorporate at Companies House — online, usually same-day, £50. One director and one shareholder (you) suffices; £100 of ordinary shares is typical. No trading history needed.
- Use the property SIC codes — 68100 (buying and selling own real estate) and/or 68209 (letting and operating own or leased real estate). Lenders check; the wrong code means restructuring before offer.
- Open a business bank account — rent in, mortgage out, clean separation from day one (your accountant will thank you; so will underwriters).
- Fund the deposit as a director’s loan — documented lending from you to the company, repayable to you tax-free from future profits: the standard structure, and quietly one of the SPV’s best features.
- Apply through a whole-of-market broker — with the intermediary-only lender base, this is less a recommendation than a description of how the market works. The decision-in-principle, valuation and offer stages mirror any BTL application, assessed on the directors.
- Line up an accountant — annual accounts, confirmation statement and corporation tax returns are non-optional; ~£600–£1,500/year for a simple SPV, and worth having from purchase, not from the first filing deadline.
Incorporate before applying (lenders want the company existing, not promised), and if the property will exceed £500,000, note ATED — the annual tax on company-held dwellings — which genuinely-let properties escape via relief, but only by filing the relief return each year.
Transferring existing properties: the trap in numbers
The instinct every landlord has on discovering the tax table — “I’ll just move my current BTLs into a company” — meets an unsentimental rule: HMRC treats the transfer as a sale at full market value, even though you’re both buyer and seller. Three costs land at once: capital gains tax on the entire gain since you bought (18/24%); SDLT at additional-property rates on the full value — on a £300,000 property that’s roughly £20,000, day one; and a new company mortgage (your personal loan can’t simply transfer — it’s redeemed and re-lent, with fees and today’s rates). Five years of Section 24 savings can vanish in the transaction. The exception with a real legal basis — incorporation relief, deferring CGT where the portfolio constitutes a genuine business (scale, your active management, typically several properties) — is specialist-adviser territory with HMRC’s bar set high, not a checkbox. The practical consensus the transfer sheets keep producing: existing properties usually stay personal; new purchases go in the company. A hybrid portfolio isn’t untidy — it’s usually what the arithmetic says, and mitigation for the personal side (spouse transfers to use both basic-rate bands, timing, pension contributions) is its own conversation with an accountant. Related manoeuvres — let-to-buy restructures, or selling to fund the company — carry the same market-value logic, so price them before romancing them.
The bottom line
Limited company buy-to-let has become the default for a reason: full interest deduction, corporation-tax rates on retained profit, a gentler 125% stress test that borrows more from the same rent, and a specialist lender market genuinely built for it. It isn’t universal: basic-rate taxpayers often net nothing, immediate extractors give much of the saving back as dividend tax, running a company costs real money, and moving existing properties in is usually a five-figure mistake. Buy new through the SPV, leave the old alone, get the structure signed off by a tax adviser — and get the mortgage from the whole market, because most of this one lives behind brokers.
Start with the lending side: compare buy-to-let deals with an FCA-regulated, whole-of-market broker fluent in SPV lending — free, no obligation.
Limited company buy-to-let: FAQs
Are limited company buy-to-let mortgage rates higher?
Typically yes, by around 0.2–0.75 percentage points over equivalent personal BTL — a premium that has narrowed year on year as the market has matured, with some lenders now pricing both identically. For higher-rate taxpayers with meaningful mortgage balances, full interest deductibility usually outweighs the premium comfortably: the rate gap costs tens of pounds a month while Section 24 costs hundreds. The comparison worth running isn’t company-rate vs personal-rate but total after-tax cost in each structure — which a broker and an accountant between them can put real numbers on.
How do I set up an SPV for buy-to-let?
Incorporate a limited company at Companies House (online, ~£50, usually same-day) with property SIC codes 68100 and/or 68209, one director and shareholder minimum, and ordinary shares — £100 is typical. Open a business bank account, put your deposit in as a documented director’s loan (repayable to you tax-free later), and incorporate before applying, since lenders want the company to exist first. No trading history is needed — lenders assess the directors behind it — and an accountant for the annual accounts and corporation tax return (~£600–£1,500/year) completes the setup.
Can I transfer my existing buy-to-let into a limited company?
You can, but HMRC treats it as a sale at full market value: capital gains tax on the whole gain since purchase, stamp duty at additional-property rates on the full value (~£20,000 on a £300,000 property), and a fresh company mortgage to replace your personal one, with fees at current rates. The combined bill regularly wipes out years of the tax savings that motivated the move. Incorporation relief can defer the CGT where the portfolio is a genuine business, but HMRC’s bar is high and it’s specialist-adviser territory. The standard outcome: existing properties stay personal, new purchases go through the company.
Do limited companies pay more stamp duty on buy-to-let?
No — a common myth. Companies pay the same SDLT as personal landlords buying additional property: standard rates plus the 5% surcharge (raised from 3% in October 2024) on every band. The genuine company-specific additions are narrower: a further 2% where the company is non-UK-resident controlled, and the flat 15% rate plus ATED only for dwellings over £500,000 that aren’t being genuinely let (rental businesses claim relief from both — but ATED relief must be actively filed each year). For a UK landlord’s ordinary rental purchase, the stamp duty bill is identical either way.
Can I borrow more through a limited company?
Often, yes — and it’s the most under-reported advantage. Lenders stress-test company applications at a 125% interest coverage ratio versus 145% for higher-rate personal borrowers, because the company’s full interest deduction leaves more genuine margin in the rent. At a 5.5% stress rate, £1,200 of monthly rent supports roughly £209,000 of company borrowing against £180,000 personally — about £29,000 more from the identical property. In lower-yield areas where the 145% test kills personal applications, the company route is frequently what makes the purchase possible at all.
Does my SPV need trading history to get a mortgage?
No — brand-new SPVs get mortgages on the day they’re incorporated, because lenders assess the humans behind the company: directors’ income, credit history, deposit source and landlord experience, exactly as if applying personally, with personal guarantees making directors stand behind the loan. What lenders do insist on is the SPV shape itself — property SIC codes, no unrelated trading activity — since a company that also runs another business complicates their security. Directors with complex income fit naturally here: specialist BTL lenders read company accounts for a living.
- HMRC — corporation tax rates and thresholds, Section 24 restriction, SDLT additional-property rates (5% surcharge from 31 October 2024), ATED and reliefs
- Companies House — incorporation requirements, fees and SIC codes (68100/68209)
- Lender and specialist market analyses — SPV criteria, ICR stress-testing conventions and rate-premium trends, 2026
Important information
nextmove is an introducer, not a lender, adviser, accountant or tax adviser. This article is for general information only and does not constitute financial or tax advice; corporation tax, dividend tax, capital gains tax, SDLT and ATED interact in complex ways that depend on your circumstances, and property-holding structure decisions should be made with a qualified tax adviser. Rates, criteria, thresholds and figures are indicative as of July 2026 and change. We introduce you to FCA-regulated, whole-of-market mortgage brokers who can advise on the lending side of limited company buy-to-let, and we may receive a fee or commission for doing so. Note that most buy-to-let lending is not regulated by the FCA.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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