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Section 24 & Ltd Company
Tax Comparison

Compare editable personal and limited-company scenarios for BTL and HMO landlords. Includes all three HMRC finance-cost-reduction caps, extraction assumptions, transfer costs and a 10-year projection.

Section 24 Modelled Ltd Co Comparison Annual Saving Payback Period 10-Year Projection Incorporation Costs

Your Portfolio Details

Portfolio Income
Number of Propertiestotal portfolio
props
Total Annual Rental Incomecombined all properties
£
Total Mortgage Interestcombined all mortgages/year
£
Other Allowable Expensesmaintenance, insurance, agent fees
£
Adjusted Total Income Above Personal AllowanceHMRC's third tax-reduction cap
£
Unused Finance Costs Brought Forwardsame property business
£
Outstanding Mortgage Balanceused for the company-rate premium
£
Tax Rates
Effective Personal Income Tax Ratesimplified marginal rate
%
Effective Corporation Tax Rateeditable simplified rate; confirm marginal relief
%
Dividend Tax Rateuse your marginal 2026/27 rate
%
Limited Company Structure
Mortgage Rate Premiumuse a current product comparison
%
Annual Accounting Feesuse your accountant's quote
£
Annual Dividends Withdrawnamount taken out per year
£
One-Off Incorporation Costs
CGT on Transfer to Companyestimate — varies by gain
£
SDLT on Transferadditional property rates on each
£
Refinancing Costsnew Ltd Co mortgages per property
£
Legal & Other Setup Costssolicitor, company formation
£
How this calculator works — formulas & sources
Section 24 — Individual Tax
Property Profit = Gross Rent − Non-finance Expenses
Tax Reduction Base = lowest of finance costs including brought forward, property business profit and adjusted total income above the Personal Allowance
Tax Reduction = Base × 20% · unused finance costs carry forward
The selected marginal rate simplifies the wider Income Tax computation, but the finance-cost reduction now applies all three HMRC caps and reports the unused amount carried forward. HMRC methodology. Section 24 Explained · HMO vs BTL
Limited Company Tax
Taxable Profit = Rent − Expenses − Interest − Rate Premium − Accounting
Corporation Tax = Positive Profit × Selected Effective Rate
Dividend Tax = (Dividend Paid − £500 allowance) × Selected Rate
This comparison models dividends and retained profit only; it does not model salary, payroll or benefits. The calculator caps dividends at available post-tax profit and uses editable effective rates. It does not replace a full Corporation Tax or personal tax computation. Section 24 Explained · HMO vs BTL
Annual Saving
Annual Difference = (Owner Cash + Retained Company Profit) − Personal Net Cash
Retained profit is not counted twice and is not presented as cash in the owner's pocket.
This compares annual economic benefit under the selected extraction assumptions. Retained company cash and personal cash are not equivalent: later extraction can create more tax. Section 24 Explained
Payback Period
Payback Period = Total Incorporation Costs ÷ Annual Saving
Incorporation Costs = CGT + SDLT + Refinancing + Legal
Payback is a model output, not a recommendation. New company purchases avoid a later property transfer but still incur purchase taxes, finance and company costs. Stamp Duty (SDLT) Explained
10-Year Cumulative Saving
Cumulative Saving (Year n) = (Annual Saving × n) − Incorporation Costs
Positive = Ltd Co is ahead · Negative = still in payback period
The 10-year projection shows when the modelled company scenario recovers the entered one-off transfer costs. Treat it as one output among tax accuracy, financing, extraction, administration, exit and legal considerations. Section 24 Explained
Incorporation Relief
Incorporation Relief may defer a qualifying gain when a business and all its assets, other than cash, transfer for shares
Eligibility and SDLT treatment depend on the legal and factual structure
Do not assume a property portfolio qualifies or that SDLT is always due on the same base. Partnership, connected-party, market-value and relief rules require transaction-specific advice. Stamp Duty (SDLT) Explained · Section 24 Explained
Official sources: HMRC landlord finance-cost guidance · Corporation Tax rates · Residential SDLT rates

Tax Comparison

Annual Modelled Difference (Ltd Co vs Personal)
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⬤ Calculating…
Payback Period
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years to recoup costs
One-Off Costs
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total incorporation
Personal Ltd Co
10-Year Cumulative Income
Personal Ltd Co
How it works

Section 24 and why it matters

Section 24 changed UK landlord taxation permanently. Here's what it means, how the numbers work, and when a limited company actually helps. Section 24 explained in full

SECTION 24
The mortgage interest trap

Since April 2020, qualifying residential finance costs are not deducted when an individual calculates property profit. A basic-rate reduction is then calculated using the lowest of finance costs, property profit and adjusted total income. This calculator exposes those caps but still simplifies the wider Income Tax calculation. Section 24 Explained

LIMITED COMPANY
Full interest deduction restored

Companies can generally deduct qualifying mortgage interest before Corporation Tax, but the effective rate depends on taxable profits, associated companies and marginal relief. Accounting, finance and extraction taxes can change the comparison, so the calculator keeps the effective rates and extraction assumptions visible. Section 24 Explained

INCORPORATION COSTS
The one-off hurdle

Moving existing BTL or HMO property into a company can create CGT, SDLT, legal and refinancing costs. The tax bases and any relief depend on the transfer, consideration, debt, connected parties, ownership and whether a qualifying business or partnership exists. Enter transaction-specific estimates and obtain specialist advice before a transfer. Stamp Duty (SDLT) Explained · HMO vs BTL

PAYBACK PERIOD
A useful comparison metric

The payback period divides the entered one-off transfer costs by the modelled annual difference. It does not prescribe an acceptable horizon and should be stress-tested for changing rates, profits, extraction and refinancing costs. Section 24 Explained

EXTRACTION TAX
Profit in the company vs in your pocket

Corporation Tax applies to taxable company profit at the applicable rate, including marginal relief where relevant. Salary, dividends and retained profit have different tax consequences, and the rates and allowances can change. This simplified model uses the effective Corporation Tax and dividend-tax rates you enter; it is not a full company or personal tax computation. Current Corporation Tax guidance. Section 24 Explained

WHO BENEFITS MOST
Compare the whole structure

The result changes with personal income, qualifying finance costs, property profit, company profit, extraction, finance pricing, administration and exit plans. Buying a new property directly in a company avoids a later transfer of that property, but not its original acquisition costs. Run multiple scenarios rather than treating tax band or holding period as a decision rule. Section 24 Explained

FAQ

Common questions

What is Section 24 and how does it affect me?
The residential finance-cost restriction was introduced by Finance (No. 2) Act 2015 and fully phased in from April 2020. Individual landlords receive a 20% tax reduction on the lowest of finance costs, property profit and adjusted total income; unused finance costs may carry forward. Companies are outside this specific Income Tax restriction but have their own tax and extraction rules. Section 24 Explained
Should I move my properties into a limited company?
It depends on the full personal and company tax computations, finance, extraction plans, transfer taxes and intended holding period. The Section 24 reduction is capped, so even a basic-rate case is not automatically neutral. Use the model as a first comparison and obtain specialist advice before transferring property. Section 24 Explained · Stamp Duty (SDLT) Explained
What is Incorporation Relief and can I avoid CGT?
Incorporation Relief under TCGA 1992 s162 may defer a qualifying gain when a business and its assets transfer for shares, but the conditions and property-business facts are complex. SDLT is a separate computation affected by consideration, debt, connected parties, partnership history and any available relief. Obtain transaction-specific tax and legal advice. Stamp Duty (SDLT) Explained · Section 24 Explained
What is the corporation tax rate for property limited companies?
The small-profits rate is 19% and the main rate is 25%, with marginal relief between the £50,000 and £250,000 limits. Those limits are reduced for short accounting periods and divided by the number of associated companies. The calculator accepts an editable effective rate because the correct result depends on the company’s full facts. Extraction can create separate personal tax. Check current GOV.UK rates. Section 24 Explained
How does the mortgage rate premium for Ltd Co affect the comparison?
Company and personal mortgage pricing changes by product, LTV, property, borrower and date. Compare like-for-like current quotations, including arrangement fees and early-repayment charges, then enter the annualised difference rather than relying on a fixed market premium. HMO vs BTL · Rent vs Buy Explained
Is it better to buy new properties in a company from the start?
There is no universal answer. Buying directly in a company avoids a later transfer of that property, but the acquisition still incurs applicable SDLT, finance and legal costs. Compare Corporation Tax, retained profit, extraction tax, mortgage terms, administration and exit plans with the personal scenario before deciding. Section 24 Explained