Transferring Property to a Limited Company
A market-value sale: CGT and stamp duty unless incorporation relief fits. What it costs, the 'no SDLT' partnership claim, a personal-vs-company comparison and the 2027 angle.
The short answer
Moving an existing buy-to-let into a company is a sale at market value. You pay CGT on the gain (18%/24%) and the company pays stamp duty on the full value plus the 5% surcharge — unless incorporation relief (a genuine property business, roughly 20 hours a week) defers the CGT. There is no general way to transfer without stamp duty; the partnership route is narrow and heavily challenged.
“Transfer property to limited company without stamp duty” is a popular search because a whole industry sells the idea. The honest version: the costs of transfer are real, the reliefs are conditional, and the answer depends on your numbers and your holding period.
What transferring costs
| Cost | How it bites |
|---|---|
| Capital Gains Tax | Deemed disposal at market value: gain since purchase less £3,000 at 18%/24% — payable within 60 days, unless deferred by incorporation relief |
| Stamp duty (SDLT / LBTT / LTT) | Company pays on market value, at additional-dwelling rates (5% surcharge in England & NI; ADS/higher rates in Scotland and Wales) |
| Mortgage | Redeem and re-borrow on a company BTL mortgage — early-repayment charges, higher rates, personal guarantees |
| Legal and valuation fees | Conveyancing, valuation, company set-up — capital, not deductible against rent |
| Ongoing | Accounts, confirmation statement, Corporation Tax return — £1,000+ a year in fees is typical |
Incorporation relief (TCGA 1992 s.162)
If you transfer a business as a going concern in exchange for shares, the gain is rolled into the base cost of the shares instead of taxed now. HMRC accepts a property portfolio as a business only where it is actively managed — the Ramsay case (2013) involved roughly 20 hours a week of hands-on work. One or two let-and-forget flats with an agent generally do not qualify. Relief is automatic if the conditions are met; the risk is HMRC disagreeing after the event.
The “no stamp duty” partnership claim
Transfers from a genuine partnership to a connected company can be charged at zero under the SDLT partnership rules. Promoters set up a partnership, wait, then incorporate. HMRC has said publicly it will challenge arrangements where the partnership was created for the purpose, and a 2024 Spotlight warned against hybrid-partnership schemes. Treat any adviser promising “no SDLT” as selling risk, not relief.
What a company gives you
| Factor | Company treatment |
|---|---|
| Mortgage interest | Fully deductible in a company — no Section 24 restriction |
| Tax on profit | Corporation Tax 19% to £50,000, 25% above £250,000 (marginal relief between) |
| Taking money out | Dividends at 10.75% / 35.75% / 39.35% (rose April 2026) after a £500 allowance — a second layer of tax |
| From April 2027 | Personal property rates become 22% / 42% / 47% — the gap to Corporation Tax widens |
| On sale | Company pays Corporation Tax on the gain; no £3,000 exempt amount; extracting proceeds taxed again |
| Inheritance planning | Shares can be gifted/structured more flexibly — a real advantage for large portfolios |
Who it tends to suit
- New purchases by higher-rate taxpayers who will reinvest rather than draw the profits — no transfer cost at all.
- Large, actively managed portfolios where incorporation relief is credible and the SDLT hit is small relative to the annual Section 24 saving.
- Not one or two properties with big gains and small mortgages — the transfer taxes exceed years of savings.
Worked comparison — £15,000 profit before interest, £6,000 interest
| Route | Annual tax |
|---|---|
| Personal, 40% taxpayer (2026/27) | Tax on £15,000 = £6,000; credit 20% × £6,000 = £1,200 → £4,800 |
| Company, profit retained | Profit after interest £9,000 × 19% = £1,710 |
| Company, all profit paid as dividend to a 40% taxpayer | £1,710 + (£7,290 − £500) × 35.75% ≈ £4,137 |
| Personal from April 2027 | Tax at 42% = £6,300; credit 22% = £1,320 → £4,980 |
Retaining profit in the company saves thousands a year; drawing it all saves hundreds. Against that, the one-off transfer cost on a £300,000 property with a £100,000 gain: CGT roughly £23,000 (if no relief) plus SDLT around £20,000. Payback can be a decade. This is a spreadsheet decision, then an adviser decision — never a webinar decision.
TCGA 1992 s.162 incorporation relief; Ramsay v HMRC [2013] UKUT 226; SDLT market-value rule for connected companies (FA 2003 s.53) and partnership provisions (Sch 15); HMRC Spotlight 63 (hybrid partnership schemes); Corporation Tax and dividend rates from our verified 2026/27 dataset; 2027 property rates gov.uk. Checked 31 Aug 2026.
Quick answers
Generally no — the company pays SDLT (or LBTT/LTT) on market value at additional-dwelling rates. The partnership exemption is narrow and HMRC challenges arrangements created for the purpose.
Yes — it is a disposal at market value. Incorporation relief can defer the gain if you transfer a genuine, actively managed property business in exchange for shares.
The April 2027 property rates widen the gap to Corporation Tax, but the April 2026 dividend rise made extraction dearer and transfer costs are unchanged. It favours retained profits and new purchases more than moving existing properties.
A rollover of the CGT on transferring a business to a company for shares — the gain is deferred into the share base cost. HMRC requires a real business, not passive letting.