From April 2027 your rent will be taxed harder than your salary. Should you buy through a limited company?

From April 2027, rental profits earned in your personal name will be taxed at 22%, 42% or 47%, depending on your band. The same money earned as salary stays at 20%, 40% or 45%. Corporation tax was not touched, so a limited company still pays between 19% and 25% and still deducts all of its mortgage interest. The gap between the two ways of owning a buy to let just got wider, and for once there is an actual date attached to the decision.

What exactly changes in April 2027?

At the Autumn Budget on 26 November 2025, the Chancellor added 2 percentage points to every income tax rate on property income. From 6 April 2027, rental profits in your personal name are taxed at 22% at the basic rate, 42% at the higher rate and 47% at the additional rate. Employment income keeps the old rates.

There is a second change that got less attention but bites just as hard. Your personal allowance will be set against employment income first, before property income. If you have a salary and rental income, more of your rental profit ends up taxed at the new higher property rates rather than being sheltered by the allowance. Burges Salmon has a clear breakdown of both changes if you want the detail.

I will say plainly what I think of it. This is another tax raid on landlords, the fourth or fifth big one in a decade depending on how you count, and the Government’s own forecaster expects it to feed through to rents. The NRLA points to Office for Budget Responsibility analysis warning that squeezing landlord returns will shrink rental supply, with rents on a typical English property estimated to rise by £20 to £25 a month as a result. Tenants will pay for a good chunk of this.

Why does this make limited companies more attractive?

Two reasons, and both were true before the Budget. The Budget just made the numbers bigger.

First, the rates. A company pays corporation tax at 19% to 25% on its rental profits. From April 2027 a higher rate taxpayer holding the same property personally pays 42%.

Second, mortgage interest. A company deducts 100% of its mortgage interest as a business expense before tax is calculated. A personal landlord gets only a 20% tax credit on interest, a restriction that has been in place since the Section 24 changes finished phasing in. On a mortgaged property, this is often the bigger difference of the two.

So why doesn’t everyone incorporate?

Because the company route has real costs, and pretending otherwise is how landlords end up worse off.

Taking money out of the company costs more than it used to. Dividend tax went up 2 points in April 2026, to 10.75% at the basic rate and 35.75% at the higher rate. If you live off your rental income, a decent slice of the company’s tax saving disappears when you pay yourself. The company structure works best for landlords who leave profits inside the company to reinvest in the next purchase, not those who need the rent to cover the household bills.

Limited company buy to let mortgage rates also run higher than personal buy to let rates, and lenders almost always want personal guarantees from the directors. So the company does not put the same distance between you and the debt that people sometimes imagine. Add accountancy fees and Companies House filings every year, and a small portfolio can find the savings eaten before they arrive.

What about properties you already own?

This is where people get burned. Moving a property you already own into your own company counts as a sale at market value. That can mean stamp duty for the company on the way in and capital gains tax for you on the way out, and those two bills can swallow years of the annual tax saving. Some landlords with larger portfolios have relief options, but that is properly an accountant’s territory, and I have written before about what transferring a property into a limited company really costs.

The practical point is that the structure decision matters most before you buy. Getting it right on the next purchase is cheap. Unpicking it later is not.

Who does the company route actually suit?

Every case is different and this is exactly the question to put to a property tax accountant before you commit. But the broad shape, as I see it from the mortgage side, is this.

If you have one or two properties, you pay basic rate tax and you spend the rental income, personal ownership is often still fine, even after April 2027. If you pay higher rate tax, you are building a portfolio and you reinvest the profits, a company usually wins, and from April 2027 it wins by more.

If you are somewhere in the middle, that is what the accountant conversation is for. What I can do is show you what each route costs on the mortgage side, because the rate, fees and lender choice differ between limited company buy to let mortgages and personal ones, and the right comparison needs both halves. I have also covered the wider trade-offs in buy to let in a company or personal name.

What should you do before April 2027?

Nothing rash. Do not incorporate because of a headline, and be wary of anyone selling incorporation schemes off the back of this Budget.

Do two things. Speak to a qualified property tax accountant about your own numbers, ideally before your next purchase rather than after it. And if a company purchase might be on the cards, find out what the mortgage side looks like early, because lender criteria for companies are different and it affects what you can borrow.

That second part is what I do. If you are weighing up a purchase in a company name or your own, get in touch and I will go through the mortgage options for both with you.