Section 24 in 2026: should your rental properties be in a limited company?

Since Section 24 took full effect, landlords who own property personally cannot deduct mortgage interest from rental profits. Instead you get a basic rate credit worth 20 percent of the interest, and if you pay tax at 40 or 45 percent, the difference comes straight out of your pocket. So should your properties be in a limited company? Here is the honest answer: sometimes, and the maths decides.

What Section 24 actually costs you

Take a higher-rate landlord with £24,000 of rent and £12,000 of mortgage interest. Real profit is £12,000. But tax is calculated on the full £24,000 at 40 percent (£9,600), minus a 20 percent credit on the interest (£2,400). The bill is £7,200, which is 60 percent of the real profit. Before Section 24 it would have been £4,800. The higher your gearing and your tax band, the worse this gets.

Why companies escape it

Section 24 only applies to individuals. A limited company deducts the full mortgage interest as a business expense and pays Corporation Tax on what is left. On top of that, profits reinvested inside the company are not hit by personal tax at all, which is why serious portfolio builders lean towards company structures.

The catch: getting existing properties in

Moving a property you already own into your own company is a sale at market value, even though no money changes hands. That can trigger two bills at once:

• Capital Gains Tax on the growth since you bought it, at 18 or 24 percent for residential property.
• Stamp Duty Land Tax paid by the company on the full market value, including the 5 percent additional dwelling surcharge that has applied since October 2024.

Incorporation relief can defer the CGT where the portfolio genuinely operates as a business, but the bar is real and the facts matter. Anyone who tells you incorporation is a no-brainer has not done your numbers.

When a company usually wins

• You pay higher or additional rate tax and the portfolio is geared.
• You are buying new properties, so there is no transfer cost: the company buys directly.
• You plan to reinvest rental profits rather than live on them.
• You are building for the long term, possibly with family succession in mind.

When staying personal usually wins

• You are a basic rate taxpayer, where Section 24 barely bites.
• You need the rental income to live on, since extracting company profits brings dividend tax with only £500 of dividends tax free.
• Your properties carry large built-in gains and the transfer costs would take a decade to earn back.

The only sensible next step

Want a first estimate right now? Our SPV or personal calculator shows the difference on your numbers in seconds. Then remember it is a numbers decision, not a philosophy. We model both routes on your actual rents, mortgages, other income and plans as part of our Property and SPV service, and give you the answer in writing. Book a free consultation and bring your mortgage statements.