Should you put your property portfolio into a company?

With a marked rise in the setting up of property investment companies in 2025, should you consider putting your investment properties into a company?

Analysis published earlier this month by home experts Hamptons showed a marked rise in the setting up of property investment companies at Companies House in 2025.

This rise is likely to be result of a combination of factors including tax efficiency, liability protection and succession and estate planning. Putting investment property into a company is not for everyone and every situation; and it’s important to consider your objectives and your plans as an investor before doing so.

We’ve taken a deeper look at the pros and cons of taking this approach with your property portfolio:

Pros:

• Net rental income is subject to lower tax rates within a company; corporation tax is payable at 19%/25% depending on profit levels compared to income tax at 20%/40%/45%.
• A company can obtain full tax relief for mortgage interest and finance costs, whereas individuals are restricted to the basic rate for relief for finance costs. If the properties are highly geared this can represent significant savings.
• In terms of benefits for longer term inheritance tax planning, the company can be structured so ownership is shared by the family so sharing the wealth. In addition, growth shares can be used so future increases in property values can accrue to the younger members of the family only.
• The profits can be accumulated for future reinvestment or permits flexibility surrounding withdrawal of profits for shareholders, to utilise basic rate bands etc.

Cons:

• If you are transferring an existing property portfolio into a company, stamp duty land tax (SDLT) is payable at higher corporate rates if it is a residential property. There is a 5% surcharge.
• As you will be personally disposing of the properties to a company, which is undoubtedly a connected party, capital gains tax will be payable at the current market values of the properties transferred. Residential property gains are charged at 18% / 24% dependent on your marginal income tax rate.
• Where profits are extracted, there is double tax as the profits have suffered corporation tax and if extracted as dividends then also taxable on the individual’s income tax rates for dividends currently, 8.75%/33.75% and 39.35%. From 6 April 2026 the rates increase to 10.75%/35.75% and 39.35%.
• Companies also have annual compliance costs for filing statutory accounts, corporation tax returns etc.

It is possible for incorporation relief to apply on the transfer of the property business to a company thereby avoiding the capital gains tax charge.  However, for this to apply there must be substantial property letting activities. To be of a significant nature, a reasonable period should be spent on these activities (at least 20 hours a week), which suggests that you’d need to own 20 properties within your portfolio to justify this level of weekly activity.

Keeping your property portfolio within a company is advantageous:

• Where there is high gearing
• For structuring multi-generational wealth planning.
• If the property portfolio is sitting at an overall capital loss/low gain position personally so only SDLT payable on incorporating into the company, it is worth considering.
• It allows additional rate taxpayers to accumulate wealth in the company structure and use accumulated profits for reinvestment

Owning a property portfolio personally is beneficial where:

• All/most of the income is required for living expenses
• You are a basic rate taxpayer
• There is low gearing
• You are considering selling the property in the short term and so avoiding the double tax charge.

If you would like to discuss the potential for incorporating your property portfolio please contact us.

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