Since Section 24 bit in 2020, every landlord article seems to suggest the same fix: "just transfer your BTLs to a limited company". The saving is real — a Special Purpose Vehicle (SPV) ltd co 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 = £7,500 + £8,750 + £5,000 = £21,250 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.
Exception — Incorporation Relief (s162 TCGA 1992): 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. Real test: personal time committed, number of properties, active management. 1–3 passive lets typically fail; 10+ actively managed with employees usually pass. 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:
Budget £2,000–3,500 per property in refinancing costs.
Three worked scenarios (2026)
Scenario A: 1 BTL, £300k value, higher-rate taxpayer
Transfer costs:
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
Annual saving: ~£12,000/year
Break-even: ~16 years. Marginal. Only if long-term hold + 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 £103,500.
Break-even: ~9 years. 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:
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 — no SDLT". HMRC has been tightening on this since 2023. The risks:
Unless a senior tax adviser signs off in writing and your lender consents, steer clear.
Decision framework
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
Start your 14-day LetCompliance trial to track each property's compliance (Gas Safety, EICR, EPC, deposit) in one place — whether held personally or in an SPV.
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 portfolio landlords with 3–4+ properties who qualify for Incorporation Relief, break-even drops to 8–12 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 roughly £21,000 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, no tax payable until you sell the shares. HMRC applies a stringent "business" test: hours committed, number of properties, active management, evidence of trade. Get specialist accountant advice — weak claims are rejected.
Can I use declaration of trust to avoid transfer SDLT?
Risky and increasingly challenged by HMRC. 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.