Incorporating a Property Portfolio in the UK: Step by Step

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, which HMRC tests apply, and where the costs land. It is not a 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.

One assumption shapes every step below: everything moves at once. One owner or couple, one portfolio, one completion date, one company. That is the ordinary shape of an incorporation and it is what makes a clean linear sequence possible, because each step can be finished before the next begins. Landlords carrying larger portfolios or very large gains often break the transfers across two to four tax years instead, which changes the risk profile, the Section 162 argument and the compliance load in ways the sequence here does not account for. If that is your position, the phased approach to incorporating existing portfolios is the guide to work from.

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, along with the product end date and any early repayment charge. 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 and on how many titles are moving.

The worked example used throughout this guide. 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. Combined latent gain: £290,000. Combined market value driving SDLT: £830,000. There is no partnership, and outstanding mortgages total £430,000. Those two headline 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 any structuring. Section 162 TCGA 1992 incorporation relief applies only where you transfer a business as a going concern. Holding rental properties passively is not automatically a business in HMRC's view, and this is the point at which incorporation plans most often fail on their tax merits.

The statutory conditions

Section 162 requires four things together. First, a business must be transferred, not a collection of assets. Second, it must be transferred as a going concern, so the lettings continue uninterrupted into the company rather than being wound down and restarted. Third, all the assets of the business other than cash must move across; retaining one property outside the company because a lender will not consent is enough to break the condition on a strict reading. Fourth, the consideration must be wholly or partly in shares issued by the company, and the relief is proportionate: if only part of the consideration is in shares, only that proportion of the gain is deferred.

The relief then rolls the gain into the base cost of those shares. Nothing is cancelled. A £290,000 deferred gain reduces the share base cost by £290,000, and resurfaces if you ever sell the shares.

The business test: Ramsay and what HMRC actually looks for

The leading authority is Ramsay v HMRC [2013] UKUT 226 (TCC). Mrs Ramsay transferred a single property divided into ten flats and spent around twenty hours a week on it: dealing with tenants, arrears, communal areas, maintenance, refuse, the garage block. The Upper Tribunal held that letting can amount to a business where the activity is sufficient in degree and scope, judged against what an ordinary person would regard as a business, and that the activities were of a nature and extent that took them beyond passive investment.

There is no statutory property count. What HMRC weighs in practice is the total picture:

• Time genuinely spent, evidenced rather than asserted. Diaries, correspondence volume, maintenance records.
• Who does the work. Full management by a letting agent pushes hard against the business finding, because the active management is then someone else's.
• Scale and organisation. A multi-property portfolio run with proper records, a business bank account and a maintenance programme reads as a venture; two flats on standing orders do not.
• Continuity and commerciality. Lettings run for profit on commercial terms, over years, not an inherited property left in place.

A single flat handed to an agent rarely clears the bar. A ten-property portfolio under genuine hands-on management usually does. The middle ground is genuinely uncertain, and that uncertainty should be resolved before you incur costs, not after. Our note on when HMRC accepts a rental portfolio as a business sets out the evidence file to assemble, and the Section 162 incorporation relief guide is the canonical statutory writeup.

The claim requirement from 6 April 2026

Section 162 used to apply automatically wherever the conditions were met, with a separate s.162A election available to disapply it. Finance Act 2026 reversed that. For transfers on or after 6 April 2026, the relief must be positively claimed, by the first anniversary of the 31 January following the tax year of the transfer, and s.162A was repealed. The practical consequence is blunt: meeting the conditions is no longer enough. An unclaimed relief is a lost relief, and on a £290,000 gain that is roughly £69,600 of tax that did not need to be paid.

Whether Section 162 applies to your situation, and whether it is the right answer, is a decision question rather than a mechanical one. Our page on incorporating rental property without CGT takes that decision framing directly.

Step 3: Price the two charges incorporation triggers

When properties move from you personally to your company, HMRC treats the same event as a disposal by you (for CGT) and an acquisition by the company (for SDLT). They run under different rules, are relieved by different reliefs, fall on different taxpayers, and have different deadlines.

Capital gains tax on the transfer

Because you and the company are connected persons, the disposal is deemed to take place at market value under TCGA 1992 s.17 regardless of what price is documented. A gain arises even though no cash changes hands, which is what makes an unrelieved incorporation so dangerous: real tax, no proceeds to pay it from.

For 2026/27 the residential CGT rates are 18% for gains falling within the basic-rate band and 24% above it, with a £3,000 annual exempt amount. On the £290,000 latent gain in the worked example, a higher-rate landlord faces roughly £69,600 at 24%, or about £68,880 after the annual exempt amount, before any relief. With a valid Section 162 claim, that falls to nil at the point of transfer and attaches to the shares instead. Our capital gains tax on property guide sets the rates in context.

Stamp duty land tax on the transfer

SDLT is where incorporations get expensive. Two rules combine.

First, s.53 FA 2003: where the purchaser is a company and the vendor is connected with it, the chargeable consideration is deemed to be not less than the market value of the interest. Selling the flats to your own company for a token £1, or for the outstanding mortgage balance, does not reduce the charge. The market value is the tax base whatever the paperwork says.

Second, the 5% additional dwellings surcharge, which has applied to transactions with an effective date on or after 31 October 2024 and stacks on top of the standard residential bands. A company acquiring residential dwellings pays it from the first pound. There is no first-time or main-residence carve-out for a company.

Section 162 relieves the CGT. It does nothing to SDLT. Multiple Dwellings Relief, which used to soften portfolio transactions, was abolished for effective dates on or after 1 June 2024 and cannot be claimed, whatever older guidance suggests. For the definitive rate walkthrough and the band-by-band arithmetic, use our SDLT on transferring property to a company guide, which is the reference table for the whole cluster.

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 (market value less cost)	Full market value (s.53 FA 2003)
2026/27 basis	18% / 24% residential	Residential bands plus 5% surcharge
Main relief	Section 162 incorporation relief (deferral, claimed)	None for a straight transfer
Can it usually be reduced to nil	Yes, if a going concern business	No, unless Schedule 15 or six dwellings applies
Payment deadline	60 days from completion where tax is due, otherwise self-assessment	14 days from the effective date

For the standalone question of whether this means paying stamp duty twice on the same properties, see stamp duty on incorporation: do you pay twice.

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 to the bill than anything else on this page. There are three routes worth knowing, and only one of them is the default.

Route 1: straight transfer, and the linked transactions trap

You sell each property to the company at market value. Simple, defensible, and the SDLT including the 5% surcharge is payable in full.

The trap is linkage. Under s.108 FA 2003, transactions are linked where they form part of a single scheme, arrangement or series of transactions between the same vendor and purchaser or connected persons. Three flats sold by the same landlord to the same company as one incorporation exercise are linked almost by definition. Linked transactions are rated on the aggregate consideration, which pushes the whole portfolio into higher bands.

On the worked example, the difference is material. Treated as three unlinked purchases, the surcharged bands (5% to £125,000, 7% to £250,000, 10% to £925,000) produce £15,000, £18,000 and £20,000, a total of £53,000. Treated correctly as linked, the aggregate £830,000 is rated as one transaction: £6,250 plus £8,750 plus £58,000, giving £73,000. That £20,000 gap is the single most common budgeting error in a self-managed incorporation. Assume linkage unless a professional adviser has concluded otherwise on the facts.

Either way, that is real cash payable within 14 days, against a CGT charge that can be deferred to nil. This asymmetry is the reason the sequence on this page exists.

Route 2: the six-dwellings non-residential deeming

Under s.116(7) FA 2003, where six or more separate dwellings are the subject of a single transaction, or of linked transactions, they are automatically treated as not residential property for SDLT. Non-residential rates then apply: 0% to £150,000, 2% to £250,000, and 5% above £250,000, with no additional dwellings surcharge.

Three points matter. It is a statutory deeming, not an election, so there is no claim mechanism; the buyer simply reports on the non-residential basis. It survived the abolition of Multiple Dwellings Relief and remains the principal portfolio-friendly route for genuine bulk transfers. And it depends entirely on the transactions being a single deal or properly linked under s.108, so the linkage discipline that costs you money on Route 1 is the thing that saves you money here.

The three-flat example cannot use it. Scale a comparable portfolio to six dwellings worth £1.6 million in one linked transaction and the arithmetic flips hard. On the surcharged residential bands the charge is £6,250 plus £8,750 plus £67,500 plus £86,250 plus £17,000, a total of £185,750. On the non-residential bands it is nil in the 0% band plus £2,000 plus £67,500, a total of £69,500. That is a saving of £116,250 on the same properties. For portfolios near the boundary, whether the sixth dwelling is inside the transaction is worth more than any other decision in the project.

Route 3: the partnership route under Schedule 15

Where the portfolio is already held in a genuine, pre-existing letting partnership, FA 2003 Schedule 15 para 18 governs the transfer out of the partnership to a connected company. The chargeable consideration is not the market value but:

Chargeable consideration = market value x (1 minus SLP%), where SLP is the sum of the lower proportions.

The SLP is worked out in five steps. Identify the relevant owners, being the persons with a pre-transaction entitlement to the interest who are, or are connected with, post-transaction partners. Identify each relevant owner's corresponding partners, meaning the partners who are that owner or are connected with them under CTA 2010 s.1122. Apportion each relevant owner's pre-transaction proportion among those corresponding partners. For each partner, take the lower of that attributed proportion and their actual partnership share. Sum those lower proportions across all partners to get the SLP.

Where every relevant party is connected and the shares line up, the SLP reaches 100%, chargeable consideration falls to nil, and no SDLT arises. That is why the route attracts so much attention, and so much HMRC scrutiny.

Four conditions and traps govern whether it is actually available:

• The partnership must be real and pre-existing. HMRC's standard attack is that the partnership is a paper contrivance entered into shortly before incorporation, in which case s.75A FA 2003 lets HMRC disregard it. The working safe harbour is at least two years of genuine operation with filed SA800 partnership returns, partnership accounting records, joint borrowing where mortgaged, and real partnership decision making. A husband-and-wife joint ownership with income split on a tax return is not a partnership.
• Partnership share means income-profit share (Schedule 15 para 34), not capital share, not voting rights, not entitlement on dissolution. Partnership agreements with mismatched income and capital ratios produce SLP outcomes people do not expect.
• Cohabitants are not connected persons under CTA 2010 s.1122. An unmarried couple cannot rely on connection to each other in the SLP calculation, which is a persistent error in popular commentary.
• The three-year anti-withdrawal charge at Schedule 15 para 17A. This attaches to the earlier step, the transfer of property into the partnership under para 10 (or a transfer of a partnership interest under para 14), not to the para 18 transfer out that completes the incorporation. Where properties were moved into the partnership to build the structure, withdrawing capital, repaying a partner loan or otherwise returning capital within three years of that transfer-in is itself a chargeable event, capped at the market value originally transferred less anything already charged. It is the built-in safeguard against a quick flip, and it is another reason the partnership has to pre-exist rather than be assembled shortly before incorporation.

The correct HMRC reference for these mechanics is the partnership manual at SDLTM33500 onwards, not the s.75A general anti-avoidance manual. The full five-step calculation with worked figures is on our Schedule 15 partnership SDLT relief guide. The route is statutorily authorised, not a loophole, but it is tightly conditioned and it cannot be created inside an incorporation timetable.

A note on multi-owner demergers

Portfolios owned by several unconnected parties who want to separate into individual companies raise a different set of rules, including reconstruction reliefs and SDLT group relief with its three-year claw-back under FA 2003 Schedule 7 para 3. That is a demerger, not an incorporation, and it is out of scope here. If that is your position, take advice specific to it rather than following this sequence.

Step 5: Arrange company finance and lender consents

Finance, not tax, is the step that most often stalls an incorporation. Personal buy-to-let mortgages are lending to you, and they cannot follow the property into a company; they are redeemed on completion and replaced with limited company buy-to-let facilities. That means:

• Early repayment charges on any product still inside its fixed term, typically 1% to 5% of the balance. On the worked example's £430,000 of borrowing, a 3% charge is nearly £13,000 of pure cost.
• Personal guarantees. Most limited company buy-to-let lenders require them from every director, so the liability protection is narrower in practice than the structure suggests.
• New arrangement fees and valuations on each facility, plus generally higher headline rates than comparable personal products.
• Timing. Offers across a multi-property portfolio commonly take eight to twelve weeks, which is usually the critical path for the whole project.

Get indicative company lending terms before you commit to the transfer. A portfolio that does not refinance cleanly leaves you with an SDLT bill, legal fees 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 private company limited by shares at Companies House. Incorporation costs £100 online or through software, and £124 by paper. Online incorporation is normally complete within 24 hours. The annual confirmation statement costs £50 online (£110 by paper), and it is a separate obligation from the accounts, not a substitute for them. Do not confuse the £50 confirmation statement fee with the incorporation fee; they are different filings.

Two set-up points matter more than the fee:

• Identity verification. Under the Economic Crime and Corporate Transparency Act 2023 regime, directors and people with significant control must complete identity verification. Build it into the timetable rather than discovering it on the day you wanted to file.
• Close investment-holding company status. Most let portfolios sit outside it, because letting to unconnected tenants falls within the qualifying-purpose carve-out at CTA 2010 s.18N, which preserves access to the 19% small profits rate. Letting to connected persons can break that.

Where Section 162 applies, the consideration is normally 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 to you tax-free over time, because repaying a debt is not a distribution. Two cautions. First, the relief is proportionate, so consideration left outside the shares reduces the gain deferred; taking a large loan account credit can trigger a CGT charge now. Second, 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 at 2026/27 rates of 10.75%, 35.75% and 39.35% above the £500 allowance. The extraction sequence for a property company sets out the order to draw funds, and our director's loan repayment strategy covers the loan account in detail.

Step 7: Transfer the properties and file

Instruct a solicitor to handle the legal transfer of each property at market value, with supportable valuations on file, because market value is the tax base for both charges and HMRC can challenge it. The mechanics of a single title transfer are set out in our guide on how to transfer property into a limited company. Three filings follow:

• SDLT return: the company must file and pay within 14 days of the effective date. This is the tight deadline and the one that generates penalties. Where the transactions are linked, consider whether a single return covering the linked transactions is appropriate.
• CGT position: report the disposal on your personal self-assessment return and claim Section 162 relief so the deferred gain rolls into the share base cost. Where any gain is unrelieved and tax is due, the 60-day UK property CGT return and payment deadline applies from completion as well.
• Corporation tax: the company files its first company tax return within 12 months of the end of its accounting period, and pays corporation tax nine months and one day after the period end. Note that the payment deadline falls before the filing deadline.

Step 8: Switch onto company compliance

Once the portfolio is incorporated, the compliance set changes entirely. Rental profit is taxed as corporation tax inside the company: 19% small profits rate up to £50,000 of profit, 25% main rate above £250,000, and marginal relief between, giving an effective marginal rate of about 26.5% in the band. Associated-company rules pull those thresholds down if you run more than one company. Section 24 no longer restricts interest relief, because it is an income tax rule that does not apply at company level, so the company deducts mortgage interest in full.

The other moving parts to set up on day one:

• Statutory filings. Annual accounts to Companies House, a company tax return to HMRC, and the £50 confirmation statement. Missing the confirmation statement is a common and avoidable first-year error.
• ATED screening. A company holding a single dwelling worth more than £500,000 on 1 April is within the Annual Tax on Enveloped Dwellings. 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.
• Expenses and allowances. The deductible base changes at company level. See allowable expenses in a limited company buy-to-let.
• Extraction planning. Profit taxed once inside the company is taxed again on the way out, so the early use of the loan account and a sensible salary-and-dividend mix drive the net result.
• 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, 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.

Closing the company later is a separate project with its own rules, including the CTA 2010 s.1030A £25,000 cap on capital treatment for informal strike-off distributions. If unwinding is a realistic prospect, read how to close a property limited company before you incorporate, not after.

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 sets its own rates and is outside these). The Section 24 finance-cost reducer rises in step from 20% 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% or 47% property rate and the 22% reducer is wide and unchanged, 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, due in 14 days, on a transaction that generates no cash. Budget for it first.
• Ignoring linkage. Pricing a multi-property transfer as separate purchases understated the worked example above by £20,000. Model it as linked.
• Assuming Section 162 applies, then forgetting to claim it. Since 6 April 2026 the relief is claim-or-nothing. Meeting the conditions and missing the deadline produces exactly the same result as failing the business test.
• Inventing a partnership for the SDLT relief. A partnership created shortly before incorporation to access the Schedule 15 SLP is the exact pattern HMRC attacks under s.75A. The route needs a genuine, pre-existing partnership with a filed track record.
• Citing Multiple Dwellings Relief. Abolished for effective dates on or after 1 June 2024. Any model or article that still applies it is wrong by a wide margin.
• Leaving one property behind. Section 162 requires all business assets other than cash to transfer. A property left out because a lender refused consent can undermine the whole claim.
• Overlooking finance and guarantees. Early repayment charges, higher company rates and personal guarantees can turn a sound tax plan into a poor overall decision. Confirm the lending first.
• Missing the first confirmation statement. A £50 filing that carries disproportionate consequences if it is forgotten in a busy first year.

Where to get the numbers right

Incorporating a property portfolio is a sequencing 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, and the difference between transfer routes on a mid-size portfolio is routinely a five-figure sum. 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, and the property SPV company guide covers the structure itself.