Incorporating a property portfolio: is moving to a limited company worth it?

Why landlords consider incorporation

In short: individual landlords can only get a 20% tax credit on mortgage interest, while a limited company deducts finance costs in full and pays Corporation Tax at 19% to 25%. For higher-rate landlords with mortgages, a company can mean much less tax on future profits.

The tax costs of moving properties into a company

• Capital Gains Tax: transferring a property to your company is treated as selling it at market value. Incorporation relief can defer the gain, but only if the letting amounts to a business and the whole business is transferred in exchange for shares.
• Stamp Duty Land Tax: the company pays SDLT on the market value, including the higher rates for additional residential property. Relief may be available if the properties were genuinely held through a partnership.
• Mortgages: existing buy-to-let mortgages usually need to be redeemed and replaced with company lending, which can bring early repayment charges and fees.
• Taking money out: dividends from the company are taxed again in your hands.

When incorporation may not be worth it

If you are a basic-rate taxpayer, have little mortgage debt, need all the rental income to live on, or plan to sell soon, the costs can outweigh the savings. Some landlords keep existing properties personally and buy new ones through a company instead.

Our incorporation review

We look at your properties, mortgages, income and plans, compare personal and company ownership over several years and set out the one-off costs. You get a clear written recommendation for a fixed fee. Read more about incorporation relief and buy-to-let limited companies.