Since Section 24 bit in 2020, you’ve probably been offered the same fix again and again: "just transfer your BTLs to a limited company". The saving is real. A company set up to hold property (a Special Purpose Vehicle, or SPV) deducts mortgage interest fully before corporation tax. But the transition cost is usually brushed over, and for some portfolios it wipes out five years of tax savings on day one.
This guide walks through the three costs most articles skip: Stamp Duty Land Tax, Capital Gains Tax, and mortgage lender consent. Then it shows break-even by portfolio size in 2026, with three worked scenarios.
The three costs that kill the "incorporate now" pitch
1. Stamp Duty Land Tax (SDLT)
A transfer from you (personally) to your limited company is treated by HMRC as a market-value sale. That means the full BTL SDLT surcharge applies on the whole property value.
2026 SDLT BTL rates (England, transfers to a company are always additional-property):
| Band | Rate |
|---|---|
| Up to £125,000 | 5% |
| £125,001 – £250,000 | 7% |
| £250,001 – £925,000 | 10% |
| £925,001 – £1.5m | 15% |
| Above £1.5m | 17% |
A £300,000 BTL transfer: SDLT = £6,250 + £8,750 + £5,000 = £20,000 on day one.
2. Capital Gains Tax (CGT)
HMRC treats the transfer as a disposal at market value. If the property has grown in value since you bought it, you pay CGT on the paper gain even though no cash changes hands.
2026 CGT rate on BTL: 24% for higher-rate taxpayers (down from 28% since April 2024), 18% for basic-rate.
That same £300,000 property bought for £200,000: gain = £100,000, after £3,000 annual exemption = £97,000 taxable. CGT at 24% = £23,280.
The exception is Incorporation Relief (s162 TCGA 1992). It can defer CGT by rolling the gain into the shares of the new company. To qualify, HMRC requires your portfolio to be a genuine business, not just passive ownership. The test turns on the work you actually do, such as the time you spend and how actively you manage the lets, not on a property count. Don't self-diagnose: get specialist advice.
3. Mortgage lender consent
Your existing BTL mortgage is with you, not a company. Transferring beneficial interest (even via declaration of trust) without lender consent usually triggers a technical default. In 2026 most lenders require:
- Redemption of the existing mortgage
- New application from the SPV at the company rate (typically 0.3–0.7% higher)
- Product fees and legal costs again
Budget £2,000–3,500 per property in refinancing costs.
Before paying any of the three, run the comparison on your own figures. From £7.99 a month, LetCompliance records the rent and costs for each property, and on paid plans its Section 24 calculator sets the tax in your own name beside the tax through a company on those figures. Get started
Three worked scenarios (2026)
Scenario A: 1 BTL, £300k value, higher-rate taxpayer
Transfer costs:
- SDLT: £20,000
- CGT (assume £100k gain, no IR): £23,280
- Refinance fees: £2,500
- Accountancy set-up: £1,200
- Total: £46,980
Annual saving (Section 24 foregone, ~£10k mortgage interest at higher-rate): ~£2,000/year
Break-even: 24 years. Do not incorporate.
Scenario B: 5 BTLs, £1.2m total value, higher-rate taxpayer
- SDLT: ~£123,750. Five transfers from you to the same company are likely to count as linked, so the rates apply to the £1.2m total (Multiple Dwellings Relief, which used to soften this, ended on 1 June 2024). If they were not linked: £71,500 (5 × £14,300, at an average of £240k each).
- CGT (assume £400k total gain): ~£95,000
- Refinance (5 × £2,500): £12,500
- Accountancy + legal: £6,000
- Total: £237,250 (£185,000 if not linked)
Annual saving: ~£12,000/year
Break-even: about 20 years (about 15 if not linked). Hard to justify unless you will hold long term and can claim IR.
Scenario C: 5 BTLs but qualifies for Incorporation Relief
Same numbers as B, but CGT deferred via IR → day-one cost drops to £142,250 (£90,000 if not linked).
Break-even: about 12 years (about 7.5 if not linked). Worth considering for a genuine portfolio business.
Scenario D: building the portfolio from scratch
If you buy fresh inside an SPV from day one, you skip transfer SDLT and CGT entirely. You still pay:
- BTL mortgage rates 0.3–0.7% higher
- Corporation tax 19–25% on profit
- Dividend tax on extraction (10.75% basic, 35.75% higher, 39.35% additional above the dividend allowance, from 6 April 2026)
For higher-rate taxpayers building a portfolio in 2026, start in a ltd co is usually the right call.
What about declaration of trust / beneficial interest transfer?
Some accountants market "transfer the beneficial interest only and pay no SDLT". The risks:
- 1HMRC may recharacterise the transfer as an SDLT-triggering event if beneficial and legal ownership are split long-term
- 2Your mortgage lender sees it as a breach of the mortgage conditions
- 3Rent must be paid to the company, not you. Any deviation unravels the structure
Unless a senior tax adviser signs off in writing and your lender consents, steer clear.
Decision framework
- 1–2 BTLs, personal name, no IR: stay personal. Mitigate Section 24 via spouse transfer or pension contributions.
- 3–4 BTLs, higher-rate, no IR: run the numbers. Usually stay personal unless you're also buying more.
- 3–4+ BTLs, genuine business, qualifies for IR: incorporation relief makes it work. Get a specialist accountant.
- Starting fresh from 2026 onward: SPV from day one is the default for higher-rate taxpayers.
FAQs
Can I transfer just one property to a ltd co?
Yes, but you lose any IR claim (HMRC treats IR as all-or-nothing for a business). Pay SDLT + CGT per property.
Is there a minimum share capital for a BTL SPV?
No legal minimum. Typically £100 ordinary shares. Ask the accountant about alphabet shares for spouse dividend flexibility.
Do I need a separate SPV per property?
No. One SPV can hold multiple BTLs. Some landlords use one per property for lender flexibility, but accountancy costs scale up.
What about SDLT group relief?
SDLT group relief can remove SDLT on a transfer between companies in the same group, not from you personally to your company. Not a way around the initial transfer SDLT.
Where to go next
- Section 24 phantom income explained: the problem an SPV tries to solve
- Rental yield UK 2026: net & after-tax: how an SPV changes the maths
- Buy-to-let tax guide 2026: personal vs company tax side by side
Get started. Whether the properties sit in your name or in an SPV, the let runs the same way: tenants, rent, certificates and a tax return at the end of the year. LetCompliance keeps each property's Gas Safety, EICR, EPC and deposit dates with reminders before each is due, and shows profit and loss per property. The Section 24 calculator models personal against company side by side, and for properties in your own name it sends your Making Tax Digital quarterly updates to HMRC as recognised software, with an SA105-shaped tax pack for you or your accountant at the year end.
Sources and scope
- GOV.UK: Renting out a property
- GOV.UK: Your landlord’s safety responsibilities
- HSE: Gas safety in rented properties
Every figure on this page is cited to GOV.UK, legislation.gov.uk or HSE and reviewed against the live source every quarter. This is guidance, not individual legal advice.
Allowable vs Capital Repair Decision Tree
The single line HMRC actually draws between an allowable repair and a capital improvement, with 24 worked examples for UK landlords.
- 24 real repair scenarios classified
- Repair-vs-capital decision tree (1-page A4)
- Replacement-of-domestic-items relief explained
- Self Assessment line mapping for SA105
Frequently asked questions
Is transferring my BTL to a limited company worth it in 2026?
For a single BTL in your personal name, usually no. SDLT at BTL rates plus CGT on the gain can exceed 20 years of Section 24 savings. For a genuine portfolio business that qualifies for Incorporation Relief, the worked example in this guide breaks even in about 12 years. For landlords buying fresh BTLs from 2026 onwards, starting in an SPV is usually the default for higher-rate taxpayers.
Does SDLT apply when I transfer a BTL to my own company?
Yes. HMRC treats the transfer as a market-value sale, so full BTL SDLT (including the 5% additional-property surcharge from October 2024) is due on the whole property value. A £300k BTL transfer incurs £20,000 SDLT at 2026 rates.
What is Incorporation Relief (s162 TCGA 1992)?
Incorporation Relief defers CGT when you transfer a genuine business (not passive ownership) to a limited company. The gain rolls into your shares, and no tax is payable until you sell the shares. HMRC applies a stringent "business" test: hours committed, active management and evidence of a real business, not simply how many properties you own. Get specialist accountant advice first, because weak claims are rejected.
Can I use declaration of trust to avoid transfer SDLT?
Risky. The "transfer beneficial interest only" route splits legal and equitable ownership and runs into: HMRC recharacterisation risk, mortgage-lender breach (most lenders prohibit it), and complex rental-income attribution. Do not use without written advice from a senior tax adviser and explicit lender consent.
