You have read that holding buy-to-let in a limited company saves tax, and now you want to move a property you already own into one. The question is simple: what does that actually cost? The honest answer is that incorporating is treated as a sale, even though no money changes hands and you still own the asset through your shares. The one-off bill can run into six figures before you save a single pound of income tax.
Here is how the cost breaks down, and a worked example you can adapt to your own numbers.
Why moving a property to your own company counts as a sale
You and your company are separate legal persons. When you transfer a property from your name into a company you control, HMRC treats it as a disposal at open market value, because you are "connected" parties. That single rule drives the two largest costs: the company is buying, so it pays Stamp Duty Land Tax, and you are selling, so you may owe Capital Gains Tax on the growth since you first bought it. On top of that, your personal mortgage cannot follow the property, so you have to refinance.
Three bills, all triggered by a transaction where no cash actually moves.
The three one-off costs
1. Stamp Duty Land Tax (paid by the company)
A company buying residential property pays the higher rates for additional dwellings on the whole price. That surcharge rose to 5% above the standard rates from 31 October 2024 (gov.uk). SDLT is charged on the market value of the property on the day of transfer, not what you originally paid.
Two points catch landlords out. First, Multiple Dwellings Relief was abolished from 1 June 2024, so moving several flats in one go no longer softens the bill. Second, incorporation relief for Capital Gains Tax (below) does nothing for stamp duty. It is worth checking the figure with our stamp duty calculator before you commit, because for most landlords this is unavoidable.
2. Capital Gains Tax (paid by you)
Because the transfer happens at market value, your gain is the current value less your original cost and buying and selling costs. For 2025-26, residential property gains are taxed at 18% for basic-rate taxpayers and 24% for higher-rate, after the annual exempt amount of £3,000 (gov.uk). A property held for years can carry a large paper gain, so this is often the biggest line of the three.
3. Refinancing and exit fees
Your personal buy-to-let mortgage has to be redeemed and replaced with a limited company product. Expect a product or arrangement fee (frequently around 2% of the loan), a broker fee, valuation, and conveyancing on both the sale and the new purchase. If you are still inside a fixed term, an early repayment charge can add several thousand pounds. Company mortgage rates also tend to sit above personal ones, which is an ongoing cost rather than a one-off.
A worked example: a £500,000 flat
Take a higher-rate landlord who bought a flat for £250,000 and it is now worth £500,000. The mortgage is £300,000, and they refinance the company at 75% loan-to-value (£375,000).
| Cost | Amount |
|---|---|
| SDLT (company, 5% surcharge on £500,000) | £40,000 |
| Capital Gains Tax (24% on £247,000 after the £3,000 allowance) | £59,280 |
| Refinancing and exit fees (arrangement, broker, legal, valuation, ERC) | ~£18,000 |
| One-off total | ~£117,280 |
The SDLT figure is built from the additional-property bands: 5% on the first £125,000, 7% on the slice to £250,000, and 10% on the slice to £500,000. The CGT assumes the £250,000 gain falls entirely in the higher-rate band. The refinancing estimate assumes a 2% arrangement fee on £375,000, roughly £4,500 of broker, valuation and legal costs, and a 2% early repayment charge on the outstanding £300,000.
That is just over £117,000 of one-off cost, on a property where nothing changed hands and the landlord still owns it.
The reliefs everyone asks about, and their catches
Two reliefs come up in every incorporation conversation. Neither is a free pass.
- Incorporation relief (section 162 TCGA 1992). If you transfer the whole letting business as a going concern in exchange for shares, the gain can be rolled into the base cost of those shares, deferring the CGT. The catch is twofold. It only applies where your letting is a genuine business that you actively run, and HMRC leans on the Ramsay v HMRC (2013) test here, which a single passively-held let rarely meets. And it defers CGT only. The company still pays the full SDLT.
- SDLT partnership relief (Schedule 15, Finance Act 2003). Where property is held in a real partnership before the transfer, this can reduce or remove the stamp duty. But the partnership has to be genuine and usually established well in advance. A "partnership" of spouses created weeks before incorporation is exactly what HMRC challenges.
If both reliefs apply cleanly, the six-figure bill above can shrink dramatically. For a typical solo landlord with one or two personally-held flats, they often do not, and the headline cost stands.
So is it worth it?
Weigh the entry cost against the annual saving. Since 6 April 2020, individual landlords can only claim a 20% basic-rate tax credit for mortgage interest under Section 24, whereas a company deducts interest in full against its profits (gov.uk). For a higher-rate landlord with a large loan, that difference can be worth a few thousand pounds a year. Set against a £117,000 entry cost, the payback period can stretch well beyond a decade, and that is before you account for higher company mortgage rates and the extra tax when you extract profit as dividends.
The point is not that incorporation is always wrong. For someone building a portfolio from scratch, or where section 162 and partnership relief genuinely apply, the maths can look very different. But moving an existing, mortgaged, personally-held property is rarely the cheap or easy step it is sold as. Run the actual figures for your own property, on your own gain and mortgage, before you speak to anyone selling the structure.
This is general information, not tax or financial advice. Incorporation is a complex, largely irreversible step, so take advice from a qualified accountant on your specific position first.
