Property portfolio incorporation: moving rental property into a company

Section 162 of the Taxation of Chargeable Gains Act 1992 applies when you transfer a business, with all its assets, to a company wholly or partly for shares. The gain is not taxed at that point. It is deducted from the base cost of your new shares, so the tax is deferred until you sell the shares. Relief is reduced if you take part of the value in cash or debt.

For transfers on or after 6 April 2026, yes. The relief used to apply automatically; now you must make a claim, and the old option to disapply it has gone. The claim deadline for a 2026/27 transfer is 31 January 2029. HMRC requires business details, the company's number, the shares issued and a computation, so keep the paperwork.

There is no statutory definition. HMRC looks at whether the activity is a serious undertaking, carried on with reasonable continuity, with real substance and on sound commercial principles, using the Ramsay case indicators. HMRC accepts relief where an individual spends about 20 hours or more a week personally managing the portfolio. Below that, it is decided case by case.

Not in practice. There is no statutory clearance for section 162, and HMRC's non-statutory clearance service will not rule on questions of fact, which includes whether activities amount to a business. This is why we build an evidence file on your hours, tasks and decision-making before transfer, to be ready if HMRC asks.

Usually yes. Where you are connected with the company, the SDLT is charged on market value rather than on any price you actually pay, and that includes the higher-rates surcharge of 5 percentage points. A dwelling worth over £500,000 may attract the 17% flat rate unless a relief for property rental businesses applies. This is often the biggest cost of incorporating.

Where the portfolio is held in a genuine partnership, transfers to a company connected with the partners can be charged on a reduced basis under the partnership rules in Schedule 15 to the Finance Act 2003. It depends on there being a real partnership that meets the legal definition, not just joint ownership. HMRC challenges artificial arrangements, so each case needs careful review.

No. The Partnership Act 1890 says joint tenancy, tenancy in common or part ownership does not of itself create a partnership, even if you share the profits. A partnership needs a business carried on in common with a view to profit. Many landlords assume joint ownership is enough for the partnership SDLT route, and it is not.

HMRC published Spotlight 69 in April 2025 saying the route of moving property into an LLP, putting the LLP into members' voluntary liquidation and selling the properties to your company does not work. For liquidations on or after 30 October 2024, new rules treat you as disposing of the property at market value when it went into the LLP, and HMRC says the SDLT anti-avoidance rule in section 75A is relevant. We do not recommend it.

Your existing lender will not normally allow the property to be moved. The company usually needs new borrowing to repay your personal mortgages, often at a different rate and on commercial terms, and some lenders require personal guarantees. Business liabilities taken over by the company are not treated as consideration under extra-statutory concession D32, but cash paid to you to clear a personal mortgage is, and it reduces the relief, so the order of steps matters. Speak to your broker early.

Section 24 stops individuals deducting mortgage interest from rental profit, replacing it with a basic-rate credit, so a highly geared landlord can pay tax on profit that is mostly interest. Companies are outside the rule and deduct finance costs as normal, paying corporation tax at 19% to 25%. The benefit has to be weighed against transfer costs.

Profits belong to the company, so extracting them means a salary, a dividend, a pension contribution or a director's loan repayment. Dividends in 2026/27 are taxed at 10.75%, 35.75% or 39.35% above a £500 allowance. A loan from the company to you that is still outstanding nine months after its year end faces a section 455 charge, 35.75% for loans made from 6 April 2026. Leaving profit in the company can be efficient for reinvestment.

It can help, because shares are easier to gift or place in trust in stages than individual properties, and a company can be combined with a Family Investment Company for control. However, rental property in a company rarely qualifies for business relief, so inheritance tax planning must be built in separately. It is a long-term decision.

Beyond adviser and legal costs, the real costs are tax: SDLT on market value, any CGT not deferred by section 162, and the company's higher borrowing costs. There is also ongoing compliance, including accounts, corporation tax returns and, for dwellings worth more than £500,000, ATED returns. We model the break-even before anyone commits.

Section 162 requires the business to be transferred as a going concern with all its assets, or all but cash. If you transfer only part of the portfolio, relief may not be available for what is moved, and a gain could arise immediately. In some cases a separate business within the portfolio can be incorporated, but the facts need careful analysis.

Where there are large unrealised gains and no relief, a low level of borrowing, a basic-rate taxpayer with little need for finance cost relief, or where the owner wants to draw all the profit personally. A low-geared portfolio held for income is often better left alone. A new purchase through a company is a very different question.

Planning and modelling usually take a few weeks, depending on how quickly we receive valuations and mortgage details. The lender process is often the slowest step. After completion we handle the SDLT return, which is due within 14 days, the incorporation relief claim and the handover so your accountant can update the records.