Incorporating a property portfolio
Since Section 24 restricted mortgage-interest relief for individual landlords, a wave of investors have looked at moving their portfolios into a limited company — usually a special purpose vehicle, or SPV — where interest is still fully deductible. The logic is sound, but the move is not free: transferring property you already own into a company is a sale at market value that can trigger capital gains tax and stamp duty, and every mortgage has to be refinanced. Done with the right advice it can pay for itself; done blindly it can cost more than Section 24 ever did.
What does “incorporating a portfolio” actually mean?
Incorporation is the process of moving property you currently own personally into a limited company that you control. You are not simply re-labelling the deeds: in law you are selling each property from yourself to the company at its current market value, and the company is buying it. That single fact drives almost everything that follows — because a sale at market value is a taxable event for the seller and a purchase for the buyer.
The attraction is the tax treatment going forward. Once inside the company, rental profits are taxed under corporation tax rules, where mortgage interest remains a fully deductible business cost — the very relief that Section 24 took away from individuals. For a higher or additional-rate landlord with significant borrowing, that difference can be substantial year after year. The question is never whether the company is more tax-efficient to run — it usually is — but whether the one-off cost of getting the property in is worth paying.
The two taxes incorporation triggers
Because the transfer is a sale at market value, two taxes come into play on the way in. Both can be large, and both have to be modelled before you commit:
The cost of moving property into a company
- Capital gains tax (CGT) — you are treated as selling each property to the company at today’s value, so you are taxed on the gain since you bought it, even though no cash changes hands. On a long-held, appreciated portfolio this can be the single biggest number in the whole exercise.
- Stamp duty (SDLT) — the company is the buyer, so it pays SDLT on the market value of what it acquires — and as a company purchasing residential property it pays the higher additional rates. There is no “moving it within the family” exemption.
- Refinancing costs — every personal mortgage has to be redeemed and replaced with limited-company lending, which means new arrangement fees, valuations and legal costs on each property.
We cover the detail of each in our guides to capital gains tax on property and stamp duty for limited companies — read those alongside this page, because they are where the real numbers live.
Section 162 incorporation relief — the CGT escape route
The CGT charge is the one that most often stops incorporation in its tracks — but it is not always payable. Where a landlord runs a genuine property business rather than simply holding a few passive investments, section 162 incorporation relief can allow the capital gain to be deferred: instead of paying CGT on the transfer, the gain is rolled into the value of the shares you receive in the new company, and tax is only potentially paid much later if you sell those shares.
The catch is the word business. Section 162 relief is designed for someone who runs their property activity as an actual business — typically operating as a property partnership with real time, organisation and effort going in, not a hands-off investor with a single buy-to-let and a letting agent. HMRC looks closely at whether a genuine business exists, and the bar is higher than many landlords assume. Whether you qualify is a specialist judgement, and getting it wrong is expensive — which is exactly why this step belongs with an accountant before anything is signed.
CGT on incorporation, in plain terms
- No relief available: the transfer is taxed as a sale at market value — CGT is due now on the whole gain.
- Section 162 relief available: a genuine property business can defer the CGT by rolling the gain into the company shares.
- SDLT is separate: incorporation relief addresses the CGT, not the stamp duty — the company’s SDLT bill still needs planning for (a property partnership may have its own SDLT considerations to explore with an adviser).
Weighing it against the Section 24 saving
Incorporation is a trade: a known up-front cost today against a stream of tax savings in the years ahead. The maths only works if the annual benefit — chiefly the restored mortgage-interest deduction that Section 24 removed — outweighs the one-off CGT, SDLT and refinancing costs over a sensible horizon. For a heavily geared, higher-rate landlord with a sizeable portfolio, the case can be compelling. For a lightly mortgaged investor, a basic-rate taxpayer, or someone sitting on a large unsheltered capital gain, the entry cost can swallow years of saving and the answer may be to leave things as they are.
There is also the ongoing side of the ledger: a company brings corporation tax, annual accounts and filing, and a cost to extracting profit (dividends or salary) for personal use. None of these is a dealbreaker, but they all belong in the comparison. The honest answer for many landlords is “it depends” — and the only way to know is to have an accountant model your specific portfolio.
Every property has to be refinanced — where we come in
Here is the part landlords often overlook until late in the process: when a property moves from you to your company, the existing personal mortgage cannot move with it. Each property has to be refinanced onto a limited-company mortgage in the SPV’s name — redeeming the old loan and putting new lending in place, property by property. Limited-company buy-to-let is a specialist product, priced and underwritten differently to a personal mortgage, and not every lender offers it or accepts every SPV structure.
That is our half of the job. As a whole-of-market broker we arrange limited-company buy-to-let mortgages across 100+ lenders, so once you and your accountant have decided incorporation is right and structured the company correctly, we shop the market for the lenders who fit your SPV and price the refinance best. You and your adviser settle the tax and the structure; we make sure the finance lands cleanly underneath it.
Limited-company buy-to-let Section 24 explainedIncorporating? Let’s fund the SPV.
Settle the tax and structure with your accountant, then come to us for the refinance. We’re a whole-of-market broker covering 100+ lenders for limited-company buy-to-let — indicative terms within 24 hours, and asking won’t affect your credit score.