Should your properties be in a company?
Moving a rental portfolio into a limited company can save tax for years to come, or cost more than it saves. We work out which before you decide.
Since mortgage interest relief for individual landlords was restricted to the basic rate, many landlords have looked at holding their properties in a company instead. A company deducts its finance costs in full and pays corporation tax on its profits, which can leave more to reinvest.
But moving properties you already own into a company is treated as a sale at market value. Without the right relief, it can trigger capital gains tax and stamp duty land tax, and your mortgages will usually need refinancing. The reliefs that can apply have strict conditions.
We model your position as it is and as it would be in a company, check which reliefs apply to you, and if incorporation is right, manage the move with your solicitor and lender.
- 1We review your portfolio and your plans
- 2We model the tax both ways
- 3We check the reliefs and their conditions
- 4We give you a clear recommendation
- 5If it's right, we manage the transfer with your solicitor and lender
- 6We set up the company's accounts and tax
Who benefits, and how
Incorporation is a long-term decision. It suits some portfolios very well and others not at all, and the answer often depends as much on your plans for the next twenty years as on this year's tax.
Portfolio landlords
- Individual landlords get relief on mortgage interest only as a basic rate tax reduction. A company deducts its finance costs from its profits in full.
- From April 2027, property income in England and Northern Ireland is taxed at its own rates of 22%, 42% and 47%, with finance cost relief at 22%. The comparison with a company shifts again, and we rerun it.
- A company pays corporation tax of between 19% and 25% on its profits, which can leave more to repay debt or buy the next property. Taking that money out is taxed again, so we model both steps.
- Making Tax Digital for income tax applies to individual landlords whose qualifying income from property and self-employment is over £50,000 now, over £30,000 from April 2027 and over £20,000 from April 2028.
Developers and traders
- Buying, developing and selling property is usually a trade, not an investment, and is taxed differently. We check which side of the line your activity falls.
- Using a company for each development keeps the risk, the finance and the accounts separate.
- A company buying a residential property worth more than £500,000 can face a 17% stamp duty land tax rate, but relief is available for property developers and traders who meet the conditions.
The next generation
- Shares in a property company can be given to children or grandchildren gradually, and a company can issue different classes of shares, which can be simpler than dividing up individual properties.
- A company can carry on beyond any one person's lifetime, with its own bank accounts, mortgages and records.
- Shares in a company that mainly holds let property do not qualify for business relief from inheritance tax. Incorporation is a tool for passing wealth on, not an exemption from the tax.
Your options
There are four routes we look at for most landlords. Doing nothing is often one of them, and it is sometimes the right answer.
Keep personal ownership
Stay as you are, and plan within the rules for individual landlords.
- Suits
- Smaller or lightly mortgaged portfolios, basic rate taxpayers, and landlords who want to spend the rental income rather than reinvest it.
- How it works
- Rental profits are taxed as your income. Mortgage interest gets a basic rate tax reduction. Ownership can be shared with a spouse or civil partner.
- Watch out for
- Higher property income tax rates from April 2027, the finance cost restriction for higher rate taxpayers, and Making Tax Digital for income tax.
A company for new purchases only
Keep what you own, and buy future properties through a company.
- Suits
- Landlords who plan to grow, but for whom moving existing properties would cost too much.
- How it works
- The company buys with its own finance and pays corporation tax on its profits. Nothing you already own is sold, so there is no capital gains tax or stamp duty land tax on a transfer.
- Watch out for
- Companies usually pay the higher rates of stamp duty land tax on residential purchases, company mortgage rates can be higher, and there are two sets of accounts and returns.
Incorporate the existing portfolio
Transfer the properties you own into a company.
- Suits
- Larger, actively managed portfolios with significant mortgages, held for the long term.
- How it works
- The transfer is treated as a sale at market value. If the letting is a business and the conditions are met, incorporation relief defers the capital gain into the company's shares.
- Watch out for
- Incorporation relief must now be claimed. Stamp duty land tax is charged on market value unless a partnership relief applies, and every mortgage needs to be refinanced.
A partnership or LLP first
Run the portfolio as a genuine partnership before any move into a company.
- Suits
- Family-run portfolios already managed as a joint business by more than one person.
- How it works
- Special stamp duty land tax rules apply when a partnership transfers property to a company connected with its partners. For an established partnership these can reduce the tax significantly.
- Watch out for
- HMRC looks closely at partnerships formed shortly before incorporation. The partnership has to be real, with its own accounts and returns, and anti-avoidance rules can override the relief.
Rates and thresholds are those in force for 2026/27, with the property income rates legislated from April 2027. Mortgages, refinancing and legal title are for your lender, broker and solicitor: we work alongside them.
Capital gains tax and incorporation relief
When you transfer properties to a company you control, you are treated as selling them at market value, so any growth since you bought them is a capital gain. Incorporation relief can defer that gain if the whole business, with all its assets other than cash, is transferred as a going concern in exchange for shares in the company. The gain is then deducted from the base cost of the shares and becomes taxable only when the shares are sold.
The relief only applies to a business, not to simply holding investments. HMRC accepts that letting can be a business where the owner personally spends around 20 hours a week on activities like those in the Ramsay case, and looks at cases below that more carefully. For transfers from 6 April 2026, the relief also has to be claimed in your tax return, by the first anniversary of the 31 January after the tax year of the transfer.
- Any part of the price not paid in shares, such as a loan account credited to you, reduces the relief.
- Mortgages and other business liabilities the company takes over are, by HMRC concession, not usually treated as part of that price. Personal liabilities are.
Stamp duty land tax and partnerships
A company buying property from a person connected to it pays stamp duty land tax on at least the market value, whatever it actually pays. On residential property, companies pay the higher rates, which include a 5% surcharge. On a large portfolio this can be the biggest cost of incorporating.
Where the properties are owned by a partnership and transferred to a company connected with the partners, special rules in Schedule 15 to the Finance Act 2003 apply instead. They look at how far the partners' ownership of the properties carries through to the company, and for a genuine established partnership the charge can be much lower. HMRC applies anti-avoidance rules where a partnership has been set up mainly to get this result.
Mortgages, refinancing and taking money out
Your existing mortgages are personal loans and cannot simply move to a company. The company usually needs new borrowing, often at different rates and with arrangement and early repayment costs. We build those costs into the comparison before you decide.
Once the properties are in a company, the profits belong to the company. You can take money out as salary, dividends or interest, or repay any loan you are owed by the company, each taxed differently. A company owning a dwelling worth more than £500,000 also has to file an annual tax on enveloped dwellings return, even where relief for letting reduces the charge to nil.
Questions we’re often asked
Will incorporating always save tax?
No. For many landlords the costs of moving, the stamp duty land tax and the extra tax on taking money out of a company outweigh the saving on mortgage interest. That is why we model both positions before recommending anything.
Can I move just some of my properties into a company?
You can, but incorporation relief needs the whole business to be transferred, so moving only some properties usually means capital gains tax on those you move. It can still make sense in some cases.
What happens to capital gains tax on a sale while the properties are in my name?
You report and pay any capital gains tax on the sale of a UK residential property within 60 days of completion, at 18% or 24% depending on your income. A company pays corporation tax on its gains instead.
Who else will I need?
A solicitor for the transfers and the company documents, and a mortgage broker or your lender for the refinancing. We work with yours, or can introduce them, and coordinate the timing.
Rules and limits checked 9 October 2026.
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