Higher tax under Section 24, the Renters’ Rights Act and higher property income tax rates from April 2027 have many landlords asking the same question: should I sell, keep going as I am, or move into a company?
Option 1: sell
Selling ends the tax on rent but triggers Capital Gains Tax on the gain. For residential property the rates are 18% within the basic rate band and 24% above it, after the £3,000 annual exempt amount. The gain has to be reported and the tax paid within 60 days of completion.
| Item | Example |
|---|---|
| Bought for, including costs | £150,000 |
| Sold for, after costs | £250,000 |
| Gain | £100,000 |
| Less annual exempt amount | £97,000 taxable |
| Capital Gains Tax at 24% | £23,280 |
Option 2: keep
Keeping the property personally means paying Income Tax on the rent with Section 24: mortgage interest isn’t deducted, and you get a 20% tax credit instead. The government has announced that property income tax rates will rise by 2 percentage points from April 2027, with the finance cost credit rising to match. For higher-rate taxpayers with mortgages, that can make the tax bill high compared with the cash the property makes.
Option 3: incorporate
A limited company can deduct mortgage interest in full and pays corporation tax at 19% to 25%. But moving existing property into a company is normally treated as a sale at market value: there can be Capital Gains Tax, and the company pays stamp duty on the market value, including the 5% surcharge. Taking money out as dividends is taxed again. Some reliefs can apply in particular cases, so take advice before you act.
Compare all three
The Property Incorporation Calculator puts selling, keeping and incorporating side by side for one property, with Section 24 on the keep option, Capital Gains Tax on selling, and stamp duty and Capital Gains Tax on moving into a company.