Hi Hazel, this is one of those questions where the right answer really is "it depends on the numbers" - but here is the full comparison so you can see which levers matter for you.
Buying personally: the mortgage interest restriction
Yes, what you heard is right. Individual landlords can no longer deduct mortgage interest (or other finance costs) when working out rental profit. Instead, you get a tax credit worth 20% of the finance costs - a basic-rate reduction against your tax bill. In practice: the rent is taxed at your Income Tax rate (20%, 40% or 45%) on the full rental profit before interest, and then the 20% credit softens the blow. Because interest is not deducted, your taxable rental income looks higher than your cash profit, which can push you into a higher tax band even though the money is not really in your pocket. For basic-rate taxpayers with modest borrowing this is manageable; for higher-rate taxpayers with big mortgages it can be painful.
Buying through a company
A company deducts mortgage interest in full as a business expense. Profits are then taxed at Corporation Tax rates: 19% where profits are £50,000 or less (the small profits rate), and 25% on profits over £250,000, with marginal relief between. Rental gains on sale are also taxed within the company - there is no £3,000 CGT annual exempt amount for companies, but the rate on retained gains can still beat personal CGT (18%/24%) if you do not need the cash out.
Getting the money out - this is the key eroder
Yes, extraction erodes a good part of the company advantage if you need the income to live on. Taking profits out as dividends means a second layer of tax: for 2026/27 the dividend allowance is £500 a year, then 10.75% at basic rate, 35.75% at higher rate, and 39.35% at additional rate. Taking a salary is usually worse because of employer and employee National Insurance. The company route wins most where profits can be left inside to repay the mortgage or fund the next property. Note also that you cannot borrow freely from your own company - director's loans have their own tax charges.
Stamp Duty Land Tax: no difference here
Both routes pay the higher rate for additional properties - an extra 5% on top of the standard residential rates - because this is not your main home. On a £280,000 flat that works out at £18,000 either way: standard rates of £4,000 plus the 5% surcharge of £14,000. (The 17% flat rate for companies only applies to residential purchases over £500,000 by certain non-natural persons - not this.)
Ongoing costs and admin
A property company needs statutory accounts, a Corporation Tax return (CT600), a confirmation statement, a separate bank account, and proper bookkeeping - realistically an accountant's fee of four figures a year. Buy-to-let mortgages for companies (SPV products) also tend to carry higher rates and arrangement fees than personal ones.
So when is a company worth it for one property?
For two basic-rate taxpayers buying one £280k flat and needing the rental income to live on, personal ownership is often competitive once you add up the dividend tax on extraction and the running costs of the company. The company route tends to win where the owners are higher-rate taxpayers, where profits will be retained and reinvested, or where a portfolio is being built. One important point: decide before you buy - moving a property into a company later triggers both SDLT and Capital Gains Tax. It is well worth getting the numbers modeled with your actual mortgage, rents, and income before committing.
