Incorporating a Property Portfolio in the UK: Step-by-Step 2026

Incorporating a property portfolio in the UK: what this guide assumes

This guide is for landlords who have already weighed whether to incorporate and now need the order of work: what to do first, what HMRC tests apply, and where the costs land. It is not a generic case for incorporation. If you are still deciding in principle, start with should I incorporate my buy-to-let portfolio and Section 24 versus incorporation, then come back here for the mechanics.

The single most important framing: incorporating a property portfolio crystallises two separate charges at the point of transfer, capital gains tax and stamp duty land tax, and they behave differently. The CGT charge can usually be deferred in full. The SDLT charge usually cannot. Most landlords who get burned have planned around the CGT and underbudgeted the SDLT. The whole sequence below is built around that asymmetry.

Step 1: Map the portfolio and the latent tax

Before any structuring decision, build a property-by-property schedule. For each property record the current market value, the original purchase price, the cost of any capital improvements, and the outstanding mortgage balance. Two numbers fall out of this that drive everything else.

The gap between current value and original cost (less allowable improvements) is the gain that a transfer to a company crystallises for CGT. The current value is the figure SDLT is charged on. You cannot sensibly choose a transfer route until you can see both totals across the whole portfolio, because the right route depends on how large each charge is.

A worked snapshot. Suppose a higher-rate landlord holds three flats bought over the years for £150,000, £180,000 and £210,000, now worth £250,000, £280,000 and £300,000. The combined latent gain is £290,000. The combined value driving SDLT is £830,000. Those two numbers, not the rental yield, set the cost of incorporating.

Step 2: Test whether HMRC will treat your lettings as a business

This is the gate for deferring the CGT, so it comes before the structuring. Section 162 incorporation relief only applies where you transfer a business as a going concern. Holding a few rental properties passively is not automatically a business in HMRC's view.

The leading authority is Ramsay v HMRC [2013], where the Upper Tribunal accepted that property letting can be a business where the activity is sufficient in degree and scope: active management, time genuinely spent, a portfolio of properties run as an organised venture rather than a single passive let. There is no magic number of properties, but a single flat handed to an agent rarely clears the bar, while a multi-property portfolio under hands-on management usually does. Our deeper note on when HMRC accepts a rental portfolio as a business sets out the evidence to assemble.

If the lettings are not a business, Section 162 is unavailable and the transfer is a fully taxable disposal at market value. That alone can make incorporation uneconomic, which is why this test sits early in the sequence.

Step 3: Understand the two charges incorporation triggers

When properties move from you personally to your company, HMRC treats it as a disposal by you (for CGT) and a purchase by the company (for SDLT). They are taxed under different rules and relieved by different reliefs.

Capital gains tax on the transfer

The transfer is a disposal at market value, so a gain arises even though no cash changes hands. For 2026/27 the residential CGT rates are 18% for gains within the basic-rate band and 24% above it, with a £3,000 annual exempt amount. On the £290,000 latent gain in the Step 1 example, a higher-rate landlord would face a CGT charge of roughly £69,600 at 24% (about £68,880 after the £3,000 annual exempt amount) before any relief.

That is where Section 162 earns its place: where the conditions are met, the gain is rolled into the base cost of the shares and no CGT is payable on transfer. The deferral mechanics are covered in full on our Section 162 incorporation relief guide, and our wider capital gains tax on property guide sets the rates in context.

Stamp duty land tax on the transfer

SDLT is charged on the market value of each property the company acquires, and the 5% additional dwellings surcharge applies (the surcharge rose from 3% to 5% on 31 October 2024). There is no general relief for moving residential property into your own company. Section 162 relieves the CGT, not the SDLT.

This is the charge that surprises people. On the three-property example, transferring each flat separately at market value, SDLT including the surcharge runs to roughly £53,000 (£15,000 plus £18,000 plus £20,000). Crucially, that is real cash payable within 14 days of the transfer, whereas the CGT can be deferred to nil. Budgeting for the SDLT, and looking hard at whether a lower-SDLT route is open, is the practical heart of the decision.

The two charges side by side

Feature	Capital gains tax	Stamp duty land tax
Who is charged	You, the transferring owner	The company, as buyer
Charged on	Gain (value less cost)	Full market value
2026/27 basis	18% / 24% residential	Residential bands plus 5% surcharge
Main relief	Section 162 incorporation relief (deferral)	None for a straight transfer
Can it usually be deferred to nil	Yes, if a going concern	No
Payment deadline	Per self-assessment / 60-day rules	14 days from the effective date

Step 4: Model the SDLT and choose the transfer route

Because SDLT is the unrelieved cash cost, the route you pick to move the properties matters more than anything else on the bill. There are three routes worth knowing, and only one of them is the default.

Straight transfer (the default)

You sell each property to the company at market value. Simple, defensible, and the SDLT (including the 5% surcharge) is payable in full. This is the right route for most single-owner portfolios where the lower-SDLT routes below are not genuinely available.

The six-dwellings non-residential route

Under FA 2003 s.116(7), where six or more separate dwellings are the subject of a single transaction (or linked transactions), they are automatically treated as non-residential property for SDLT. Non-residential rates then apply (0% to £150,000, 2% to £250,000, 5% above) with no additional dwellings surcharge. This is a statutory deeming, not an election, and it survived the abolition of multiple dwellings relief. For a genuine bulk transfer of six or more properties in one go, it is usually the cheapest compliant route, but it depends on the transactions actually being a single linked deal.

The partnership route (Schedule 15)

Where the portfolio is already held in a genuine, pre-existing letting partnership, FA 2003 Schedule 15 reduces the chargeable consideration by reference to the sum of the lower proportions (SLP). Where the partners transferring in are all connected (a husband-and-wife partnership, for example) and the post-transfer shares line up, the SLP can reach 100%, which means nil chargeable consideration and therefore nil SDLT. The detail of the five-step SLP calculation is on our Schedule 15 partnership SDLT relief guide.

Two warnings. First, HMRC will not accept a partnership invented just before incorporation to access the relief; the working safe harbour is a real partnership operated for at least two years with filed SA800 partnership returns, joint borrowing and partnership accounting. Where the "partnership" is a paper contrivance, the s.75A general anti-avoidance rule lets HMRC ignore it. Second, a Schedule 15 para 17A anti-withdrawal charge can claw back the relief if a partner withdraws capital within three years of the transfer. The route is statutorily authorised, not a loophole, but it is tightly conditioned.

Step 5: Arrange company finance before you move anything

Finance, not tax, is the step that most often stalls an incorporation. Personal buy-to-let mortgages cannot simply follow the property into the company. You will need limited company buy-to-let lending, and most lenders require personal guarantees from the directors. Existing personal mortgages may carry early repayment charges, and the new company facilities will have their own arrangement costs.

Get indicative company lending terms before you commit to the transfer, because a portfolio that does not refinance cleanly into the company can leave you with an SDLT and legal bill and no working structure. Our overview of buy-to-let limited companies covers how the company side is set up and run.

Step 6: Form the company and set up the director's loan account

Register a standard private limited company by shares at Companies House. From 2025 onward, directors and people with significant control must complete identity verification, so build that into the timetable. Most let portfolios sit comfortably outside close investment-holding company status because letting to unconnected tenants falls within the qualifying-purpose carve-out at CTA 2010 s.18N, which preserves access to the small profits rate.

Where you use Section 162, the consideration for the transfer can be split. Anything taken as shares carries the rolled-over gain into the share base cost. Anything left owed to you by the company becomes a credit on your director's loan account, which the company can repay tax-free over time. That makes the loan account a useful early extraction route, but mind the exhaustion trap: drawing your rent receipts against the balance can clear even a large incorporation credit within a few years, after which extraction moves to dividends or salary at the relevant rates. The extraction sequence for a property company sets out the order to draw funds.

Step 7: Transfer the properties and file

Instruct a solicitor to handle the legal transfer of each property at market value. Three filings follow:

• SDLT return: the company must file and pay within 14 days of the effective date of the transfer. This is the tight deadline; do not let it slip.
• CGT position: report the disposal on your personal self-assessment return and claim Section 162 relief where it applies, so the deferred gain rolls into the share base cost. Where any gain is not relieved and tax is due, the 60-day residential CGT reporting deadline can also bite.
• Corporation tax: the company will file its first company tax return within 12 months of the end of its accounting period and pay corporation tax nine months and one day after the period end.

Step 8: Switch onto company compliance

Once the portfolio is incorporated, the compliance set changes. Rental profit is taxed as corporation tax inside the company, which for 2026/27 means the 19% small profits rate up to £50,000 of profit, the 25% main rate above £250,000, and marginal relief between (and remember associated-company rules pull those thresholds down if you run more than one company). Section 24 no longer restricts your interest relief, because it is an income tax rule that does not apply at company level; the company deducts mortgage interest in full.

The other moving parts to set up on day one:

• ATED screening: a company holding a single dwelling worth more than £500,000 on 1 April is within ATED. Most let portfolios claim the commercial-letting relief, but that relief must be claimed on an ATED return every year, due by 30 April, even when no tax is payable.
• Extraction planning: getting profit out as dividends or salary is taxed again in your hands, so the early use of the director's loan account and a sensible salary-and-dividend mix matter to the net result. See our director's loan repayment strategy.
• Not MTD for ITSA: companies are outside Making Tax Digital for Income Tax entirely. If you keep any qualifying property or self-employment income personally, that income remains within MTD for ITSA, which is live from 6 April 2026 at the £50,000 threshold, dropping to £30,000 from 6 April 2027 and £20,000 from 6 April 2028.

What April 2027 does to the incorporation case

From 6 April 2027, individuals' property income in England, Wales and Northern Ireland is taxed at separate property rates of 22% basic, 42% higher and 47% additional, enacted by Finance Act 2026 (Scotland is the only part of the UK outside these rates, setting its own). The Section 24 finance-cost reducer rises in step to 22%, so the much-discussed "new wedge" does not open for basic-rate landlords. For higher and additional-rate geared landlords, though, the gap between their 42%/47% property rate and the 22% reducer is unchanged and still wide, which keeps the long-run case for incorporation intact rather than weakening it. Our guide to the 2027 property income tax rates sets out the figures.

Common mistakes when incorporating a portfolio

• Treating SDLT as the deferrable charge. It is the CGT that defers under Section 162. The SDLT is the hard cash cost, and on a meaningful portfolio it is substantial. Budget for it first.
• Assuming Section 162 is a given. The going concern and business tests are real, and HMRC scrutinises claims. Assemble the evidence before transferring, not after an enquiry letter arrives.
• Inventing a partnership for the SDLT relief. A partnership created shortly before incorporation to access the Schedule 15 SLP is exactly the pattern HMRC attacks under s.75A. The relief needs a genuine, pre-existing partnership with a track record.
• Forgetting the extraction layer. Profit taxed once inside the company is taxed again on the way out. Incorporation that ignores how the cash comes back to you can leave you worse off than staying personal.
• Overlooking finance. Early repayment charges and company lending terms can turn a sound tax plan into a poor overall decision. Confirm the lending first.

Where to get the numbers right

Incorporating a property portfolio is a structuring exercise where the order of work, and a clear-eyed view of the unrelieved SDLT, decides whether it pays. The right answer is specific to your portfolio's gains, values, gearing and your own tax position. If you want the full picture modelled before any property moves, speak to our property tax team. For the decision in principle, our guide on whether to incorporate a buy-to-let portfolio is the place to start.