For property investors looking to move their portfolio into a limited company, tax efficiency is a key concern. Two major tax reliefs—Incorporation Relief (Section 162 TCGA 1992) and Partnership Relief (Schedule 15 FA 2003)—can significantly reduce the Capital Gains Tax (CGT) and Stamp Duty Land Tax (SDLT) liabilities when transferring property ownership to a corporate structure.
This guide explores the key differences, benefits, eligibility criteria, and the step-by-step process for using these reliefs to incorporate a property business.
Incorporation Relief allows property investors to defer Capital Gains Tax when transferring a qualifying business into a limited company in exchange for shares. The key requirement is that the business being transferred must be an active property business, not just passive rental income.
Partnership Relief eliminates or significantly reduces Stamp Duty Land Tax (SDLT) liability when transferring properties from a genuine partnership into a limited company owned by the same partners in the same proportions.