Corporation Tax for Landlords: Running a Property Company in 2025/26
Many landlords now hold buy-to-let properties through a limited company rather than personally. The tax treatment is different — and often more favourable. Here's how Corporation Tax works for property companies.
Why Use a Company for Property?
Since April 2020, individual landlords can no longer deduct mortgage interest from rental income. They get a 20% tax credit instead. But companies can still deduct the full mortgage interest as an expense.
| Individual | Company | |
|---|---|---|
| Mortgage interest deduction | 20% tax credit only | Full deduction |
| Tax rate on profits | Up to 45% income tax | 19–25% Corporation Tax |
| Extracting profits | Automatic (it's your money) | Dividends (taxed again) |
| Capital Gains Tax | 18%/24% | 19–25% CT (indexation frozen at December 2017) |
| Stamp Duty | Standard rates | 5% surcharge applies |
CGT rates note: Individual residential property gains are taxed at 18% (basic rate) or 24% (higher/additional rate) since 6 April 2024. For companies, gains are taxed at the CT rate (19–25%). Indexation allowance was frozen at December 2017 — no indexation accrues for assets acquired after that date, and none at all for assets bought since January 2018.
Allowable Expenses for Property Companies
Your property company can deduct these from rental income:
Fully Deductible
- Mortgage interest (the big one — full deduction for companies)
- Insurance (buildings, landlord, public liability)
- Letting agent fees and management fees
- Repairs and maintenance (not improvements)
- Accountancy fees
- Legal fees (for tenancy agreements, debt recovery)
- Council tax (when property is empty)
- Utilities (when property is empty or included in rent)
- Advertising for tenants
- Travel to properties (for maintenance, inspections)
- Ground rent and service charges
Not Deductible
- Property improvements (capital — claim through capital allowances or SBA)
- Your own labour
- Initial property purchase costs (stamp duty, legal — these are capital)
- Fines and penalties
Mortgage Interest — The Key Advantage
Example: Rental income £30,000, mortgage interest £15,000, other expenses £5,000.
| Individual | Company | |
|---|---|---|
| Rental income | £30,000 | £30,000 |
| Allowable expenses | £5,000 | £20,000 (including mortgage) |
| Taxable profit | £25,000 | £10,000 |
| Tax (40% / 19%) | £10,000 | £1,900 |
| Mortgage interest credit (20%) | -£3,000 | N/A |
| Net tax | £7,000 | £1,900 |
The company saves £5,100 in tax. But remember — you'll pay dividend tax when extracting profits.
CT600 for Property Companies
Property income goes in Box 190 (Income from a property business) on the CT600.
Your tax computation should show:
- Gross rental income
- Allowable deductions (itemised)
- Net property income
- Corporation Tax calculation
Wear and Tear / Replacement Relief
For furnished properties, you can claim the cost of replacing furnishings (furniture, appliances, kitchenware) as a revenue expense. This replaced the old 10% wear and tear allowance.
Structures and Buildings Allowance (SBA)
If you build or renovate commercial property, you can claim 3% per year Structures and Buildings Allowance. SBA does not apply to residential dwellings. It is excluded from any building used as a dwelling — and converting a commercial building into residential use does not qualify for SBA, because once the building is used as a dwelling the allowance cannot be claimed.
Filing with Taxpipe
If your company has UK property rental income, Taxpipe handles your CT600 filing. Enter your net rental income in Box 190 and Taxpipe calculates the Corporation Tax and submits your return electronically to HMRC.
Company director with rental income? File your CT600 with Taxpipe — £59.