The shift from personal to corporate ownership has been the most significant structural change in UK buy-to-let in the last decade. Driven by Section 24 mortgage interest tax changes (which restrict interest relief for personal landlords to a 20% tax credit), the number of property companies incorporated in the UK has surged to over 50,000 per year. Here is how it works in practice.\n\nWhat Is an SPV — A Special Purpose Vehicle is a limited company set up specifically to hold property investments. The company buys, owns, and lets the properties. Rental income goes to the company. The company deducts mortgage interest, management costs, maintenance, and all other allowable expenses from its profits, then pays corporation tax on the remainder. This is fundamentally different from personal ownership where Section 24 prevents higher-rate taxpayers from deducting mortgage interest.\n\nSetting Up the Company — Register a new company at Companies House (12 pounds online, takes 24 hours). The SIC code should be 68209 (other letting and operating of own or leased real estate). You are the director and shareholder. If buying with a partner, you can both be directors and split shareholdings however you wish — this is one of the advantages of company ownership. You need a business bank account (Starling, Tide, and Mettle offer free business accounts suitable for property companies). You need an accountant familiar with property companies — budget 500 to 1,000 per year for annual accounts and corporation tax returns.\n\nThe Tax Advantage — In the company, mortgage interest is fully deductible against rental income. Corporation tax is 25% on profits (for companies with profits over 250,000, with a small profits rate of 19% for profits under 50,000 and marginal relief between). For a higher-rate taxpayer personally, the effective tax rate on rental income after Section 24 can exceed 60% in extreme cases. Through a company, it is 19% to 25%. The bigger the mortgage relative to rent, the bigger the advantage of corporate ownership.\n\nExample — Property worth 250,000, rental income 1,000 per month (12,000 per year), mortgage interest 600 per month (7,200 per year), other costs 1,800 per year. Personal (higher-rate): taxable income is 12,000, tax credit for interest is 1,440 (20% of 7,200), income tax at 40% is 4,800, minus credit gives net tax of 3,360. Profit after tax and costs: 12,000 minus 7,200 minus 1,800 minus 3,360 equals a loss of 360. Company: taxable profit is 12,000 minus 7,200 minus 1,800 equals 3,000. Corporation tax at 19% is 570. Profit after tax: 2,430. The same property loses money personally but generates 2,430 profit through a company.\n\nMortgage Rates and Availability — Company buy-to-let mortgages carry slightly higher rates than personal BTL mortgages — typically 0.25% to 0.75% more. However, the tax savings usually far outweigh the rate premium. Most specialist BTL lenders offer company products: The Mortgage Works, BM Solutions, Paragon, Landbay, Fleet Mortgages, Aldermore, Shawbrook, Kent Reliance, and Foundation Home Loans. Personal guarantees from the directors are required by all lenders, so limited liability protection does not fully apply.\n\nExtracting Profits — Money in the company is not money in your pocket. To access company profits personally, you can take a director salary (tax-free up to the personal allowance, then at income tax rates), take dividends (taxed at dividend rates: 8.75% basic, 33.75% higher), or leave profits in the company to reinvest. Most property company directors take a small salary (12,570 per year) and dividends as needed. If you do not need the income, leaving money in the company to build a war chest for the next deposit is the most tax-efficient approach.\n\nTransferring Existing Properties — This is where it gets expensive. Transferring a personally owned property to a company is legally a sale. It triggers stamp duty (the company pays SDLT including the additional property surcharge), capital gains tax (you personally are deemed to have sold at market value), and potentially mortgage exit fees if breaking a fixed deal. For many landlords, the cost of transferring existing properties exceeds the future tax saving. The general advice is to hold existing properties personally and buy all new properties through the company. However, for large portfolios with significant remaining mortgage terms, a detailed calculation by a specialist accountant may show that transferring is worthwhile over a long enough time horizon.\n\nAccounting and Compliance — Company accounts must be filed at Companies House annually. Corporation tax returns must be filed with HMRC. As a director you must file a personal self-assessment return showing your salary and dividends from the company. Annual confirmation statements to Companies House are required. The administrative burden is higher than personal ownership, but a good property accountant handles most of it. Budget 800 to 1,500 per year in total for a small portfolio company.\n\nWhen NOT to Use a Company — If you are a basic-rate taxpayer and expect to stay one, the personal Section 24 restriction is less punishing (you lose the difference between 20% relief and your marginal rate, which is zero). If you are buying one property with a small mortgage, the administrative costs may exceed the tax saving. If you want to live in the property, company ownership of your main residence creates complications including benefit-in-kind charges. If you plan to sell quickly, CGT rates for companies are effectively higher when you factor in double taxation (corporation tax on the gain plus income tax when extracting the proceeds).