Costs and taxes involved with portfolio incorporation

We’ve discussed the advantages and disadvantages of transferring personally held buy-to-let properties to a limited company. Now let’s look in detail at the costs and taxes involved.

Buy-to-let property portfolio incorporation costs

As mentioned earlier, transferring personally held property to a limited company is a buying and selling transaction, and is subject to the following taxes:

Capital Gains Tax (CGT)

Capital gains tax is due on any uplift of the property value from purchase price to the market value at incorporation.

  • CGT is currently 18% for gains in the basic tax rate band and 28% for gains in the higher rate tax band for personally held properties.

  • Even if no money changes hands, CGT is charged on the market value of the property at incorporation.

Stamp Duty Land Tax (SDLT)

Stamp duty is paid by the company when property ownership is transferred from the individual.

It is paid on the market value at the date of transfer and applies regardless of whether consideration is given for the properties (cash is paid or shares transferred) or the properties are gifted to the limited company.

The limited company will pay:

  • a 3% surcharge on top of regular SDLT rates

  • a 2% additional SDLT surcharge rate for non-residents if based outside of the UK

Capital Gains Tax calculator

Work out how much tax would be due when selling your personally held properties

Calculate CGT

Stamp Duty Land Tax calculator

Work out how much tax your limited company would pay for your personally held properties

Calculate SDLT

Legal & conveyancing costs

  • Factor in legal costs to transfer each property as the usual Land Registry documents will still need to be updated by your solicitor.

Mortgage costs

  • Early redemption charges (if any) on any mortgages you have in place which are still in their locked in periods.

  • New SPV mortgage arrangement fees.