Property incorporation tax advice: should your buy-to-let move into a limited company?
Property incorporation means transferring buy-to-let property you own personally, or through a partnership, into a limited company. Our property incorporation tax advice tells you, before you commit, what the move would cost on day one, what it would save each year, and whether incorporation relief is available. The service is for landlords with an existing portfolio, especially higher-rate taxpayers caught by the mortgage interest restriction.
Personal ownership vs a limited company at a glance (2026/27 and 2027/28)
This table compares personal and company ownership for 2026/27 and 2027/28. Income tax rates shown are for England, Wales and Northern Ireland; Scotland sets its own income tax rates.
| Feature | Owned personally | Owned by a limited company |
|---|---|---|
| Tax on rental profit | Income tax: 20%, 40% or 45% in 2026/27; 22%, 42% or 47% from 6 April 2027 (England, Wales and NI) | Corporation tax: 19% up to £50,000 profit, 25% above £250,000, marginal relief in between |
| Mortgage interest | No deduction; a tax credit at 20% (22% from 6 April 2027 in England, Wales and Northern Ireland) | Deducted in full from profit (subject to the £2 million corporate interest restriction) |
| Taking the money out | Profit is already yours after income tax | Dividends taxed at 10.75%, 35.75% or 39.35%, with a £500 allowance |
| Selling a property | CGT at 18% or 24%, £3,000 allowance | Corporation tax on the gain, then tax again when profits are extracted |
| Inheritance tax | Property in your estate; no Business Relief | Shares in your estate; a letting company gets no Business Relief either |
| Annual compliance | Self Assessment | Company accounts, corporation tax return, confirmation statement, possibly ATED |
Sources: GOV.UK corporation tax rates, GOV.UK dividend tax, Finance Act 2026 s.7. Work out what you pay now with our rental income tax calculator.
What has changed for landlords in 2026 and 2027?
Three changes matter most: from 6 April 2026 you must claim incorporation relief and dividend tax has risen, and from 6 April 2027 rental profits you own personally are taxed at 22%, 42% or 47% in England, Wales and Northern Ireland.
| Date | Change | What it means for incorporation | Status |
|---|---|---|---|
| 6 April 2026 | Incorporation relief must now be claimed. The election to switch it off (s.162A) is repealed | A missed claim means CGT is due on the transfer. Deadline: the first anniversary of 31 January after the tax year of transfer (31 January 2029 for a 2026/27 transfer) | Law: Finance Act 2026 s.39 |
| 6 April 2026 | Dividend tax rises to 10.75% (ordinary) and 35.75% (upper) | Taking profit out of a company costs more | Law: Finance Act 2026 s.4 |
| 6 April 2027 | Property income tax rates of 22%, 42% and 47% in England, Wales and Northern Ireland | Personal ownership costs more | Law: Finance Act 2026 s.7, in force from 6 April 2027 |
| 6 April 2027 | Mortgage interest credit rises from 20% to 22% | Slightly reduces the cost of personal ownership | Law: Finance Act 2026 Sch 1 |
| 28 October 2026 | Autumn Budget | Figures on this page will be reviewed afterwards | Announced |
Sources: Finance Act 2026 s.39; HMRC CG65735. GOV.UK’s short incorporation relief page still says the relief is automatic; that applies only to transfers before 6 April 2026.
What taxes are due when you transfer property to a limited company?
A transfer to your own company is treated as a sale at market value for both Capital Gains Tax and Stamp Duty Land Tax, even if no money changes hands (TCGA 1992 s.18; FA 2003 s.53).
This table lists each tax that can arise on the transfer in 2026/27. Stamp Duty applies in England and Northern Ireland.
| Tax | When it applies | Rate (2026/27) | Possible relief |
|---|---|---|---|
| Capital Gains Tax | On the gain between your original cost and today’s market value | 18% or 24% after the £3,000 allowance | Incorporation relief (TCGA 1992 s.162) defers the gain into the shares if the conditions are met and you claim it |
| Stamp Duty Land Tax (England and NI) | On the market value of each property the company acquires | Residential rates plus the 5% surcharge for companies; 17% on a dwelling over £500,000 unless a relief applies, such as for a property rental business | Partnership relief (FA 2003 Sch 15) where a genuine partnership transfers; six or more dwellings in one transaction can be taxed at non-residential rates. Incorporation relief does not reduce Stamp Duty |
| Annual Tax on Enveloped Dwellings (ATED) | A company owning a dwelling worth over £500,000 | Annual charge from £4,600 | Relief for property rental businesses, but a relief declaration return is still required each year |
| Mortgage and legal costs | Lenders usually need the company to take a new mortgage | Early repayment charges, arrangement and legal fees | None; these are real costs to budget for |
Multiple Dwellings Relief was abolished for transactions completing on or after 1 June 2024 (GOV.UK). Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales have their own rules.
Worked example: the day-one cost of moving one property
Assumptions: one buy-to-let in England bought in 2015 for £150,000, now worth £250,000; higher-rate taxpayer; no partnership; transfer in 2026/27.
| Item | Without incorporation relief | With incorporation relief |
|---|---|---|
| Gain | £100,000 | £100,000 |
| Less annual exempt amount | (£3,000) | – |
| CGT at 24% | £23,280 | £0 now (gain deferred into the shares) |
| SDLT for the company: 5% on the first £125,000 and 7% on the next £125,000 | £15,000 | £15,000 (incorporation relief does not help) |
| Total tax on day one | £38,280 | £15,000 |
SDLT rates: GOV.UK residential rates and GOV.UK corporate bodies.
Do you qualify for incorporation relief?
Incorporation relief defers Capital Gains Tax when a business is transferred to a company for shares. Use this checklist:
- It must be a business, not just an investment. HMRC follows the Ramsay case (2013). It accepts relief where you personally spend 20 hours or more a week on activities such as finding tenants, arranging repairs and managing the properties. Below that, it depends on the facts (HMRC CG65715).
- The whole business must go across. All the business assets, except cash, must be transferred as a going concern. You cannot pick and choose properties.
- You must be paid in shares. Relief only covers the part paid in shares. Any cash or a loan account credited to you is taxed in proportion (HMRC CG65745).
- Mortgages need care. Business liabilities the company takes over are not normally treated as payment under an HMRC concession, but personal debts are, and refinancing can change the picture.
- You must claim it. For transfers on or after 6 April 2026, include the claim with your tax return by the first anniversary of the following 31 January.
- Know the trade-off. The deferred gain reduces the base cost of your shares, so the tax comes back if you sell the shares later.
| Situation | Likely position |
|---|---|
| Sole landlord, 2 or 3 properties, managed by a letting agent | Relief unlikely: probably not a business |
| Hands-on portfolio, 20+ hours a week, all properties transferred for shares | Relief likely, if claimed in time |
| Company pays part of the price in cash or credits a loan account | Partial relief only |
| Some properties kept personally | Relief not available: the whole business must transfer |
Partnerships and Stamp Duty: what you need to know
Stamp Duty partnership relief (Finance Act 2003 Schedule 15) can reduce the SDLT when an established partnership transfers property to a company connected with the partners. The charge is based on market value reduced by the partners’ “lower proportions” (FA 2003 Sch 15 para 18).
- Owning property jointly is not, on its own, a partnership. HMRC looks at how the business is actually run, its accounts and tax returns.
- Setting up a partnership shortly before incorporating to save Stamp Duty attracts HMRC scrutiny, and anti-avoidance rules can apply.
- A partnership is not required for incorporation relief. The Capital Gains Tax relief depends on there being a business, whoever runs it.
More detail: incorporating a property partnership.
Worked example: will a company save you tax each year?
In this example a company leaves you about £2,400 a year better off if every pound is paid out as dividends, and more if profit stays in the company.
Assumptions: 2027/28 tax year; England; your salary already uses the basic-rate band; rental profit before mortgage interest £50,000; mortgage interest £20,000; no other companies.
| Owned personally | Company: profit kept in the company | Company: all profit paid out as dividends | |
|---|---|---|---|
| Rental profit before interest | £50,000 | £50,000 | £50,000 |
| Mortgage interest | (£20,000) | (£20,000) | (£20,000) |
| Tax on profit | £21,000 (42% of £50,000) | £5,700 (19% of £30,000) | £5,700 |
| Mortgage interest credit | +£4,400 (22% of £20,000) | – | – |
| Dividend tax (35.75% after the £500 allowance) | – | – | (£8,509) |
| Left for you | £13,400 | £24,300 (in the company) | £15,791 |
In this example the company saves about £2,400 a year if you take every pound out, and much more if you can leave profit in the company to repay debt or buy more property. Weigh that against the day-one cost in the example above: here it would take about 6 years to recover £15,000 of Stamp Duty. Your figures will be different, which is what our feasibility report works out.
When incorporation may not be right for you
Incorporation is usually not worth it if your letting is not a business, you need all the rental income to live on, or the Stamp Duty and refinancing costs outweigh the yearly saving.
- Your letting is not a business. Without incorporation relief, CGT is due on every gain.
- You need all the rental income to live on. Dividend tax on extraction can wipe out much of the saving.
- Refinancing is expensive. Early repayment charges, higher company mortgage rates and fees can outweigh the tax saved.
- You plan to sell within a few years. You may not recover the Stamp Duty.
- Inheritance tax is your main concern. A company holding rental property gets no Business Relief (HMRC IHTM25261). Planning with share classes is possible but needs separate advice.
- The properties are worth over £500,000 each. ATED returns and the 17% Stamp Duty rate need specific relief claims.
| Alternative | When it suits |
|---|---|
| Buy new properties through a company and keep existing ones personally | Avoids CGT and SDLT on the existing portfolio |
| Keep everything personally | Basic-rate taxpayers, low borrowing, or a planned sale |
| Incorporate in stages | Not possible with incorporation relief, which needs the whole business; may suit some properties if CGT is low |
Starting fresh? See setting up a property investment company.
How our property incorporation service works
We work in five stages, from a fact-find to filing your incorporation relief claim, and confirm the fee in writing before any work starts.
| Step | What we do | What you receive |
|---|---|---|
| 1. Fact-find | Review your portfolio, ownership, mortgages, how you run the business and your plans | A list of the information and documents we need |
| 2. Feasibility report | Calculate CGT, SDLT, refinancing and ongoing costs against the annual saving, personally and through a company | A written report with a clear recommendation and break-even point |
| 3. Business test evidence | Assess whether your letting is a business for incorporation relief and what records support it | A summary of the evidence and any gaps |
| 4. Implementation | Work with your solicitor and mortgage broker on the transfer, share issue, valuations and SDLT returns | Completed SDLT returns and company set-up |
| 5. Claim and aftercare | Make the incorporation relief claim on your tax return and run the company’s accounts and tax | The claim filed on time, then company accounts from £49.95 a month including VAT |
We confirm the fee for the feasibility report and implementation in writing before any work starts. Your work is led by a named ACCA-qualified accountant, reviewed by Simon Misiewicz FCCA, ATT, MBA.
Frequently asked questions
Can I transfer my buy-to-let to a limited company without paying Capital Gains Tax?
Only if your letting is a business and you transfer the whole business for shares and claim incorporation relief. The gain is then deferred, not cancelled.
Does incorporation relief cover Stamp Duty?
No. Incorporation relief only deals with Capital Gains Tax. Stamp Duty is charged on market value unless partnership relief or another relief applies.
Do I have to claim incorporation relief?
Yes, for transfers on or after 6 April 2026. The claim goes with your tax return and must be made by the first anniversary of the 31 January after the tax year of the transfer.
How many properties do I need to incorporate?
There is no set number. What matters is whether you run a business, which HMRC accepts if you spend 20 hours or more a week on it, and whether the savings outweigh the costs.
Will my mortgage lender allow the transfer?
Usually the company needs a new limited company mortgage, so speak to a mortgage broker early. Early repayment charges can be a major cost.
Is a limited company better for inheritance tax?
Not automatically. Shares in a company that holds rental property do not qualify for Business Relief, so they are taxed like the property itself.
About this page
Written and reviewed by Simon Misiewicz FCCA, ATT, MBA, Director, Optimise Accountants. Simon has invested in property since 2006 and leads a team of five ACCA-qualified accountants.
Last reviewed: 2 October 2026. Drafted with AI assistance; every figure checked against GOV.UK, HMRC manuals and legislation.gov.uk, including Finance Act 2026, and reviewed by Simon before publishing.
This page is general information, not personal advice. Your position depends on your circumstances, so take advice before transferring any property.
Optimise Accountants is the trading name of OPTIMISE ACCOUNTANTS LIMITED, registered in England and Wales, company number 04856185. Registered office: Office 15 Bramley House 2a, Bramley Road, Long Eaton, Nottinghamshire NG10 3SX.
