Moving your buy-to-lets into a limited company: Is it worth It?

Ask a room full of landlords about limited companies and you will hear two confident, opposite answers. One camp says incorporation is the only sensible structure since mortgage interest relief was cut. The other says the transfer costs wipe out a decade of savings. Both are right, for different portfolios. Whether incorporation makes financial sense depends on your income, borrowing, existing gains, future plans and how actively you run your property portfolio. This guide explains how the figures work in 2026, what transferring property to a limited company involves and which landlords may be more likely to benefit.

The usual caveat applies with extra force here: this is one of the most circumstance dependent decisions in property, and you should take proper advice from an accountant before committing. This article provides general information rather than personal tax, financial or legal advice.

A note on location

This article focuses mainly on residential properties in England.

Stamp Duty Land Tax applies in England and Northern Ireland. Wales has Land Transaction Tax, while Scotland uses Land and Buildings Transaction Tax. Property registration systems also differ across the UK.

The tax position may therefore vary depending on where the properties are located and where the landlord lives.

Why landlords consider incorporating

The main attraction is the way rental profits and mortgage interest are taxed.

Individual residential landlords can no longer deduct their finance costs fully from their rental income when calculating taxable profits. Instead, they generally receive a basic-rate tax reduction, currently calculated at 20% of the qualifying finance costs, although the amount available can be limited by the landlord’s property profits and adjusted total income.

This can create an uncomfortable result for highly leveraged landlords. They may pay Income Tax on a profit figure that is considerably higher than the amount of cash they have actually retained after paying their mortgage interest.

A limited company is treated differently. Interest and other qualifying finance costs are generally taken into account when calculating the company’s taxable profit. The company then pays Corporation Tax on that profit.

For the 2026-27 financial year, the Corporation Tax small-profits rate is 19% for companies with profits of £50,000 or less. The main rate is 25% for profits above £250,000, with marginal relief applying between the two thresholds. These limits may be reduced where the company has associated companies.

The landlord can then decide whether to retain the remaining profit in the company, perhaps to fund another purchase, or withdraw it personally. Taking money out as a salary, dividend or other payment may create an additional personal tax liability.

From April 2027, separate Income Tax rates are due to apply to property income, with rates of 22%, 42% and 47%. Residential finance-cost relief will then be calculated at the 22% property basic rate. This future change should be included in any long-term comparison.

For a higher rate taxpayer with meaningful borrowing, the difference is stark. On a property producing £12,000 of rent with £7,000 of mortgage interest, an individual paying 40 per cent tax can face an effective bill approaching £3,400 after the interest credit. A company with the same figures pays corporation tax on the £5,000 of true profit, under £1,000 at the small profits rate. Money retained in the company to buy the next property suffers no further tax until it is drawn out.

Companies also help with inheritance planning, since shares can be gifted or structured more flexibly than bricks, and they separate the portfolio from your personal finances.

The costs of getting there

If incorporation were free, most portfolio landlords would have done it years ago. It is not free. Transferring a property you already own into your own company is a sale at full market value in the eyes of the tax system, and that triggers three sets of costs.

Capital gains tax

You are disposing of the property to the company, so capital gains tax applies to the growth since you bought it, at 18 or 24 per cent, even though no money changes hands. A landlord sitting on large paper gains can face a six figure bill for the privilege of selling to themselves.

Stamp duty

The company is buying the property, so it pays stamp duty land tax at market value, including the 5 per cent surcharge for additional dwellings. The current bands are on the government’s stamp duty pages. On a £300,000 property the company’s bill runs to roughly £20,000, per property.

Refinancing

Personal buy-to-let mortgages cannot simply be renamed. Each property must be refinanced onto a limited company product, which means arrangement fees, valuations, legal work and possibly early repayment charges on your existing loans. Company mortgage rates also tend to run slightly higher than personal ones.

Incorporation relief: the exception that can change the figures

There is a significant carve out. Section 162 incorporation relief lets you defer the capital gains tax entirely by rolling the gain into the shares of the new company, provided you transfer a genuine property business as a going concern in exchange for shares. HMRC’s helpsheet on incorporation relief sets out the conditions.

The critical word is business. Passively owning one or two rentals managed by an agent is unlikely to qualify. The benchmark, drawn from case law, is active and substantial involvement in running the portfolio, with around twenty hours a week of genuine management activity often cited as the working threshold. Larger portfolios run hands-on stand a good chance. A couple with two flats and a letting agent do not.

Landlords who hold their properties in a genuine partnership may also reduce or eliminate the stamp duty charge on transfer, which is why the combination of partnership plus incorporation is the standard structure for large portfolio moves. It is also an area HMRC scrutinises closely, so this is emphatically professional advice territory.

So who actually benefits?

Incorporation conveyancing and its associated costs make sense in some situations and not others. The structure tends to pay off when:

• You are a higher or additional rate taxpayer with significant mortgage interest.
• You plan to reinvest profits into more property rather than live off the rent.
• You are building for the long term, including passing the portfolio to children.
• Your gains to date are modest, or you genuinely qualify for incorporation relief.

It tends not to pay off when you own one or two properties with small mortgages, when you need the rental income to live on, since extracting money as salary or dividends brings its own tax, or when the CGT and stamp duty on transfer would take many years of annual savings to claw back. Plenty of landlords are best served by a hybrid: keep existing properties in personal names and buy the next one through an SPV, a special purpose vehicle company set up just to hold property, which avoids all transfer costs on the existing portfolio.

The legal process if you go ahead

A transfer into a company is a full conveyancing transaction for every property: contracts, searches where the lender requires them, redemption of the old mortgage, completion of the new company loan and registration at the Land Registry, with the company as buyer and you as seller. Multiply that by the size of your portfolio and sequence it around your mortgage redemption dates, and the project takes months. Conveyancing fees are commonly quoted per property, so ask firms about portfolio rates. You can compare conveyancing quotes on Moving Compared to get a sense of per property costs from firms that handle company transfers.

Alongside the conveyancing you will need an accountant to run the incorporation relief analysis and the ongoing company accounts. Accountancy fees vary according to the number of properties, volume of transactions, VAT position, payroll requirements and complexity of the ownership structure. Rather than relying on a general estimate, landlords should obtain quotations based on their particular portfolio.

The verdict

Moving buy to lets into a limited company is neither a magic tax fix nor a mug’s game. It is a capital project with a payback period. Price the CGT, the stamp duty and the refinancing honestly, set them against a realistic annual saving, and see how many years it takes to break even. If the answer is four or five and you are in property for the long haul, incorporation deserves serious consideration. If the answer is fifteen, keep the portfolio in your own name and use a company for the next purchase instead.