Is a Limited Company Better for Your Buy-to-Let?

Use Taxd's Section 24 Tax Calculator to compare how mortgage interest is taxed on a residential rental property held personally against holding it through a limited company. Enter your gross rental income, allowable operating expenses, yearly mortgage interest and your marginal tax rate to see an annual and five-year comparison.

How Your Estimate is Calculated

The calculator works out your taxable rental profit two ways from the same rental income, expenses and mortgage interest. Under personal ownership, it takes mortgage interest out of your expenses and gives you a 20% tax credit against your bill instead. Under company ownership, it deducts mortgage interest in full before applying Corporation Tax to what is left.

What to Keep in Mind:

Section 24 applies to individual landlords of residential property. It does not apply to furnished holiday lettings that meet the qualifying conditions, or to commercial property. Since 2020/21, an individual landlord can no longer deduct mortgage interest or other finance costs from rental income before tax. Instead, they get a flat 20% tax credit against the tax due on those costs, which is worth less than a full deduction once you are a higher or additional rate taxpayer. A company deducts mortgage interest in full as a normal expense, but its profits are taxed again when you take them out as salary or dividends.

What This Estimate May Not Include:

Furnished holiday lettings, which follow separate rules and lost automatic access to some reliefs from April 2025. Commercial or mixed-use property. The tax due when you extract company profits as salary or dividends. The Stamp Duty Land Tax and Capital Gains Tax cost of moving a property you already own into a company. How the finance costs restriction interacts with your other income and allowances, such as the personal allowance taper.