Tax Changes for Landlords | If you’re weighing up whether to buy property in your personal name or via a limited company, the latest tax changes for landlords could significantly influence your decision. With new rules on income tax, Making Tax Digital (MTD), and stamp duty all taking effect between 2025 and 2028, understanding the financial impact of both ownership structures is now more important than ever.
Why These Tax Reforms Matter for Buy-to-Let Investors
Whether you’re a portfolio landlord or a first-time investor, tax efficiency should be a core consideration. From mortgage interest relief limitations to the end of tax perks for furnished holiday lettings, these reforms are shifting the landscape for unincorporated landlords.
If you’re still unsure whether a personal or limited company BTL setup is right for you, consider the upcoming changes and how they affect each route.
Income Tax Hike for Individual Landlords – From April 2027
From the 2027–28 tax year, unincorporated landlords will see an increase in income tax rates on rental income:
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Basic rate: Rising from 20% to 22%
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Higher rate: Increasing from 40% to 42%
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Additional rate: Jumping from 45% to 47%
Importantly, mortgage interest relief will still be limited and calculated only at the new 22% basic rate, reducing the effectiveness of tax deductions for higher-rate taxpayers.
These changes may reduce the net profitability of property investments held in personal names, especially for landlords with multiple properties or those in higher tax brackets.
Making Tax Digital (MTD) for Landlords – Phased Rollout from 2026
The rollout of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will become mandatory for landlords who exceed certain income thresholds:
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From April 2026: Applies to landlords with annual gross property income over £50,000
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From April 2027: Applies to those earning over £30,000
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By July 2029 (expected): Could extend to landlords with income above £20,000
MTD will require landlords to maintain digital records and submit quarterly updates to HMRC using approved software. This could add complexity and cost for landlords managing their affairs outside of a limited company structure, where bookkeeping is often already digitised.
Abolition of Furnished Holiday Lettings (FHL) – From April 2025
Previously, landlords operating short-term lets that met the FHL criteria enjoyed generous tax advantages, including:
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100% mortgage interest relief
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The ability to claim capital allowances
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Entrepreneur’s relief on sale
As of April 2025, the FHL regime is being abolished. These properties will now be taxed in line with standard residential lettings, eliminating many of the historic benefits and increasing tax exposure for holiday-let landlords.
SDLT Surcharge Increases – Effective Immediately
Under the Autumn 2024 Budget, Stamp Duty Land Tax (SDLT) on additional residential properties increased sharply:
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The buy-to-let and second home surcharge rose from 3% to 5%
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The nil-rate threshold reverted to £125,000 in April 2025, up from the temporary higher limit
This change increases the upfront cost of acquiring property, which could affect investors seeking to grow a portfolio through personal ownership. Incorporating via a limited company, BTL could allow for longer-term financial planning that mitigates these costs through more efficient tax treatment.
New Council Tax Surcharge for High-Value Homes – From April 2028
A new annual council tax surcharge will apply from April 2028 to UK homes valued over £2 million. This policy is aimed at luxury properties, but landlords operating in premium markets, particularly in London or the Southeast, should factor in this ongoing cost when assessing investment structures.
Should You Incorporate Your Property Portfolio?
Given the changes above, many landlords are now exploring the benefits of owning property via a limited company. This structure allows:
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Full finance cost deduction (mortgage interest is treated as a business expense)
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Lower corporation tax (currently 25%) compared to personal income tax rates
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Easier reinvestment of profits without triggering personal tax liabilities
While a company structure introduces additional complexity (e.g., filing annual accounts, corporation tax returns), the tax savings can often outweigh the admin, especially for higher-rate taxpayers or portfolio investors.
For those just starting out, we recommend visiting our Adviser Mortgage Network for the Newly Qualified for guidance on setting up buy-to-let structures.
Need Help Navigating BTL Structuring?
If you’re advising clients or considering investing yourself, understanding the nuances between personal vs limited company buy-to-let is critical.
Our Specialist Mortgage Network for Advisers supports brokers working with BTL clients who need help navigating complex tax, lending, and structuring challenges.
You can also explore the benefits of working with a network in our Why Join a Mortgage Network resource.
2025–2028 Tax Shifts Will Reshape BTL Choices
With so many tax and regulatory changes taking effect, landlords need to be strategic. For some, personal BTL ownership may remain viable, but for many, the rising tax burden makes limited company BTL the more efficient long-term choice.
Before you commit, weigh your income level, property goals, and willingness to manage complexity. If you’re a broker, now is the time to ensure your clients understand the consequences and opportunities of choosing the right BTL structure. Find a mortgage broker using Connect Adviser Directory.
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