Can a Family Investment Company Hold Rental Property? SDLT, CGT and Mortgages

Quick answer: Yes, a Family Investment Company (FIC) can own rental property. The easy route is to let the FIC buy new property with cash and loans from the family. Moving property you already own into a FIC is normally treated as a sale at market value, which can bring capital gains tax (CGT) and Stamp Duty Land Tax (SDLT) before the FIC has earned a penny.

Why families put property in a FIC

Most Family Investment Companies hold shares and funds. Some hold property too, usually because the family wants three things at once:

• a company, so mortgage interest is a cost of the business rather than being restricted as it is for individuals under Section 24;
• parents who keep control as directors;
• growth shares for children or trusts, so future increases in value build up outside the parents' estate.

The structure is the one in our general article on how a Family Investment Company is set up, funded and run. The question here is narrower: what changes when the asset is bricks and mortar.

Route 1: the FIC buys new property

This is the cleaner route. The FIC is funded, usually with a mix of share capital and a loan from the parents. The loan is not income when it comes back to you. The FIC then buys the property with that cash, often with a mortgage on top.

There is no CGT or SDLT problem from moving something you already own. There is still SDLT on the purchase, and for a company it is expensive.

SDLT on a company purchase

For a company buying residential property in England or Northern Ireland, the standard bands carry a 5 percentage point surcharge. For 2026/27 the rates are 5% to £125,000, 7% to £250,000, 10% to £925,000, 15% to £1.5m and 17% above that.

If the company buys a single dwelling worth more than £500,000, a flat 17% of the whole price applies instead. Relief from that rate is available where the dwelling is bought for a qualifying purpose, including a property rental business. The relief can be withdrawn if the conditions stop being met within three years, for example if someone connected with the company starts to live there. A FIC that lets to unconnected tenants is the standard case. A family holiday home or a home for a child is not.

Wales and Scotland have their own taxes. Our article on SDLT, LTT and LBTT when you incorporate sets out the extra charges.

Example: A FIC buys a £400,000 flat to let. SDLT at company rates is £6,250 on the first £125,000, £8,750 on the next £125,000 and £15,000 on the last £150,000: £30,000 in total. The FIC is funded with £150,000 from the family (£145,000 as a loan and £5,000 for shares) and borrows £280,000 from a lender. Rent is £24,000 a year, mortgage interest £15,000 and other costs £3,000, leaving a taxable profit of £6,000 and corporation tax of £1,500 at 25%. All figures are hypothetical.

Route 2: moving property you already own into a FIC

Here the family transfers existing buy-to-lets to the FIC in exchange for shares or a loan account. Tax law treats the FIC as buying them at market value from a connected person.

• CGT. You are treated as selling at market value, whatever the FIC pays. Any gain since you bought is taxable at 18% or 24% after the £3,000 annual exempt amount.
• SDLT. Where a company buys from someone connected with it, SDLT is worked out on at least market value. A mortgage the company takes on can also count as part of the price. The company rates above apply.
• Relief. Incorporation relief under section 162 of the Taxation of Chargeable Gains Act 1992 can postpone the gain if you transfer a genuine property rental business as a going concern. From 6 April 2026 you must claim it, and the business test is hard to meet for a handful of properties managed by an agent. It does nothing for SDLT.

Because of this, we rarely suggest simply moving a large unrealised gain into a FIC. Our article on incorporation relief for UK property landlords explains the relief, and the property portfolio incorporation service page covers the wider decision.

How the FIC is taxed on property

A FIC that mainly holds investments or lets property is a close investment-holding company. For 2026/27 it pays corporation tax at 25% on its taxable profits, whatever their size. That includes rent, interest and gains. It gets no annual exempt amount for gains, and the 19% small profits rate is not available.

• Rent. Taxed at 25% after expenses. Interest on money borrowed for the business is a deductible cost, so Section 24 does not apply to the company.
• Gains on sale. Corporation tax at 25% on the gain, with no £3,000 exempt amount.
• Taking money out. Dividends are taxed on the shareholders who receive them: 10.75%, 35.75% or 39.35% above a £500 allowance in 2026/27. Repayments of the parents' loan come back free of income tax, up to what was lent.
• Rates for individuals. From 6 April 2027 property income of individuals in England, Wales and Northern Ireland is taxed at 22%, 42% and 47%. Companies are not affected. That tilts the comparison a little towards a company, but the dividend tax on the way out is still the bigger factor.

If the family needs to spend all the rent, a FIC adds a second layer of tax and the case is weak. If the rent is being reinvested for the next generation, it can be stronger. Our article on whether incorporating your portfolio is still worth it in 2026/27 compares the numbers.

Mortgages

Lenders treat a company differently from an individual. A newly formed FIC has no trading history, and lenders may ask directors or shareholders for personal guarantees. Interest rates and fees can differ from personal buy-to-let products. Speak to a broker who knows company lending before you commit, and explain the share structure, as some lenders want to understand who owns the shares.

Money the parents lend to the FIC stays in their estate for inheritance tax until it is repaid. Our article on funding a Family Investment Company with a loan explains how that works.

Other points to check

• Inheritance tax. A company that mainly lets property does not qualify for Business Relief, so there is no relief on its shares. The benefit comes from growth in value accruing to shares that other people own, not from the property itself.
• ATED. If the FIC owns a UK residential property worth over £500,000, the Annual Tax on Enveloped Dwellings can apply. For 2026/27 the charge starts at £4,600. A relief is available for properties let commercially to third parties, but you must file a return each year to claim it.
• Gifting shares. A gift of FIC shares is a disposal for CGT, and holdover relief is generally not available. Growth shares are best issued at the start, while they are worth little.
• Personal use. A parent living rent-free in a FIC property risks the SDLT relief and can create other tax charges.

When a FIC for property is the wrong answer

A FIC is probably the wrong vehicle if you have a large existing portfolio with big gains, if you need the whole rental income to live on, if the sums are modest, or if you want to avoid public accounts at Companies House. A simple limited company, or leaving the portfolio as it is and buying new property in a FIC, may be better. We tell you which plainly.

Talk to us about Family Investment Company

• A FIC is one tool, not a plan: it works best alongside gifts, trusts and a will
• It mainly caps your share of future growth rather than removing existing wealth from your estate
• A FIC that holds investments pays corporation tax at 25%, but most dividends it receives are exempt

See how we help or book a free 20-minute call.

FAQs

Can a Family Investment Company buy buy-to-let property?

Yes. A FIC can buy residential or commercial property to let. It pays SDLT at company rates and corporation tax at 25% on the profits, and mortgage interest is deductible as a business cost. Lender appetite and the 17% SDLT rate for dwellings over £500,000 need checking first.

Do I pay CGT if I transfer my properties into a FIC?

Normally yes, on the gain at market value, unless incorporation relief under section 162 applies. Relief needs a genuine property rental business transferred as a going concern, and from 6 April 2026 it must be claimed. Many small portfolios do not meet the business test.

Is SDLT lower if my FIC buys the property?

No. A company pays the standard bands plus a 5 percentage point surcharge, and a flat 17% on a single dwelling over £500,000 unless a relief for a property rental business applies. If the conditions fail within three years, the relief can be withdrawn.

Does property in a FIC avoid inheritance tax?

Not by itself. Let property in a company does not qualify for Business Relief. Value can leave your estate if you give FIC shares to others and live seven years, or if growth builds up in shares other people own. Loans you made to the FIC stay in your estate.

Is it better to hold property in a FIC or a normal property company?

It depends on the goal. A normal company suits a landlord who wants to run the portfolio and enjoy the income. A FIC adds a share structure for family wealth-building, but it costs more to design and its profits bear the same corporation tax. Often the FIC is the home for new money, not the old portfolio.

Sources

• Corporation tax rates: https://www.gov.uk/corporation-tax-rates
• SDLT residential rates: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
• SDLT and corporate bodies (17% rate and reliefs): https://www.gov.uk/guidance/stamp-duty-land-tax-corporate-bodies
• Higher rates and the 17% single rate from 31 October 2024: https://www.gov.uk/government/publications/stamp-duty-land-tax-increase-to-the-higher-rates-of-stamp-duty-land-tax-and-to-the-single-rate-payable-by-non-natural-persons
• FA 2003 section 53 (connected company, market value): https://www.legislation.gov.uk/ukpga/2003/14/section/53
• FA 2003 Schedule 4A paragraphs 5 and 5G (qualifying purposes; three-year withdrawal): https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/5 and https://www.legislation.gov.uk/ukpga/2003/14/schedule/4A/paragraph/5G
• Section 162 TCGA 1992: https://www.legislation.gov.uk/ukpga/1992/12/section/162
• Incorporation relief claims from 6 April 2026: https://www.gov.uk/government/publications/capital-gains-tax-incorporation-relief-claims/capital-gains-tax-incorporation-relief-claims-process
• Capital gains tax rates: https://www.gov.uk/capital-gains-tax/rates
• Dividend tax: https://www.gov.uk/tax-on-dividends
• Property income rates from April 2027: https://www.gov.uk/government/publications/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income/income-tax-changes-to-tax-rates-for-property-savings-and-dividend-income
• Business Relief exclusion for investment businesses (IHTA 1984 section 105): https://www.legislation.gov.uk/ukpga/1984/51/section/105
• ATED charges and reliefs: https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-the-basics and https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-reliefs-and-exemptions

Next step

If you are weighing a FIC against a property company, we will model both on your own figures and tell you honestly which one wins. We offer a free 20-minute call to start. Book a call. You can also read our Family Investment Company service page.