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What is Corporation tax?
Last verified 31 October 2026
Corporation Tax is the tax a limited company pays on its profits. Where a company owns a let property, GOV.UK says the rental income is treated like other business income of the company.
Why it matters to landlords
The main rate is 25% on profits above £250,000 and the small profits rate is 19% for profits of £50,000 or less, with marginal relief between those figures. Both limits are reduced for short accounting periods and for associated companies. Companies are outside the residential finance cost restriction, which applies to individuals, partners and trusts.
A company is a separate taxpayer, so rent paid into it is not your personal income, and anything you take out as a salary or dividend is taxed on you separately. Because the company pays Corporation Tax on its profits, check how a dividend would then be taxed before choosing between holding property personally and through a company.
Example
Greenfield Properties Ltd has a rental profit of £40,000 in its accounting period and no associated companies. Profits are under £50,000, so it pays the 19% small profits rate, which is £7,600. Its director then pays personal tax on any dividend she draws.
Related terms
- Limited company buy-to-let
- Dividend tax
- Special purpose vehicle (SPV)
- Finance costs
- Incorporation Relief