Moving rental properties you own personally into your own limited company is treated as a sale, even though you are on both sides of it. Capital gains tax is worked out as if the company paid full market value. Stamp duty land tax (SDLT) is charged on market value as well, with the 5 percentage point surcharge for additional dwellings on top. Incorporation relief under section 162 of the Taxation of Chargeable Gains Act 1992 can defer the capital gains tax, but only if your letting is a business and the whole business moves to the company in exchange for shares. It does nothing for the SDLT.
That split is why incorporation is expensive for some landlords and sensible for others. This guide takes the two taxes in turn, then covers mortgages, the director's loan account and the ongoing costs, so you can decide whether a limited company is worth the cost of the move.
What happens when a landlord moves buy-to-let properties into a limited company
A company is a separate legal person. When you transfer property to a company you control, the law does not look at what you actually paid or received. Transfers of assets between connected parties are deemed to take place at market value, as ACCA's technical guidance on incorporating a letting business puts it. A landlord moving properties into a company they have just formed therefore has a taxable gain on the difference between market value and what the properties originally cost.
For 2026/27 that gain is taxed at 18% or 24%, depending on your tax band. The practical consequence is that both the capital gains tax and the SDLT are real cash costs even though no money changes hands between you and your own company. Together these are the main tax liabilities of incorporating, and they arrive before the company has earned a penny.
Two separate questions follow, and they have different tests:
- Can the capital gains tax be deferred? That depends on incorporation relief, and the test is whether you run a business.
- Can the stamp duty land tax be reduced? For most individual landlords, no. Only a genuine partnership gets special treatment.
Why landlords consider company ownership
The reasons are mostly about what happens after the move. Individual landlords pay income tax on rental profits at 20%, 40% or 45% in 2026/27, rising to 22%, 42% and 47% from 6 April 2027. They also get only a basic rate credit for mortgage interest under section 24: 20% in 2026/27 and 22% from April 2027. A company pays corporation tax at 19% to 25% and deducts mortgage interest in full before working out its profit.
There are non-tax reasons too. A limited company separates the property business from your personal assets, so that if the company is sued, directors are not personally responsible for its debts. Shares in the company can also be gifted more easily than a property, which helps with succession planning. Our guide to mortgage interest relief for landlords explains the section 24 restriction behind most of these decisions.
How can a landlord avoid paying 40% tax on rental income?
There is no trick here, only a comparison of rates. A higher rate taxpayer who owns buy-to-let properties personally pays income tax at 40% on the profit, with interest relieved only at the basic rate. Inside a company, the profit is taxed at corporation tax rates of 19% to 25%, with the 19% rate applying to profits up to £50,000, the 25% main rate above £250,000 and marginal relief between.
That saving is real only while the money stays in the company. Taking profits out means the company has already paid corporation tax and you then pay income tax on salary or dividends. Dividend tax in 2026/27 is 10.75%, 35.75% or 39.35%, depending on your band. A company structure is therefore strongest for a landlord who reinvests profits in more properties, and weakest for one who needs the rent to live on. This is ordinary tax planning, and it is different from the packaged schemes covered later, which promise to remove the capital gains tax and SDLT altogether.
Capital gains tax: market value, not the price you agree
The gain is the market value of each property on the transfer date, less what you paid and allowable costs. If you agree a price of £1 with your company, the gain is still calculated on market value.
A worked example. Suppose a property cost £150,000 and is worth £300,000 when transferred. The gain is £150,000 before any annual exempt amount or allowable costs. At 18% and 24% the tax would be £27,000 or £36,000, depending on your tax band. Repeat that across a portfolio with years of growth and the bill can exceed the first few years of any corporation tax saving.
Incorporation relief is the route that avoids that bill. It is a deferral, not an exemption, and the rest of the decision turns on whether you qualify.
Incorporation relief under section 162: what it defers and what it needs
HMRC's Capital Gains Manual (CG65700) describes the relief this way. It applies where a person other than a company transfers a business as a going concern, with the whole of its assets (or the whole of its assets other than cash), to a company wholly or partly in exchange for shares issued to that person. If the conditions are met, the capital gains tax on the gain is postponed until the person disposes of the shares. It is the one real tax relief available on the capital gains side of an incorporation.
The mechanism is a reduction in the base cost of the shares, which is the figure used to work out the gain when you eventually sell them. HMRC's manual says the gains on the assets are 'rolled over' by reducing the acquisition cost of the shares received. In the example above, the shares in the company would carry a base cost broadly matching the original £150,000 cost of the property rather than its £300,000 value. The consequence is that a future sale of those shares can produce a higher capital gains tax bill than you expected.
The conditions are four, and all must be met:
- You are transferring a business, not simply assets.
- It is transferred as a going concern, meaning the business continues in the company's hands.
- All the assets of the business are transferred. Cash can generally be kept back.
- The consideration is wholly or partly in shares.
There is no partial version for a transfer that gets three of the four right.
You must now claim the relief
For transfers on or after 6 April 2026, HMRC's manual says a claim is required. Before that date the relief applied automatically when the conditions were met, and the transferor could elect under section 162A to switch it off. Section 162A elections are no longer available for transfers on or after 6 April 2026. In practice, you claim the relief in your Self Assessment return if you are eligible, so your tax returns for the year of transfer need preparing with this in mind.
The whole business has to move
You cannot move three properties out of a portfolio of eight and expect relief on the part you moved. The properties, the liabilities attached to them and the letting activity itself need to move as a single unit. If one or two let properties are mortgaged on terms that make refinancing into a company impractical, that alone can make relief unavailable. For the same reason, relief is unlikely to apply to a transfer of a single property out of a larger portfolio. Moving one property with little accumulated gain can still make sense, but there the capital gains tax is small anyway.
Part-share consideration
If only part of what you receive is shares, relief applies only to the proportion of the gain matching the share consideration. Relief is scaled back where part of the consideration is cash or a loan account left outstanding.
Is your property business really a business?
This is the question that decides whether the relief is available, and the answer is not automatic. Owning and letting out property is an investment activity by default. HMRC does not treat it as a business unless the level of activity goes beyond what a passive investor does.
The leading case is Elizabeth Moyne Ramsay v HMRC [2013] UKUT 266. The Upper Tribunal held that residential letting can be a business for the purposes of section 162, and that whether it is one is a question of fact. It identified the characteristics of a business:
- a serious undertaking earnestly pursued, with reasonable or recognisable continuity;
- an activity that is material in terms of turnover;
- conducted in a regular manner;
- carried out on sound and recognised business principles;
- the kind of activity commonly undertaken by people who seek to profit.
The tribunal declined to set a specific number of hours or days. It said the key difference is the degree of activity, which must outweigh what a mere passive investor would normally carry out, and that all activities should be considered together rather than in isolation.
HMRC has set its own marker. Its guidance at CG65715, as quoted by ACCA, says: 'You should accept that incorporation relief will be available where an individual spends 20 hours or more a week personally undertaking the sort of activities that are indicative of a business. Other cases should be considered carefully.' Mrs Ramsay's own 20 hours a week passed the test, but that figure cannot be looked at in isolation, and landlords with smaller portfolios may struggle to convince HMRC.
In practice that means:
- Who does the work matters. A portfolio run largely through a managing agent, with you reviewing statements and signing off decisions a few times a year, looks like investment. Sourcing tenants, negotiating rents, managing refurbishments and spending real hours each week looks closer to the Ramsay facts.
- A day job is a problem. Occasional responsive maintenance, such as answering a tenant's query about a repair, is not enough, and landlords in full-time employment elsewhere will be asked how they find the time.
- Keep evidence. Prepare full diaries and timesheets, and keep them before any challenge arrives. Regular tasks such as managing tenant questions, coordinating repairs and collecting rent are the sort of evidence that counts.
- Unless it is clearly substantial, expect a challenge. Activity below HMRC's 20-hour marker invites one.
If you want certainty on a specific transaction, non-statutory clearance can be sought from HMRC before you proceed.
Moving property into a limited company: stamp duty land tax
SDLT arises on the market value of the properties transferred, whatever the company actually pays. There is no general SDLT relief for individuals who incorporate an existing letting business. That is why incorporation relief only ever solves half the bill.
The standard residential bands on GOV.UK are:
| Portion of the price | SDLT rate |
|---|---|
| Up to £125,000 | Zero |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Above £1.5 million | 12% |
GOV.UK also says you usually pay 5% on top of these rates when buying a residential property means you will own more than one. A company buying from its owner will not be replacing a main residence, so the surcharge will usually apply.
A worked example. Take a single dwelling transferred at a market value of £300,000, ignoring any special rules for companies or multiple purchases. The standard bands give nothing on the first £125,000, £2,500 on the next £125,000 and £2,500 on the last £50,000, a total of £5,000. Adding 5 percentage points to each band is a further £15,000, which gives £20,000 for one property. Multiply by the number of properties and the SDLT bill, payable up front, is often the largest single cost of incorporating.
Six or more dwellings
GOV.UK lists special rules for people buying six or more residential properties in one transaction, and for companies buying residential property. Where six or more dwellings are transferred in a single transaction, the purchase can be treated as non-residential for SDLT, so the non-residential rates apply instead of the residential bands and surcharge. Whether that helps depends on the numbers, so both computations should be run. This is different from Multiple Dwellings Relief, which was abolished for transactions completing on or after 1 June 2024 and can no longer be claimed.
The partnership exception, and its risks
There is a specific SDLT relief for transfers from a partnership to a company connected to the partners (Part 3 of Schedule 15 to the Finance Act 2003). ACCA's example shows how it works. Mr A is entitled to 70% of a partnership's profits and controls the new company. He was entitled to 70% of the partnership's interest, so 70% of the market value escapes SDLT and SDLT is charged on the remaining 30%. On a £100,000 property, that is £30,000 of chargeable value.
The word that matters is partnership. Two spouses who jointly own rental flats and file separate Self Assessment returns are not, by that fact alone, a partnership. A partnership in law is a business operated in common by two or more people with a view to profit. If you own the properties alone, the route is not available at all.
The risks are well documented:
- Anti-avoidance. Section 75A of the Finance Act 2003 ignores steps inserted into a single arrangement that reduce SDLT, and no tax avoidance motive is needed. An LLP inserted purely as a middleman is likely to be ignored, leaving an unexpected SDLT liability.
- Timing. A property partnership needs to have existed for a sustained period. There is no fixed timeframe, but around three years is the usual recommendation. HMRC is unimpressed by a partnership created the same month as the transfer.
- Clawback. The relief can be clawed back if the shares received are sold within three years.
- Liquidation planning. One scheme moves a portfolio into an LLP, liquidates the LLP and passes the properties to a company. Legislation aimed at it took effect from 30 October 2024, and HMRC maintains the arrangement was ineffective from the outset.
Treat any promise of incorporation with no capital gains tax and no SDLT for an ordinary landlord with suspicion. If a structure only works because several bold assumptions hold at once, the risk sits with you, not the promoter.
Set up a limited company first: SPV or trading company
Before any property moves, you need a company to receive it. You have two structural options. A trading company is a standard limited company that may own property alongside other activities. A special purpose vehicle (SPV) is a limited company incorporated only to own and let property. Most lenders prefer an SPV for a limited company buy-to-let loan. Holding property in an existing trading company gives you fewer mortgage options and less competitive rates, so speak to a broker before adding properties to that kind of company structure.
How to transfer property to a limited company, step by step
The mechanics, in order:
- Set up a limited company. Register it with Companies House as an SPV.
- Arrange the finance. If the property has a mortgage, the company needs its own buy-to-let mortgage, because the existing one is repaid on the sale.
- Transfer the property. Ownership passes by changing the title from your name to the company's, with the change registered at HM Land Registry.
- Pay SDLT. It is due on the market value whether the company takes a new mortgage or not.
- Claim incorporation relief. If you qualify, make the claim for the year of transfer.
Buy-to-let mortgages and the company mortgage question
Most personal buy-to-let mortgages cannot be assigned to a company. Landlords generally need to refinance, and because the property is being sold to the company, the personal mortgage must be repaid and the company needs a new loan in its own name. A company mortgage works on the company's credit history, which may barely exist for a new company, so lenders often want the directors to stand behind the loan.
That has practical consequences for limited company buy-to-let mortgages:
- Lender consent and disclosure. You cannot avoid telling the lender. Suggestions that the lender need not be told, using deeds of trust to stop the change of owner showing at the Land Registry, may breach the mortgage conditions.
- Fewer lenders and higher cost. Some lenders do not lend to limited companies. Company mortgages tend to carry higher interest rates, arrangement fees and solicitors' fees. Advisers commonly put company rates 0.3 to 0.5 percentage points above personal buy-to-let rates.
- Deposits and criteria. Lenders may ask for higher deposits and stronger financial proof. The amount depends on the lender, so ask early.
- Personal guarantees. Many lenders require directors to guarantee company borrowing personally, which weakens the limited liability protection for your personal assets.
- Timing. Moving as a fixed rate ends can avoid early repayment charges.
How borrowing interacts with the consideration
How you structure what the company pays you matters for the relief. ACCA says that where the company takes on a mortgage or business loans, this is not treated as cash consideration, so it does not by itself restrict incorporation relief (extra-statutory concession D32). But if the liabilities of the business exceed the cost of the properties, for example because equity has been released, a capital gains tax liability remains.
If the company pays you partly with a loan account, so the company owes you the value of the properties, you can draw on it later. That dilutes incorporation relief and has its own tax consequences, so the funding structure needs deciding alongside the relief, not after it. Be wary of circular money movements designed to create a director's loan account: HMRC will argue that a loan arranged for tax avoidance is outside its general concession on business loans moving across on incorporation.
What it costs, and where the saving comes from
The figures below are for 2026/27 unless stated.
| Held personally | Held in a company | |
|---|---|---|
| Tax on rental profits | 20% / 40% / 45% (22% / 42% / 47% from April 2027) | Corporation tax: 19% to 25% |
| Mortgage interest | Basic rate credit only: 20% (22% from April 2027) | Fully deductible against profits |
| Taking the profits out | Already yours after income tax | Dividend tax: 10.75% / 35.75% / 39.35% |
| Getting existing properties in | n/a | Possible CGT at 18% / 24%, plus SDLT with surcharge |
Against the saving, set the one-off and ongoing costs:
- CGT and SDLT if relief or exemption is not available. These are the large items.
- Legal and conveyancing fees. Quotes of £1,000 to £2,500 are typical, and you need a market valuation of every property being transferred.
- Refinancing costs, including any early repayment charge and the higher rate and fees on company lending.
- Annual company administration. The company files annual accounts and a confirmation statement at Companies House and company tax returns with HMRC every year. You still have a personal Self Assessment return if you take money from the company, and payroll if you draw a salary. Typical quotes for annual accountancy on a single-property company run from £800 to £1,500. Our page on buy-to-let limited company accounts shows what the filings involve.
- Annual Tax on Enveloped Dwellings (ATED). Residential property held by a company above the relevant value threshold can bring the portfolio into this separate annual charge. Check whether your properties fall within it before you proceed.
- Tax on extracting profit. The company has to pay corporation tax first, then you pay income tax on the salary or dividends you take. If you rely on the rental income to live on, dividend tax can absorb much of the corporate saving.
A company also changes what happens when you sell. Gains on an incorporated property may be taxed at corporation tax rates rather than capital gains tax rates, but money still has to come out of the company before it is yours.
Is going down the limited company route right for you?
It is not right for every landlord. Situations where moving buy-to-let properties into a limited company is unlikely to pay: a basic rate taxpayer with low borrowing, a plan to sell within three to five years, a large unrealised gain with no incorporation relief, and a need to draw the rental income regularly to live on. It points the other way for higher or additional rate taxpayers with mortgaged properties who can leave profits in the company for several years, and who can claim incorporation relief. Larger portfolios tend to benefit more than one or two flats, and a long-term investment plan helps.
The decision comes down to four questions:
- Does the portfolio amount to a business for incorporation relief?
- What would SDLT on market value plus the surcharge cost across all the properties?
- How long will you hold? The corporation tax saving is annual, and the SDLT cost is paid once.
- Do you need the rental income to live on? If yes, dividend tax eats much of the saving. If profits are reinvested in more property, the company compounds at corporate rates.
Only after those four answers does the decision usually become clear in either direction. Model staying personal against incorporating over a realistic holding period, using the rates that will apply in 2027/28. That is a calculation, not a slogan, and getting the business question wrong at the outset is expensive to unpick.
Frequently Asked Questions
Do I pay capital gains tax when I transfer buy-to-let properties into a limited company?
By default, yes. The transfer is a disposal at market value, taxed at 18% or 24% for 2026/27. Incorporation relief under section 162 can roll the gains into the base cost of your shares, but only if the portfolio is a business transferred as a going concern for shares. From 6 April 2026 you must claim it.
Does incorporation relief cover stamp duty land tax?
No. Incorporation relief deals only with capital gains tax. SDLT is charged on market value, with the 5 percentage point surcharge for additional dwellings. A separate relief exists for genuine partnerships transferring to a connected company, with its own conditions.
How many hours do I need to spend on my properties?
There is no statutory hours test, and the Upper Tribunal in Ramsay declined to set one. HMRC's guidance says it will accept relief where you spend 20 hours or more a week personally doing business-type activities, and that other cases need careful consideration.
Can I transfer my existing mortgage to the company?
Generally not. The personal mortgage is repaid on the sale to the company, and the company arranges its own borrowing, often at a higher rate and with personal guarantees from its directors. Speak to a broker before you decide.
Can I transfer just one property?
You can, but incorporation relief needs the whole business to move. For a single property taken out of a larger portfolio, expect both capital gains tax and SDLT to apply.
Before you decide
Start with an honest inventory: the accumulated gain on each property, the mortgage balances, current market values, and how much genuine management work the portfolio takes. Those figures set both the transfer costs and the strength of any claim to relief.
Deplexify prepares accounts and tax for UK landlords, businesses and contractors, and the property page explains what that covers for landlords and property companies.
Sources
- CG65700 - Reliefs: Incorporation relief: introduction - HMRC internal manual - GOV.UK — gov.uk, read 2026-10-18
- Stamp Duty Land Tax: Residential property rates - GOV.UK — gov.uk, read 2026-10-18
- The pitfalls of incorporating a letting business | ACCA Global — accaglobal.com, read 2026-10-18
- Incorporating Buy to Let Property into Limited Company — ukpropertyaccountants.co.uk, read 2026-10-18
- Property Incorporation Planning: Key Considerations and Risks – HW Fisher — hwfisher.co.uk, read 2026-10-18
- Incorporation Relief explained: Transferring property into a limited company — pkfsmithcooper.com, read 2026-10-18
- Incorporating a property portfolio in 2026/27: costs and reliefs — visionconsulting.co.uk, read 2026-10-18
- To incorporate or not to incorporate: a guide for landlords - FreeAgent — freeagent.com, read 2026-10-18
- Incorporation Relief for Landlords: Moving a Portfolio Into a Company | Grafene Accounting — grafeneaccounting.com, read 2026-10-18
- Should I move my buy-to-let properties into a company? | SO Legal — solegal.co.uk, read 2026-10-18