The Autumn 2026 Budget has introduced further tax increases for landlords, with higher rates of tax on property and savings income taking effect from April 2027. These changes add to the growing tax burden on individual landlords and make the question of whether to hold investment property personally or through a limited company increasingly relevant.
From 6 April 2027, income tax rates on property income will increase by a further 2%, bringing the rates for landlords in England, Wales and Northern Ireland to:
| Current | From 6 April 2027 | |
| Basic rate | 20% | 24% |
| Higher rate | 40% | 44% |
| Additional rate | 45% | 49% |
This represents a cumulative 4% increase and will further reduce the net returns available to landlords holding properties in their personal names.
Why consider a limited company?
For individual landlords, the impact is compounded by the restriction on mortgage interest relief. Rather than deducting mortgage interest in full from rental income, individual landlords generally receive a basic rate tax reduction. This can result in a significant tax liability, particularly for higher rate taxpayers with substantial borrowing, even where much of their rental income is used to service mortgage commitments.
Holding property through a limited company offers a different tax treatment. Mortgage interest is generally deductible in full when calculating the company’s taxable profits, potentially providing a significant advantage over personal ownership. In addition, the Corporation Tax rates currently range from 19% for companies with qualifying profits of up to £50,000 to 25% for profits exceeding £250,000, with marginal relief applying between these thresholds. These are significantly lower than the rates introduced on personal property income.
There is also a cash flow advantage where profits are retained within the company. Rental income can be reinvested into further property acquisitions without an immediate personal tax charge. However, extracting profits through dividends or salary will generally create an additional personal tax liability. Company ownership can therefore be particularly attractive to investors looking to expand their portfolios rather than rely on rental income to fund their personal expenditure.
What should landlords consider?
The Budget makes reviewing existing property ownership arrangements increasingly important, particularly for higher-rate taxpayers with mortgage-funded portfolios.
A limited company may offer greater tax efficiency for investors looking to reinvest profits and build their portfolios. Conversely, personal ownership may remain appropriate for basic-rate taxpayers with relatively low borrowing or those who depend on rental income personally.
Landlords should also remember that transferring existing properties into a company can trigger Capital Gains Tax and Stamp Duty Land Tax, potentially making incorporation costly without considering the tax reliefs available.
How we can help
Our advice to landlords is to review their position now rather than wait until April 2027. If you would like help reviewing your personal portfolio, please feel free to get in touch with our tax department today.
Written by Aaliyah Adnan, Tax Senior (include photo)
aaliyah.adnan@kirknewsholme.co.uk DD 0113 531 7322
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