SDLT Property Incorporation

What Is Property Incorporation?

Property Incorporation refers to transferring ownership of a property — or an entire portfolio — from individual or joint ownership into a limited company structure.

Since 6 April 2020, individual buy-to-let landlords can no longer deduct mortgage interest as an expense when calculating taxable profits. This has significantly increased Income Tax bills for Higher Rate and Additional Rate taxpayers with mortgage debt.

However, this restriction does not apply to limited companies — which is why many landlords are now choosing to incorporate their property portfolios to manage their tax exposure more effectively.

What Are the Benefits?

Transferring your buy-to-let portfolio into a limited company can offer several valuable advantages

Lower Tax Rates

Company profits are taxed at the Corporation Tax rate, which is typically lower than the Income Tax rate paid by Higher Rate and Additional Rate taxpayers.

Flexible Profit Extraction

Profits can be withdrawn more efficiently through salaries or dividends, and different share classes can be used to optimise tax planning.

When properties are transferred to a company, their base cost increases, allowing future sales to incur a smaller tax liability.

Reduced Future Tax Charges

Limited Liability Protection

Operating through a company structure provides personal protection by limiting individual financial liability.

Better for Long-Term Planning

A corporate setup can create a strong foundation for business continuity and Inheritance Tax planning

Are You Eligible?

You can quickly assess whether incorporating your property portfolio could benefit you — and whether it can be done without triggering SDLT or Capital Gains Tax (CGT) charges — by asking yourself these six simple questions:

• Are you a Higher Rate or Additional Rate taxpayer?

• Are you married or part of an existing property investment partnership?

• Do you own four or more properties or units?

• Do you actively manage your property portfolio and spend significant time on it?

• Is your portfolio made up mainly of residential properties?

• Do you have any mortgage debt on your properties?

If you’ve answered “yes” to most of these questions, incorporation may offer substantial tax advantages.

Tax on Incorporating Your Portfolio
Transferring property to a company can trigger Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT). However, with the right reliefs in place, these charges can often be reduced or even avoided entirely.