Since Section 24 came into force, which changed the buy-to-let market, landlords have increasingly turned to limited companies as a means of staying profitable. But with corporation tax hikes now in force and mortgage lenders becoming more stringent, is it still the best move to form a limited company in 2025 for your BTL property investments?
This article explores the present state of limited-company buy-to-let, how Section 24 still affects landlords, and what corporation tax reforms mean to your bottom line. If you are a seasoned property investor or landlord considering your next step, this analysis is for you.
What Is a Limited-Company Buy-to-Let?
A buy-to-let in a limited company is purchasing property in a Special Purpose Vehicle (SPV) instead of in your own personal name. An SPV can be a standard limited company incorporated purely for property holding. It was common practice for landlords to use SPVs with the ongoing implementation of Section 24 over the period between 2017 to 2020, which made holding rental properties in your own personal name significantly less tax-effective.
Section 24: A Brief
The Finance (No. 2) Act 2015 did away with Section 24, the tax relief to deduct all the mortgage interest as a relief on calculation of income tax against rent from properties. Landlords with BTL properties in their personal now have tax relief at a basic rate of 20% on mortgage interest payments only.
This shift hits the higher-rate and additional-rate taxpayers disproportionately hard as it significantly minimises their rental profits and maximises how much they are paying in tax. For landlords with multiple rental properties and heavy borrowings, the impact is very severe.
Limited companies are exempt from Section 24 however. For Limited companies (SPVs) the mortgage interest is considered a business expense and is fully deductible before corporation tax is calculated. This has led to the significant rise in landlords buying new properties through SPVs.
Corporation Tax in 2025: What’s Changed?
Since April 2023, corporation tax in the UK is tiered and has not altered in 2025:
- 19% for companies with profits under £50,000
- 25% on profits between £250,000 and the next band
- A tapered band for profits between those bands
For smaller portfolio landlords running their business in a limited company, this means you can only pay 19% tax. But bigger landlords can now pay an effective rate of 25%, particularly if they are not receiving marginal relief, or run several companies.
You must estimate the size of your property portfolio, projected rental income and reinvestment plans in deciding is it viable to move your property portfolio to a limited company structure. For some, the higher rate is a reasonable trade-off; for others, it negates the advantage of corporate organisation.
What About SPV Buy-to-Let Mortgage Rates?
Another important consideration of best buy to let mortgage deals UK is the affordability and availability of mortgages for limited companies. Although the gap between individual and SPV mortgage rates has closed in recent times, company mortgages remain marginally more expensive.
Additionally, appetite from lenders varies. Specialist BTL Lenders are most prevalent for the SPV market, but some high street banks still favour lending to individuals. They are likely to insist on:
- Greater deposits (often 25% or greater)
- Higher rental cover ratios (often 125% to 145%)
- Landlord experience, particularly for portfolio investors
The buy to let mortgage rates UK market remains active. Even though higher interest rates overall in 2024 and 2025 have weighed on all landlords, company borrowers need to allow for marginally higher upfront charges and costs.
Using tools like a buy to let calculator UK to help you with details of repayment costs and affordability testing for both personal and limited company borrowing scenarios.
When Is a Limited Company Worth It for Property Investment?
Buying and owning buy-to-Let property in a Limited Company is still worthwhile and profitable when:
- You’re a higher-rate taxpayer and you want to keep your personal tax exposure to a minimum.
- You intend to retain profits within the company to reinvest (rather than withdrawing them as dividends)
- You’re building a long-term portfolio and prioritise capital growth over short-term cash flow.
- You already own several properties and are hitting lending or tax efficiency ceilings in your personal name.
There are downsides, however. You’ll have extra administrative charges, accountancy fees and will have to pay personal dividend tax if you have to extract profits for personal use.
Benefits of Retaining Profits Within the Firm
Certain SPV landlords take little or no profit from the firm in the initial years. That has profits piling up, which can then be utilised to:
- Finance deposits for other property
- Cover void periods or repairs
- Pay off debt quicker
For this model to be successful, you must have a long-term strategy and as little reliance as possible on property income for personal living expenses.
Whether purchasing your first buy-to-let or expanding an established portfolio, the decision to invest through a limited company must be thoroughly weighed. Tax rules are complex, and the right choice depends on your personal income, future plans and investment strategy.
A professional Mortgage Broker UK can also help you identify the UK best buy to let mortgage deals and provide you with instructions on how lender criteria differ for personal names and limited company borrowers. They will also help you compare them rates and provide lender-specific affordability checks so you really do get all of the facts needed in order to make fully informed decision as to which route to go.
Final Thoughts
Despite higher corporation tax and slightly more expensive mortgages, the limited-company option remains a sensible option for most property landlords and investors in 2025, particularly those wanting to build a property portfolio, reinvest dividends, or mitigate personal tax risk under Section 24.
But it’s not the automatic choice it seemed a few years ago. Landlords need to weigh tax savings against borrowing costs, administrative inconvenience and overall investment policy.
A tailored solution based on professional advice is more important than ever.
Should You Use a Limited Company for Buy-to-Let in 2025?
Not sure if a limited-company buy-to-let is right for your portfolio in 2025? Contact us for expert advice tailored to your tax position, investment goals and mortgage needs. UK Mortgage Broker are a truly independent broker with ALL UK Mortgage Lenders – so we are certainly very well placed to provide you with the right impartial mortgage advice and we offer free quotes.