Buy-to-let in 2026: SDLT, Section 24, and when a limited company still makes sense

# Buy-to-let in 2026: SDLT, Section 24, and when a limited company still makes sense

Buy-to-let maths changed again. Higher stamp duty on additional dwellings, tighter relief on mortgage interest for personal landlords, and a further shift in how property income will be taxed from April 2027 mean yesterday’s “rule of thumb” can misprice today’s deal.

This guide is a practical walkthrough of the three decision points that matter most:

1. Buying: what SDLT really costs
2. Holding: Section 24 and upcoming property income rates
3. Structuring: personal name versus limited company

Keep it bookmarked when you run numbers on the next purchase or refinance.

1) Buying: SDLT is part of the yield, not an afterthought

For many buy-to-let and second-home purchases in England and Northern Ireland, you pay standard residential Stamp Duty Land Tax plus the higher rates for additional dwellings. That surcharge rose to 5% (from 3%) for relevant transactions from 31 October 2024. The residential nil-rate band also tightened again from 1 April 2025.

Why investors get caught out

People still quote gross yield on purchase price alone:

Annual rent ÷ purchase price

A better first filter is:

Annual rent ÷ (purchase price + SDLT + buying costs)

On a typical additional dwelling, SDLT is large enough to move the yield by a meaningful fraction of a percent, sometimes the difference between “borderline” and “no”.

Quick habit

Before you offer, ask your conveyancer for an SDLT estimate on this property under additional dwelling rules (and confirm whether any replacement-main-residence exceptions could apply, they usually do not for pure investment buys).

Scotland and Wales use different land transaction taxes. If you buy across borders, do not reuse an England spreadsheet.

2) Holding: Section 24 is still the quiet profit killer

If you own personally, finance costs (mainly mortgage interest) are not deducted in full against rental income the old way. Instead, you generally receive a basic-rate tax reduction related to those finance costs (often discussed as the Section 24 restriction).

What that means in practice

• Higher-rate and additional-rate landlords feel it most.
• “Interest cover” on a mortgage application is not the same as tax profit.
• Cash can look healthy while taxable profit looks worse.

Looking ahead to April 2027

Government has signalled higher tax rates on property income (separate from earnings) from 6 April 2027 for relevant parts of the UK. Exact planning should always follow the Finance Act wording and HMRC guidance in force when you file, but the direction of travel is clear: personal property income is not getting cheaper to hold.

Making Tax Digital (MTD)

From April 2026, landlords with qualifying gross income above the first threshold (phased reductions in later years) may need digital records and quarterly updates. Even if you are below the first band today, set books up as if MTD is coming, clean digital records help anyway.

3) Limited company: useful tool, not a magic switch

Companies can still make sense because:

• mortgage interest is generally a corporation tax deduction (subject to normal rules)
• profits can sometimes be retained at corporation tax rates
• limited liability and clearer portfolio branding help some investors

But incorporation is often expensive to get into if property is already owned personally.

The cost of moving existing properties in

Transferring personally owned rentals into a company is usually treated as a disposal at market value. That can trigger:

• Capital Gains Tax (with UK residential property reporting/payment deadlines where tax is due, commonly discussed as a 60-day window)
• SDLT / land tax again, often including higher rates for additional dwellings / company purchase rules

Those entry costs can take years to earn back. Many landlords are better doing new buys in a company while leaving old stock personally owned: a hybrid that needs tidy governance, not vibes.

When a company often looks stronger

• You are a higher-rate taxpayer with material interest costs.
• You can leave profits in the company to grow the portfolio.
• New purchases (not already-owned stock) are the main plan.
• You accept accounts, Corporation Tax, and director extraction planning as normal overhead.

When personal ownership may still win

• You need most rental cash for lifestyle spending each year.
• Mortgage pricing or lender appetite is better in personal names for your case.
• The portfolio is small and admin cost would dominate.
• You are near a sale / CGT event anyway and should not complicate basis.

Worked sketches (illustrative only)

These are teaching examples, not quotes. Always model your actual rates, reliefs, and mortgage terms.

Sketch A: personal landlord, interest-heavy

Rent £18,000. Allowable expenses (ex-interest) £3,000. Interest £9,000.

Under Section 24-style rules, interest does not simply wipe taxable profit pound-for-pound for higher-rate taxpayers the way pre-restriction rules did. Your tax bill can surprise you even when cash left after interest feels modest.

Bookmark test: if interest is a large share of rent, run a personal versus company model before the next remortgage.

Sketch B: company buy, profits retained

Same property bought in a special purpose company. Interest deducted in arriving at company profit. Corporation Tax applies. No personal tax until you extract funds (salary/dividends/loans, each with rules).

If you leave profit in to fund deposits, the company route can compound faster. If you extract almost everything, the advantage narrows.

Sketch C: incorporate an existing £900k portfolio

Even before maths, list:

• likely CGT on latent gains
• land tax on transfers
• lender consent / early repayment charges
• legal and valuation fees

If the payback exceeds your planned hold period, stop. Structure should serve the investment, not the other way round.

Sketch D: first additional dwelling after the surcharge rise

You already own a home and are buying a £280,000 flat to let. SDLT with the additional-dwellings surcharge can be large enough that your true capital in the deal is well above £280,000 before refurbishment. Re-run yield on that higher base. If the deal only works on the old 3% surcharge assumption, it does not work.

Decision matrix you can reuse

Question	Tips personal	Tips company
Do I need the cash each year?	Often better	Weaker if heavy extraction
Is interest high versus rent?	Painful under Section 24	Often stronger
Is this a new buy or a transfer in?	Fine either way	Prefer new buys
Am I organised enough for company admin?	Lower bar	Must be yes
Any sale in the next 24 months?	Keep simple	Avoid reshuffles

A practical sequence before you buy or refinance

1. Estimate all-in purchase cost including SDLT and fees.
2. Build a 3-year cash flow (voids, repairs, rate rises).
3. Tax the cash flow both ways (personal versus company).
4. Stress-test extraction needs.
5. Only then instruct solicitors/lenders on structure.

Remortgage moments are decision moments

Landlords often revisit structure only when buying. Remortgage is just as important. A rate rise that squeezes cash flow can also change the personal-vs-company comparison because interest becomes a larger share of rent.

Before you refinance, ask:

• Will the new lender allow a company borrower if that is the better tax home?
• Are early repayment charges large enough to delay a sensible restructure?
• If I stay personal, how does higher interest interact with Section 24?
• If I move to a company later, am I creating a second land-tax event?

Sometimes the answer is “refinance now, restructure never.” Sometimes it is “do not refinance into a five-year product that blocks a planned incorporation.” The point is to ask before you sign.

Portfolio hygiene that investors bookmark

• One spreadsheet tab per property: rent, voids, interest, other costs, capital spend.
• Separate capital improvements (may help CGT base cost) from repairs (usually revenue).
• Keep purchase completions statements forever; they are gold at sale.
• Diary MTD thresholds if you have material gross rents.
• Review jointly owned properties: splits, bank access, and who declares what.

None of this is glamorous. All of it reduces tax friction and sale delays.

If you would like help modelling a purchase or remortgage (SDLT, Section 24, and company versus personal on your numbers), contact us. Bring your rent schedule, mortgage interest, and the monthly cash you need to take out. We are happy to help you pressure-test the structure before you commit.

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General UK tax information for investors. Land tax rules differ by nation; rates and thresholds change. This is not advice for a specific property or person.