If your properties have increased in value, Capital Gains Tax could present the biggest hurdle to incorporating your portfolio. This chapter looks at S162 incorporation relief to mitigate CGT.
Incorporation relief delays the payment of Capital Gains Tax until you sell or dispose of the company shares. If the company is never sold, CGT is delayed indefinitely.
According to HMRC, you must meet the following criteria to be eligible for incorporation relief:
be a sole trader or in a business partnership
transfer the business and all its assets (except cash) in return for shares in the company
Buy-to-let property businesses need to show they are a genuine business to qualify for incorporation relief. This means giving evidence, such as actively managing their properties and tenants, to show they are not just passive investors.
The Ramsey v HMRC  tribunal ruled that property letting is a business for incorporation relief.
Activity should outweigh what might normally be done by passive investors
At least 20 hours work per week was undertaken by the landlord
Maintenance, such as unblocking drains and conducting repairs
Gardening, including hedge pruning, clearing of leaves and removal of algae from flagstones
Regular cleaning of the communal areas of the building
Responsibility for payment of electricity bills for communal areas
Clearing rubbish from the property and surrounding land
Cleaning and clearing flats of furniture abandoned by previous tenants
Assisting an elderly tenant, including dealing with telephone calls and acting as a liaison
If you’re running your property business and are married or in a civil partnership, a registered partnership or an LLP, you could be eligible for S15 land and buildings SDLT relief on incorporation of the property.