More Landlords are asking whether it’s better to hold their buy-to-lets personally or through a limited company. A company can offer tax advantages — but moving property into one isn’t straightforward. It triggers Capital Gains Tax, Stamp Duty Land Tax, and mortgage costs that you need to weigh carefully.
Watch my breakdown on property ownership structures — whether you’re thinking about trusts, selling, or moving buy-to-lets into a company
Why Landlords Consider Transferring to a Company
- Mortgage interest relief: In a company, all finance costs are deductible. Personally, relief is restricted.
- Corporation tax: Company profits taxed at 25% (or lower if small profits), compared to up to 45% as an individual.
- Retained profits: You can leave profits in the company for reinvestment.
- Estate planning: Shares in a company may be easier to transfer than properties.
The Tax Traps
1. Capital Gains Tax (CGT)
- HMRC treats the transfer as if you sold the property at market value.
- CGT is due on the gain (at 18% or 24% for residential property).
- Annual allowance for 2025/26: £3,000.
Example
Bought at £150,000 → now worth £300,000.
Gain = £150,000 – £3,000 allowance = £147,000 taxable.
At 24% = £35,280 CGT bill.
2. Stamp Duty Land Tax (SDLT)
- SDLT applies on the market value of the property.
- The additional property surcharge applies — 5% on top of each SDLT band (since Oct 2024).
Example: Buy-to-let worth £300,000 (April 2025)
- First £125,000 → 0% + 5% = £6,250
- Next £125,000 → 2% + 5% = £8,750
- Final £50,000 → 5% + 5% = £5,000
Total SDLT = £20,000
👉 For many landlords, this means a double tax hit: CGT on the gain and SDLT on the transfer.
3. Mortgage Issues
- You’ll need new mortgages in the company’s name.
- Rates are often higher, with stricter criteria.
- Arrangement fees and legal costs add to the bill.
The “Business Incorporation Relief” Option
In some cases, you may qualify for Incorporation Relief (s162 TCGA 1992) if HMRC accepts your activity as a property rental business, not just investment.
- This can defer CGT by rolling the gain into the company’s base cost.
- To qualify, you must show substantial activity — multiple tenants, regular maintenance, hands-on management.
- Even if CGT is deferred, SDLT is still due, unless rare partnership exemptions apply.
Should You Do It?
Pros
- Corporation tax savings
- Full finance cost relief
- Retained profits for reinvestment
- Flexibility in estate planning
Cons
- Large upfront CGT and SDLT bills
- Mortgage refinancing costs
- Ongoing admin and compliance
Final Thoughts
Transferring buy-to-lets into a company can work for some landlords, but the upfront tax costs are substantial. The right choice depends on your:
- Portfolio size
- Profit levels
- Mortgage terms
- Long-term plans (retirement, family transfers)
📞 Thinking about moving properties into a company? Book a clarity call with Grace Certified Accountants — we’ll model the numbers for your portfolio before you make a move.
🔗 Related GCA Blogs
- What Expenses Can You Claim When Selling a UK Rental Property?
If you’re thinking of selling instead of transferring, here’s what you can and can’t claim to reduce your CGT bill. - What Happens If You Die Owning a Rental Property?
If you hold onto your property, here’s how IHT and CGT apply when passing it on to your heirs. - Using Trusts to Manage Property Tax – What You Need to Know (UK)
Some landlords consider using trusts instead of companies. This blog explains the pros, cons, and tax pitfalls.