Mark Alexander - Founder of Property118

I've seen lower rates in headlines, but honest applications from Portfolio landlords rarely, if ever, qualify for those products in my experience.... Read More

A would be most people’s answer, and mine too based on the very limited information provided.

A lot more information would be required to make a fully informed decision, not just financial facts but also things like age and long term objectives and aspirations.

Pulling money out of the company might not be easy and the finance costs on HMO’s is likely to be much more expensive, BUT, there could be reasons to go that way too regardless of the obvious higher costs now.... Read More

I understand why this concern arises. Section 24 created a very unusual position for individual landlords, and it felt inconsistent when compared with how finance costs are treated in most other areas of the tax system. There is an important distinction that explains why the same measure has never been applied to companies.

Individual landlords fall under the income tax regime. Companies fall under the corporation tax regime. These are separate systems with different underlying logic. When Section 24 was introduced, the Government argued that individual property letting was not regarded as a trading activity. That interpretation gave the Treasury room to treat finance costs differently for individuals without altering the structure of corporation tax.

Corporation tax has always allowed companies to deduct finance costs in the same way as any other business. Removing that deduction for companies that hold residential property would have far wider consequences than Section 24. It would affect commercial landlords, pension funds, insurers, REITs, housing associations and Build to Rent operators. These sectors rely on normal corporation tax rules. Any disruption to that framework would require extensive consultation and a complete rewrite of well-established principles.

The policy risk is therefore very different. Section 24 was introduced during a period when the Government was trying to influence the owner-occupier and landlord market. The corporate sector was not the target of that intervention. The direction of travel since then has centred on regulation rather than changes to corporate finance deductibility.

Speculation can create anxiety across the landlord community. The most reliable approach is to follow published policy signals. Property118 reviews every Budget document, technical note and consultation paper. There is no indication that corporate interest deductibility is under review. If that position ever changes, we will report it immediately.... Read More

We are a Google-accredited news feed, so hopefully it will be picked up that way.

The other issue is that non-statutory clearance was removed several years ago, meaning that landlords will now have to complete the incorporation transaction first and hope that HMRC don't find an excuse to try to disallow the relief. When they do that, it involves major legal headaches and costs. That's all very well for HMRC, because they are funded by the taxpayer and there is no repercussion (other than embarrassment) if/when their decisions are eventually proven wrong in the tribunal system.

GOOD NEWS - our article is already in Pole position in Google News... Read More

My recent research into that point concluded that, generally, there is no longer a differential in interest rates offered to individual portfolio landlords and those operating via a Limited Company. Further, aside from the differing tax outcomes, underwriting of BTL Limited Company mortgage applications is currently more lenient, particularly in relation to interest cover requirements.

Below are links to a couple of articles I wrote off the back of that research ...

1) How Limited Company Buy-To-Let Mortgages Work - LINK https://www.property118.com/limited-company-buy-to-let-mortgages-2025/

2) What Landlords Need to Know About Buy-To-Let Affordability Tests in 2025 - LINK https://www.property118.com/what-landlords-need-to-know-about-buy-to-let-affordability-tests-in-2025/... Read More

Those new calculations were much easier to do than I thought. Thankfully I made a decent job of my spreadsheet, so I was able to amend the variables quickly.

Updated Calculations Based on the New Finance Cost Relief Clarifications

Thank you again for highlighting the updated Government guidance.
The illustration has now been rebuilt so that it reflects the correct
finance cost credit of 22%. All four scenarios use the same property,
rent, cost and mortgage assumptions.

Portfolio profile

8 properties
£200,000 each (total value £1,600,000)
60% loan to value
Total borrowing £960,000
Interest rate 5.5% (interest £52,800 per year)
Total rent £115,200 per year
Operating costs £23,040 per year
Real cash profit after interest £39,360

1. Personal landlord at 40% tax (current rules)

Taxable profit under Section 24£92,160
Tax at 40%£36,864
Finance credit (22% of £52,800)£11,616
Tax payable£25,248
Net income after tax£14,112

2. Personal landlord at 42% tax (from April 2027)

Tax at 42%£38,707.20
Finance credit (22% of £52,800)£11,616
Tax payable£27,091.20
Net income after tax£12,268.80

3. Limited Company at 19% Corporation Tax (small profits rate)

Taxable profit£39,360
Corporation Tax at 19%£7,480
Net cashflow after tax£31,880

4. Limited Company at 25% Corporation Tax (upper rate)

Corporation Tax at 25%£9,840
Net cashflow after tax£29,520

Summary comparison

Scenario
Net cashflow after tax

Personal landlord at 40%£14,112
Personal landlord at 42%£12,268.80
Limited Company at 19% CT£31,880
Limited Company at 25% CT£29,520

The 2% headline increase is not the main issue. Section 24 still inflates taxable profit for landlords who hold property personally. A company pays tax on real profit and is therefore far less affected. This remains the core driver of the difference.... Read More

Thank you for sharing this. I appreciate you pointing me to the updated material on the Government website. I was not aware of the specific reference to finance cost relief being aligned to the new 22% property basic rate at the time I published the article or in the updates I worked on over-night. Your comment has prompted me to look again at the workings and to update the calculations so that the illustration reflects the most accurate position. I'm working on that now and will remodel the same private landlord, plus two versions for the Limited Company based on 19% and 25% corporation tax. This may take a while to adjust my calculations so please give me an hour or so.

Meanwhile, the underlying point remains the same. The impact of the 2% rate rise depends on whether interest is deductible. A landlord who holds property personally under Section 24 still faces tax on an inflated profit figure. A landlord who holds property inside a company or within a structure where interest is deductible pays tax on the real profit instead. The difference between those two positions is significant.... Read More

Mick, I strongly recommend you book a full consultation because I cannot provide you the level of guidance on a forum without you sharing lots of very detailed information and personal information that I wouldn’t recommend you to post here.... Read More

There is no definitive guidance yet on how any future “mansion tax” or equivalent valuation-based charge would apply to buildings with multiple units or HMOs. Nothing has been published that sets out whether assessments would be based on:

• the value of the entire building as one hereditament
or
• the value of the individual units if they are self-contained

There is also no clarity on how shared-facility HMOs, mixed-use buildings or sui generis properties would be treated.

The Government has not released draft legislation, technical notes, or implementation rules that would allow a reliable interpretation. Anything beyond this would be speculation.

Once formal documents are published, the details will become easier to interpret. Until then, it is sensible to avoid drawing conclusions based on early commentary or press summaries.... Read More

Lenders base their rental cover calculations on several factors, including interest rates, operating costs, tax treatment and their own internal risk models. The new two percent tax change will form part of the broader cost landscape, although it is only one component of the affordability picture. Some lenders may adjust their stress tests over time if they believe the overall cost of holding rental property has increased. Others may take a different view.

The important point is that lender criteria do not always move in a straight line with individual tax changes. Each lender reviews its exposure, funding costs and regulatory obligations before making alterations to rental cover requirements. This is why the market often shows a wide range of approaches at any given moment.

A periodic review of your borrowing and rental cover is sensible, especially if you are planning future refinances or portfolio changes. The direction of travel becomes clearer once lenders have had time to react to the new environment.... Read More