Case Study: A Scottish Landlord Moves 14 Highly Geared Properties into a Company

The client

The client is an individual landlord who owned 14 rental properties in Scotland, together worth about £2m. The portfolio was heavily borrowed against, with mortgages above 65% of its value. Our team carried out the work in 2025.

The challenge

• Because so much of the rent went on mortgage interest, Section 24 was taking a large share of what the landlord received.
• The landlord wanted a route for passing the business on to their children.
• In Scotland, moving properties into a company triggers Land and Buildings Transaction Tax (LBTT), not SDLT, so the cost had to be known before any commitment was made.
• The mortgages meant the lenders had to be brought into the process.

What we did

Incorporation

• The portfolio was transferred to a company. Capital gains tax was deferred through incorporation relief under section 162.
• Two LBTT routes were compared. The first treats six or more dwellings bought in a single transaction as non-residential property. The second is multiple dwellings relief, which Scotland still has, unlike the SDLT equivalent in England.
• We confirmed that the 8% Additional Dwelling Supplement did not apply, because six or more dwellings are treated as non-residential.
• The LBTT was quoted before the client went ahead. The client's Scottish solicitor, who had acted for them for about 20 years, worked out the tax and filed the return with input from our team on the tax position. The LBTT was paid in full.

Dealing with the lenders

The loans were handled through a mix of refinancing and consent from the existing lenders, depending on each provider. Several issues had to be resolved along the way. Our team spoke to the lenders directly, joining calls with the client to understand each provider's requirements and keep the process moving.

A Family Investment Company

• We set up alphabet share classes, with shares issued to the landlord's spouse and mother. No trust was used.

The outcome

• The portfolio now sits in a company, where mortgage interest is deducted as a business expense.
• The LBTT was calculated and paid in full as part of the incorporation, and the client's solicitor submitted the return.
• The landlord's spouse and mother hold shares, which begins moving future growth away from the landlord.
• The whole project took between two and four months.

This case study is shared for general information. Every portfolio is different, and our advice is prepared by our specialist team and reviewed by a Chartered Tax Adviser. If you would like to see whether a similar approach could suit your own properties, book a call with our team.

Landlords can find more guides and tools at our specialist practice, Property Tax Advisory.