Incorporating a Buy-to-Let Portfolio With Mortgages: Lenders, Refinancing and Relief

Quick answer: A personal buy-to-let mortgage will not normally move into a company, so the company usually needs new borrowing to repay your lenders. That can mean early repayment charges, new fees, different interest rates and personal guarantees. How you structure the borrowing can also reduce incorporation relief, so the lender plan and the tax plan have to be built together.

Why the mortgage is the hard part

Landlords often start incorporation planning with tax: Section 24, capital gains tax (CGT) and Stamp Duty Land Tax (SDLT). The mortgage is what makes it hard to carry out.

A mortgage is a contract between you and your lender, secured on a property. When you move the property into a company, you are changing the borrower and the owner. Lenders generally will not agree to that on the existing terms. They have lent against your income, your credit and your personal buy-to-let product. A company is a different borrower.

What lenders usually do

The usual outcome is a refinance:

1. The company arranges a new loan, or loans, with a lender that lends to limited companies.
2. The new loan repays your personal mortgage.
3. The property transfers to the company, with the new lender taking security.

Points to expect:

• A different product. Company buy-to-let mortgages are priced differently from personal ones, and the choice of lenders is narrower. Rates and fees may be higher or lower than your current deal. Do not assume.
• Personal guarantees. Many lenders ask the directors or shareholders to guarantee the loan personally. That limits the protection of limited liability.
• Valuations and legal costs. Each property will need a valuation, and there are legal fees on the new security.
• Interest cover. Lenders test whether rent covers interest by a margin. Their tests can differ for companies and individuals.
• Time. The lender process is often the slowest step. Start early. Our service page on property portfolio incorporation explains the full sequence.

Some landlords find a lender that agrees to a transfer of the existing loan, or to a new loan in the company with the old one cleared on completion. This is lender-specific, and a mortgage broker who knows company lending is worth involving before you commit.

Early repayment charges

If your current deal is a fixed rate or has a tracker with a penalty period, repaying early can cost a percentage of the balance. This can be thousands of pounds on a large portfolio.

The fix is usually timing. Incorporating at the end of a fixed term, or moving properties in stages as each deal expires, avoids or reduces the charge. Staged transfers come with their own tax problem: incorporation relief under section 162 of the Taxation of Chargeable Gains Act 1992 needs the business to be transferred as a going concern with all its assets, or all except cash. Moving only part of a portfolio can lose the relief. Our article on moving a property portfolio into a limited company covers this.

How borrowing affects incorporation relief

Incorporation relief defers the gain if the business transfers to the company in exchange for shares. The gain is deducted from the base cost of your new shares, so the tax is postponed rather than cancelled. From 6 April 2026 you must claim it, and the rental activity must be a genuine business.

If part of what you receive is not shares, the relief is reduced in proportion. This is where borrowing matters.

• Cash to you. If the company borrows more than it needs to clear the mortgage and pays the surplus to you, the cash is consideration other than shares.
• A loan account. If the company owes you for the value of the properties and you take a director's loan credit instead of shares, that credit is also not shares. It can be repaid tax-free later, up to what you are owed, but it can reduce the relief now.
• Business liabilities. Under HMRC's extra-statutory concession D32, business liabilities that the company takes over are not treated as consideration. Cash paid to you to clear a personal borrowing is.

Whether a particular mortgage is a business liability depends on what the money was used for. Borrowing used to buy or improve the let property is the usual case. Borrowing that was used for private spending is not.

Example: A landlord has a genuine rental business with properties worth £900,000 and a base cost of £400,000, so the gain is £500,000. A £450,000 mortgage secured on the properties is a business liability that is cleared on incorporation. The company borrows £500,000 from a new lender and pays £50,000 to the landlord as cash. Setting the £450,000 business liability aside, the landlord receives £400,000 of shares and £50,000 of cash for the £450,000 of equity. Incorporation relief would defer about eight-ninths of the £500,000 gain, around £444,000, and about £56,000 would be taxable now. Had the company not paid out the cash, the whole gain could be deferred. These figures are hypothetical, and real calculations depend on the exact liabilities and terms.

Interest on the company's loan

Mortgage interest is deductible in the company as a cost of the business, so Section 24 no longer applies to that interest. That is one of the main reasons to incorporate. Interest is deductible only where the borrowed money is used for the company's business. Do not use a refinancing to withdraw funds for private use without taking advice.

If you lend money to the company as part of the move, a loan account balance stays owed to you and can be repaid free of income tax. But the company must be able to afford it. Borrowing from the company, by contrast, can lead to a charge of 35.75% for loans made from 6 April 2026 if the loan is still outstanding nine months and one day after the company's year end.

SDLT when debt moves

When a company buys property from someone connected with it, SDLT is worked out on at least the market value. If the company takes on a mortgage, the amount of debt assumed can also count as the price. The result is that the SDLT is not reduced just because the property carries a mortgage. See our article on SDLT, LTT and LBTT when you incorporate for the rates.

A sensible order of steps

1. Check the business test. Without a genuine property business, incorporation relief may be unavailable and the CGT can be large.
2. List every mortgage. Note balances, rates, end dates, early repayment charges and what each was used for.
3. Ask a broker for company terms, including guarantees and fees, before you commit.
4. Model the tax with the borrowing included. Include CGT, SDLT, the relief reduction for any cash, and the annual savings from Section 24.
5. Choose the timing. Aim for the end of fixed terms if you can.
6. Complete in the right order, with the relief claim, SDLT return within 14 days and the lender notices handled.

When the mortgages say "do not incorporate"

Sometimes the answer is to leave the portfolio as it is and buy new property in a company. That avoids refinancing existing loans and any CGT or SDLT on a transfer. Our article on whether incorporating is still worth it in 2026/27 compares those options.

Talk to us about Property Portfolio Incorporation

• Incorporation relief under section 162 can defer CGT, but only if the rental activity is a business
• From 6 April 2026 the relief must be claimed, it is no longer automatic
• SDLT is usually charged on market value, unless a partnership route properly applies

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

FAQs

Can I transfer my buy-to-let mortgage to my limited company?

Rarely on the existing terms. Most lenders treat a company as a new borrower, so the company takes a new loan to repay your personal mortgage. Some lenders offer a transfer or a combined process. Ask your lender and a broker before you commit to any plan.

Do I pay early repayment charges when I incorporate?

If you repay a fixed-rate or penalty-period mortgage early, usually yes, as a percentage of the balance. Timing the move for the end of the fixed term avoids it. Staging the transfer to avoid charges can interfere with incorporation relief, so check the tax first.

Will taking out cash on refinancing reduce my incorporation relief?

Yes, if the company pays you cash, it counts as consideration other than shares and reduces the relief proportionately. Borrowing used to clear business liabilities is treated differently under extra-statutory concession D32. The order of steps matters, so model the numbers first.

Do I need personal guarantees for a company buy-to-let mortgage?

Many lenders ask for them, particularly from directors and shareholders of newer companies. A guarantee means that if the company defaults, you are personally liable. Ask for the terms in writing, and weigh them against the tax benefit of incorporating.

Is mortgage interest fully deductible once the properties are in a company?

Interest on money borrowed for the company's business is generally deductible in full against the company's profits, and Section 24 does not apply to a company. Borrowing used for private purposes is not deductible. The company pays corporation tax on the profit that remains.

Sources

• 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
• HMRC Capital Gains Manual CG65715 (business test): https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65715
• HMRC Capital Gains Manual CG65745 (ESC D32): https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65745
• Section 24, ITTOIA 2005 section 272A: https://www.legislation.gov.uk/ukpga/2005/5/section/272A
• Corporation Tax Act 2010, section 455: https://www.legislation.gov.uk/ukpga/2010/4/section/455
• FA 2003 section 53 (connected company, market value): https://www.legislation.gov.uk/ukpga/2003/14/section/53
• SDLT filing and payment: https://www.gov.uk/stamp-duty-land-tax/how-to-pay
• Corporation tax rates: https://www.gov.uk/corporation-tax-rates

Next step

If you own mortgaged property and are wondering whether a company works, we will map your lenders, charges and tax together, and tell you plainly if it does not. We offer a free 20-minute call to start. Book a call.