What Incorporating Your BTL Portfolio Actually Costs (and When It Pays Back)
Transferring a personally-held portfolio into a Ltd triggers SDLT on the deemed market-value sale (with the +5% surcharge), CGT on the deemed disposal, and refi costs. We compute the all-in one-off cost and the year Section 24 savings repay it.
Many landlords decide they'd be better off in a limited company and assume they can just "transfer the properties in." It's far more expensive than people realise — HMRC treats a connected-company transfer as a sale at market value, triggering both SDLT and CGT all at once.
The four cost layers
1. SDLT on deemed market-value transfer
The company "buys" the property from you at market value, and pays SDLT at additional-property rates (the +5% surcharge applies). On a £900,000 portfolio, that's well over £75,000 of SDLT before any CGT.
2. CGT on deemed disposal
You're treated as having sold the properties at market value. Gain × 18%/24% (residential, band split against your income). On large pregnant gains, this can be six figures.
3. Refinancing
Existing personal mortgages must be redeemed and replaced with SPV products: early redemption charges, valuation, arrangement fees.
4. Ongoing overhead
Annual accountancy + Companies House + corporation tax filings: a real ~£1,000–£3,000/yr depending on portfolio size and accountant.
The one number that matters: break-even year
Total one-off cost ÷ net annual Section 24 saving. If your annual saving is £12,000 and the one-off cost is £130,000, you don't break even until year 11. Compared to a typical 10-year hold, that may not be worth it.
Reliefs we flag (and you should investigate)
- Section 162 incorporation relief — defers CGT if the business is genuinely a "business" (case law: Ramsay v HMRC).
- SDLT partnership-incorporation relief — possible if the portfolio operates as a partnership for ≥2 years.
- Multiple dwellings relief (MDR) — abolished for most transactions June 2024.
The Portfolio Incorporation Cost calculatorgives a baseline before reliefs. Always confirm with a property-specialist accountant.
