Property Incorporation
Many landlords are considering incorporating their property portfolios into a limited company to benefit from lower Corporation Tax rates and avoid the Section 24 mortgage interest restriction. However, incorporation carries potential SDLT and CGT costs that must be carefully analysed before proceeding.
What are the benefits?
Section 24 Mitigation
Limited companies are not subject to the Section 24 mortgage interest restriction — all finance costs remain fully deductible against rental profits. This makes incorporation particularly attractive for mortgaged portfolios where Section 24 creates significant additional personal tax.
Lower Corporation Tax Rate
Rental profits in a company are taxed at Corporation Tax rates (19–25%) rather than personal Income Tax rates of up to 45%. For higher-rate taxpayers with large rental portfolios, the ongoing Corporation Tax saving can be substantial.
Partnership Incorporation Route
Where properties are held in a genuine partnership (e.g., with a spouse), it may be possible to incorporate via a partnership contribution, potentially avoiding SDLT on the transfer. We assess whether this route is available and appropriate in your circumstances.
Long-Term Exit Planning
Operating through a company can provide greater flexibility for future succession planning, using the company's accumulated profits for investment, and potentially using an EOT or family gift of shares for IHT planning.
How can Zenus Tax help?
We model the CGT, SDLT, and Income Tax implications of incorporation across your specific portfolio
We advise on whether the partnership incorporation route is available and advisable
We structure the incorporation to minimise upfront tax costs
We advise on the ongoing compliance requirements of the company
Frequently Asked Questions
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