Corporation Tax Rates for Property Companies in 2026/27

The corporation tax rate for a property company in 2026/27 is 19% on profits up to £50,000 and 25% on profits above £250,000, with an effective 26.5% rate on the slice between. That is the question most people arrive with, and it is answered in a sentence. The harder and more valuable question is the one underneath it: does putting a buy-to-let portfolio inside a company actually leave you better off once Section 24, dividend tax, capital gains tax on the transfer and stamp duty are all in the same calculation?

This guide gives the rates and the marginal relief mechanics first, then does the work the rate table cannot: it compares the company route against personal ownership with a worked Section 24 example, sets out the capital gains and stamp duty costs of moving property in, and explains the structuring choices (single company versus multiple SPVs, director's loan extraction) that decide whether incorporation pays.

Corporation tax rates for property companies in 2026/27

A property company is taxed on its profits at exactly the same rates as any other UK company. There is no special property rate. What is specific to property is one anti-avoidance rule, the close investment-holding company charge, covered further down. The three rates for the financial year from 1 April 2026 are unchanged from 2025/26.

Taxable profit	Rate applied	How it works
Up to £50,000	19% (small profits rate)	The effective rate for most small property companies on all their profit.
£50,001 to £250,000	26.5% effective (marginal band)	Marginal relief tapers away the small profits rate, so each extra pound in this band costs 26.5%.
£250,000 and above	25% (main rate)	The headline rate applies to the whole profit once it exceeds £250,000.

The £50,000 small profits rate

A company with three buy-to-let properties producing £40,000 of taxable profit pays corporation tax at 19% on the whole amount. This rate applies whether the profit is kept in the company or paid out, and it is well below the 40% an individual higher-rate landlord would face on the same figure. For the large majority of single-property and small-portfolio companies, 19% is simply the rate, and the marginal mechanics never come into play.

The £250,000 main rate and the 26.5% marginal band

Profit above £250,000 is taxed at 25% across the board. The interesting part is the band in between. The current marginal relief regime sits in Part 3A of the Corporation Tax Act 2010: the company is charged at 25% and then given relief equal to the standard fraction (currently 3/200, set by Parliament under s.18) multiplied by the amount its profit falls short of £250,000. The arithmetic produces a 26.5% marginal cost on profit between the two limits, higher than either the floor or the ceiling. A portfolio company sitting at £150,000 of profit is paying an effective blended rate somewhere above 19% but well under 25%, and every additional pound it earns up to £250,000 is taxed at that 26.5% margin.

One detail catches people out: the £50,000 and £250,000 limits are divided by the number of associated companies. Two connected property companies do not each get the full band; they share it. That is one of the reasons the multiple-SPV question, dealt with later, is not a free way to multiply the small profits rate.

The close investment-holding company trap

A close investment-holding company (CIHC) under CTA 2010 s.18N is denied the small profits rate altogether and pays 25% on every pound, with no 19% band and no marginal relief. The good news for most landlords is that letting property to unconnected tenants is a qualifying purpose that takes a company out of CIHC status, so a standard buy-to-let SPV is usually safe. The risk arises where the company mainly holds cash, shares, or property let to connected persons. If you are setting up a structure that looks more like an investment vehicle than a letting business, the CIHC point needs checking on the facts before you assume the 19% rate is available.

Company versus personal ownership: the comparison that matters

The rate table tells you what a company pays. It does not tell you whether you should use one. For that you have to put the corporate route next to personal ownership with all the moving parts in view. The decisive factor for most landlords is Section 24.

Why Section 24 drives the decision

Section 24 (the finance-cost restriction enacted by s.24 Finance (No.2) Act 2015, sitting in ITTOIA 2005 ss.272A and 274A) restricts an individual landlord's mortgage interest to a 20% basic-rate tax credit rather than a full deduction. It is fully in force; the phase-in finished years ago. A company is not subject to Section 24, because it is an income-tax rule that only applies to individuals. Inside a company, mortgage interest is an ordinary business expense deducted in full before profit is calculated. For a geared higher-rate landlord, that single difference often outweighs everything else. Our guide on claiming mortgage interest under Section 24 sets out the personal-ownership position in detail.

A worked Section 24 example

Take a higher-rate landlord with £60,000 of rental income, £25,000 of mortgage interest and £5,000 of other allowable costs.

Held personally. The £25,000 interest is not deducted from income. Taxable rental profit is £55,000 (£60,000 less £5,000 of other costs), taxed at 40% giving £22,000, then reduced by a Section 24 credit of 20% of the £25,000 interest, which is £5,000. The income tax bill is £17,000.

Held in a company. All costs including the £25,000 interest are deducted, so taxable profit is £30,000. Corporation tax at 19% is £5,700. If the landlord leaves that profit in the company to repay debt or buy another property, the comparison stops there: £5,700 against £17,000. If instead the landlord extracts the post-tax profit as a dividend, dividend tax at 35.75% (after the £500 allowance) adds roughly £8,508.50, taking the combined cost to around £14,208.50, still below the £17,000 personal figure but by a far smaller margin.

The example shows the real lesson: the corporate advantage is largest for geared, higher-rate landlords who reinvest rather than draw the cash. For an ungeared landlord on the basic rate who needs the income to live on, the two layers of tax can wipe the advantage out.

How April 2027 changes the maths

From 6 April 2027 the UK introduces separate property income tax rates of 22% basic, 42% higher and 47% additional, enacted by Finance Act 2026 (ss.6-7, Royal Assent 18 March 2026) and applying to property income in England, Wales and Northern Ireland. Only Scotland is carved out, where Holyrood sets property income rates. In step with this, the Section 24 finance-cost reducer rises from 20% to 22%, so it continues to match the basic rate and no new wedge opens for basic-rate landlords. For higher and additional-rate landlords the rate on rental profit climbs by two points while the company rate stays at 19% or 25%, widening the gap that already favours incorporation. We cover the detail in our guide to the 2027 property income tax rates for landlords.

Feature	Personal ownership 2026/27	Limited company 2026/27
Rate on rental profit	20% / 40% / 45% (22% / 42% / 47% from April 2027)	19% to £50k, 25% above £250k
Mortgage interest relief	Restricted to 20% credit (22% from April 2027)	Full deduction, no Section 24
Tax on extracting cash	None (you already own it)	Dividend tax 10.75% / 35.75% / 39.35% on top
Reinvesting profit	Taxed at marginal rate first	Only corporation tax, then reinvest
Reporting regime	MTD for ITSA where qualifying income over the threshold	Annual CT600, outside MTD for ITSA

The cost of moving property into a company

The comparison above assumes the property is already inside the company. Getting it there from personal ownership is where incorporation can become expensive, because the transfer is a disposal for capital gains tax and a purchase for stamp duty land tax. These costs are upfront and real, and they are why incorporation is a decision to model carefully rather than a default.

Capital gains tax and Section 162 relief

Transferring a property you own personally into your company is a disposal at market value, so any gain since you bought it is in charge to CGT at 18% or 24% (after the annual exempt amount of £3,000). Section 162 incorporation relief can defer that gain where you transfer the whole of a property business as a going concern, wholly or partly in exchange for shares. The crucial word is business: a portfolio under active management is more likely to qualify than a single passive let, and the threshold follows Ramsay v HMRC [2013]. Relief defers rather than cancels the gain; it rolls into the base cost of the shares you receive. Our dedicated guide to Section 162 incorporation relief for property landlords walks through the conditions and the business test, and the wider position sits in our capital gains tax on property guide.

Stamp duty land tax on incorporation

SDLT is the harder cost to mitigate. When the company acquires the property it pays SDLT on the market value, including the 5% additional dwellings surcharge that applies to companies buying residential property, and there is no general incorporation relief that switches it off. The one genuine route to reduce the charge is FA 2003 Schedule 15, which can reduce the chargeable consideration to nil where the portfolio is already held in a real, pre-existing letting partnership with its own returns, accounting and joint borrowing. HMRC scrutinises this heavily and will attack a partnership created shortly before incorporation as a contrivance under the s.75A anti-avoidance rule. In Scotland the equivalent is Land and Buildings Transaction Tax with an 8% Additional Dwelling Supplement; in Wales it is Land Transaction Tax with its own higher-rate band structure. None of these can be assumed away, which is why the SDLT bill often decides whether incorporation makes sense at all.

Extracting profit from a property company

Money inside a company is not money in your pocket. How you get it out, and at what cost, is half the incorporation question. There are three main routes and the order you use them in matters.

Director's loan account first

When you incorporate, the value you transfer in above any share capital usually sits as a credit on your director's loan account: money the company owes you. You can draw that balance back as a repayment of the loan, entirely free of personal tax, which is normally the most efficient first route for taking cash out. A landlord with a substantial incorporation credit can live off loan repayments for several years before dividends become necessary. The reverse position is the trap to watch: if you overdraw the account so the company is lending you money, an amount still unpaid nine months after the year-end triggers a s.455 charge at 35.75% (for loans made on or after 6 April 2026), refundable when you repay. Our guide to the director's loan account mechanics in a property company covers this in full.

Dividends and the second layer of tax

Once any loan account credit is exhausted, dividends are the usual extraction route. For 2026/27, dividends are taxed at 10.75% (basic rate), 35.75% (higher rate) or 39.35% (additional rate) after a £500 dividend allowance. This is the second layer that the headline corporation tax rate hides. The combined cost of 19% corporation tax plus 35.75% dividend tax on the remainder is what a higher-rate landlord should compare against personal income tax, not the 19% alone. Splitting dividends across spouses using separate share classes can use both sets of allowances and lower bands, a standard design covered in our guide to buy-to-let limited companies.

Retaining profit to grow the portfolio

The strongest case for a company is the landlord who does not need the rent personally. Profit retained in the company is taxed once, at 19% or 25%, and can be reinvested into more property or used to pay down borrowing with no further charge until it is eventually extracted. This rolling-up effect, combined with full interest relief, is what makes the corporate route compelling for portfolio builders and far weaker for landlords drawing every pound to live on.

Reliefs and deductions inside a property company

A company calculates its taxable profit after deducting its allowable costs, and on this front it has more room than an individual landlord.

Mortgage and finance costs are deducted in full, with no Section 24 restriction. Ordinary running costs, letting agent fees, repairs, insurance and professional fees come off in the usual way. Capital allowances are available on qualifying plant and machinery, and the Annual Investment Allowance gives 100% relief on qualifying expenditure in the year it is incurred. Trading and property losses can be carried forward against future profits, and group relief allows losses to be surrendered between connected companies, which is useful where a structure mixes development activity with long-term lets. A point worth flagging: most of the structure of a residential let does not qualify for capital allowances, so the headline allowance is more relevant to commercial property and communal plant than to a standard buy-to-let.

Single company or multiple SPVs?

Landlords building a portfolio often ask whether to run everything through one company or to use several special purpose vehicles. The corporation tax limits push against the instinct to split: the £50,000 and £250,000 thresholds are shared across associated companies, so three SPVs do not each get their own 19% band. If the only goal is the small profits rate, splitting achieves nothing and adds cost.

The real reasons to use multiple SPVs are structural rather than rate-driven. Lenders often want each financing ring-fenced in its own company. Separating development projects from long-term holds keeps trading and investment activity cleanly apart. Planning a future sale of one tranche of properties is far simpler when that tranche already sits in its own company whose shares can be sold. Against all of that, a single company is cheaper to administer, simpler to file for, and easier to extract from. The right answer depends on your lending, your succession plans and your eventual exit, and it is rarely decided by the tax rate alone.

Filing, payment and compliance

A property company must file a CT600 corporation tax return within 12 months of its accounting period end, but the tax falls due earlier, nine months and one day after that period end. A company with a 31 March 2026 year-end therefore pays its corporation tax by 1 January 2027 and files the return by 31 March 2027. Companies with profits over £1.5 million (reduced by the number of associated companies) pay in quarterly instalments instead of a single payment. Late payment attracts interest, and a late return carries escalating penalties. Note that a company is outside Making Tax Digital for Income Tax Self Assessment entirely; MTD for ITSA applies to individual landlords above the qualifying-income threshold, while the company continues with annual corporate reporting.

Getting the decision right

The 19% and 25% rates are the headline, but they are the least of the work. Incorporation pays where a geared, higher or additional-rate landlord retains profit to grow a portfolio, because full interest relief and the corporate rate compound in their favour, especially from April 2027 as personal property rates rise to 22%, 42% and 47% while the company rate holds. It pays far less, and can cost more, where a basic-rate or ungeared landlord needs the rent to live on and faces a second layer of dividend tax, plus the upfront CGT and SDLT of moving property in. The figures in this guide are a framework, not a recommendation; the right answer turns on your gearing, your marginal rate, your plans for the cash and the latent gains in the properties you would transfer. A property accountant can model the specific numbers before you commit to a structure that is expensive to unwind.