Incorporating a property portfolio

Typically for higher or additional rate landlords with significant mortgages who plan to keep and grow the portfolio and reinvest profits. It is less likely to pay for itself if you're a basic-rate taxpayer, need most of the profit to live on, have little debt or expect to sell soon. The break-even point is when the yearly saving has repaid the one-off costs of moving, mainly SDLT and refinancing, so it needs modelling with your figures.

Ramsay v HMRC [2013] is the leading case on whether letting property is a business for incorporation relief. Mrs Ramsay ran a block of flats and spent around 20 hours a week on it herself, and the tribunal found her activity was a business. HMRC now uses that decision's indicators: a serious undertaking earnestly pursued, reasonable continuity, real substance, sound business principles and the pursuit of profit. Passive investment with everything outsourced is harder to fit.

HMRC's guidance says it will accept relief where an individual spends 20 hours or more a week personally on activities that are the sort carried out by a business, such as finding tenants, managing repairs and dealing with arrears. Below that, it looks at each case on its facts. Hours alone aren't decisive, though: the scale, organisation and activity of the letting all matter, and good evidence of what you actually do is essential.

Yes, for transfers on or after 6 April 2026. Incorporation relief used to apply automatically, but Finance Act 2026 changed it so you must make a claim, giving HMRC the details it asks for, including the business, the company and the shares issued. The deadline is the first anniversary of 31 January after the tax year of transfer, so 31 January 2029 for a transfer in 2026/27. The old election to disapply the relief has gone.

Your existing buy-to-let mortgages are in your personal name, so in practice the company will usually need new borrowing to repay them, or your lender must agree to transfer them, which is uncommon. That means arrangement fees, valuations, possibly early repayment charges and company lending criteria. For incorporation relief, HMRC accepts that business liabilities taken over by the company are not treated as non-share consideration, under its concession ESC D32.

There's no legal minimum. What matters for incorporation relief is whether your letting is a business, and portfolios with several properties and real management activity are more likely to meet that test than one or two passively let flats. In practice the costs, especially SDLT and refinancing, mean incorporation tends to make most sense for larger, mortgaged portfolios. Our incorporation calculator gives a first view.

You can transfer selected properties, but incorporation relief requires the whole business and all its assets, other than cash, to go to the company in exchange for shares. Move only part, and relief is unlikely to apply, so any gains on those properties would normally be taxable on transfer. Some landlords accept a gain on a few low-gain properties deliberately, or leave older properties out and buy new ones in a company.

The existing tenancies normally carry on, with the company stepping into your shoes as landlord from completion. Tenants should be told in writing who their new landlord is, deposit protection records should be updated, and letting agency agreements, insurance, licences and certificates moved into the company's name. From completion the rent belongs to the company, so it needs its own bank account and records from day one. Your conveyancer and agent will handle most of this.

Where a property business has been genuinely carried on as a partnership, special SDLT rules for partnerships can reduce or remove the SDLT when the partnership transfers properties to a company owned by the partners. The relief depends on partners being connected with the company and on how the property came into the partnership. It only works on the right facts, with a real partnership operating for good reasons, and HMRC examines these arrangements closely.

No fixed period is set out in the SDLT rules, but a partnership created just before incorporation, mainly to save SDLT, is exactly what HMRC's anti-avoidance rule in section 75A targets. There is also a three-year rule that can charge SDLT where capital or interests change after property goes into a partnership. A partnership that has really operated for several years, with its own accounts and returns, stands on much firmer ground.

Not by itself. The Partnership Act 1890 says joint ownership, even where you share the rent, doesn't of itself create a partnership. A partnership needs a business carried on in common with a view to profit, usually shown by an agreement, a partnership tax return, joint management and a real business. That distinction matters for partnership SDLT relief, so co-owners shouldn't assume they qualify.

Generally no. There's no statutory clearance for incorporation relief, and HMRC's non-statutory clearance service won't give a view on questions of fact, including whether certain activities amount to a business. It may help where there is genuine uncertainty about how the law applies to agreed facts. In practice, landlords rely on a careful analysis of their activity, solid evidence and a well-documented transaction.

If the company owns a dwelling worth more than £500,000, it falls within the Annual Tax on Enveloped Dwellings. Properties let commercially to unconnected tenants usually qualify for property rental business relief, but the company must still file a Relief Declaration Return each year, by 30 April for properties held on 1 April. Letting to family members or allowing them to live there can lose the relief and trigger the charge.

Usually a few months from first advice to completion, depending mostly on the lender. The tax analysis and modelling can be done in weeks, but new company mortgages, valuations, conveyancing for each property and the share issue all take time. Fixed-rate mortgages ending is often the trigger, so starting six months or more ahead of your rate expiry gives you room to plan properly.

SDLT is usually the largest, followed by refinancing costs such as arrangement fees, valuations and any early repayment charges. Add conveyancing on each property, our tax advice and ongoing company accounts and returns. There can also be capital gains tax if incorporation relief doesn't apply. We weigh these against the annual tax saving to show how many years it takes to break even.

Yes, but money doesn't simply flow to you as it did before. Profits belong to the company, so you take them as dividends, salary, pension contributions or repayment of money you're owed. If part of the transfer was paid by crediting a director's loan account, you can draw that down tax-free over time. How you extract profits is a big part of whether incorporation pays.

HMRC says no. In its Spotlight 69, published in April 2025, it set out why moving properties into an LLP, then liquidating it so the properties pass to a company, doesn't work. A new rule for liquidations from 30 October 2024 treats members as disposing of the property at market value, and HMRC also cites SDLT anti-avoidance. Landlords sold these arrangements should take independent advice.