SimpleReturns

My company rents out property: how is that taxed?

Reviewed by Lee Jones, Founder · Updated 27 October 2026
The short answer

If your company owns property and collects rent, the company pays Corporation Tax on the profit, the same tax it pays on any other money it makes. The profit is the rent your company earned in the year minus the costs of letting the property. Your mortgage interest is not one of those costs, but your company still gets relief for it in full, against its total profits. The tougher rule that stops people who let homes in their own name taking mortgage interest off the rent does not apply to companies.

Official source. This guide is a plain-English summary of official GOV.UK guidance, not advice. The authoritative source is Property Income Manual PIM2052 on gov.uk. Always rely on that over our summary.

How is rented-out property taxed in a company?

Your company pays Corporation Tax on the profit it makes from renting property out. It is the same tax your company already pays on its other earnings, just worked out on the rent instead of on sales. You do not pay income tax on it, and the company does not pay it the way a person letting a flat in their own name would.

The figure that gets taxed is your rental profit: the rent your company earned for the year, minus the real costs of letting the place out. If the costs are bigger than the rent in a year, you have a loss, not a profit, and there is no tax to pay on it for that year.

What counts as profit on the rent?

Start with the rent your company earned for its accounting year, including rent that was due but not yet paid. Then take off the everyday costs of running the let. What is left is the profit you pay tax on.

The usual costs you can take off:

  • Letting-agent fees: what you pay an agent to find tenants and manage the property.
  • Repairs and upkeep: fixing what is already there, like mending a broken boiler or repainting.
  • Replacing furniture and furnishings in a let home: replacing a worn carpet, sofa or fridge with a similar one can come off, but buying the first one cannot.
  • Insurance: buildings and landlord insurance for the property.
  • Mortgage interest: the interest part of your buy-to-let mortgage (not the bit that pays back the loan itself) is not taken off the rent itself. Your company gets relief for it in full against its total profits under separate rules, which usually comes to the same tax.
  • Other running costs: ground rent, service charges, and the cost of getting a tenant out so you can re-let.

One thing you cannot take off the rent is the cost of improving the property, like adding an extension or fitting a brand-new better kitchen where there wasn't one before. Fixing something is a repair you can claim. Upgrading it to something better is an improvement, and that follows different rules. We sort which side of the line a cost falls on.

The big one: mortgage interest

You may have heard that landlords can no longer take their mortgage interest off the rent. That change hit people who let homes in their own name, as individuals: since April 2020 they cannot take any of it off, and get a tax credit worth 20% of the interest instead. It does not apply to your company.

When your company owns the property, the interest on the mortgage still gets full tax relief. It is not counted as a cost of the letting itself. Your company works out its rental profit without the interest, then takes the whole of the interest off its total profits before working out the tax, which usually comes to the same tax bill. This is one of the real differences between letting through a company and letting as a person, and it often works out in the company's favour.

A worked example

Say your company lets out one flat for a year.

Rent for the year£14,000
Letting-agent fees-£1,400
Landlord insurance-£400
Repairs (new boiler part, repainting)-£1,200
Rental profit£11,000
Mortgage interest for the year, taken off total profits-£6,000
Profit the company is taxed on (if it has no other income)£5,000
For example

The rental profit is £11,000. The £6,000 of mortgage interest is then taken off the company's total profits, so if the company has no other income it pays Corporation Tax on £5,000, not on the full £14,000 of rent. Notice the whole £6,000 of interest came off. A person letting the same flat in their own name could not take any of that interest off, and would get a tax credit worth 20% of it instead, which is the part that catches people out.

Is rent kept separate from my company's other income?

Yes. Your rental profit goes in its own place on the company's tax return, apart from the money the company makes from its normal trade (the sales or services it sells). They are worked out separately and then both count towards the company's tax.

So if your company both trades and lets property, you do not just add the rent to your sales. The rent is its own pot, with its own costs taken off, and we keep the two apart for you.

How SimpleReturns handles it

Tell us the rent your company earned for the year and the costs of letting the property, or upload them, and we put the rental profit in the right place on your return, take off your mortgage interest in full, and keep it separate from your trading income. You see every figure before anything is sent.

Common questions

Does my company pay income tax or Corporation Tax on rent?

Corporation Tax. The rent your company makes is taxed like the company's other earnings, on the profit after the costs of letting.

Can my company still take off the whole mortgage interest?

Yes. The rule that stops people who let homes in their own name taking their mortgage interest off the rent, and gives them a tax credit worth 20% of it instead, does not apply to companies. Your company gets relief for the interest in full, set against its total profits rather than taken off the rent itself.

What rent costs can I take off?

Letting-agent fees, repairs and upkeep, insurance, ground rent and service charges, and the cost of re-letting. Improving the property is the main thing you cannot take off the rent. Mortgage interest is not taken off the rent itself, but your company gets relief for it in full against its total profits.

What if the costs are more than the rent?

Then you made a loss on the property that year, not a profit, so there is no tax to pay on the rent for that year.

My company both trades and rents a property out. Do I lump it all together?

No. The rent is worked out on its own, separate from your trade, and we keep the two apart on the return.

Ready to do it the easy way?

You do not need to know any of this to file. Tell us the rent in and the costs out, and we work the rental profit, take off the mortgage interest in full, put it in the right place on your return, and show you every figure before anything is sent, for £99 with Guided, once, no subscription.

Start your return →

Or, if your property setup is more involved, say a mix of homes and shops, a recent sale, or a property moved in or out of the company, an accountant may be the better fit, and that's an honest call to make.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.