Transferring Buy-to-Let Properties to a Limited Company in the UK

14 Feb 2024

Transferring buy-to-let properties from an individual name to a limited company has become a popular strategy among property investors in the UK. This approach offers various benefits, including tax advantages and increased protection. However, the process can be complex and requires careful consideration. In this blog post, we teamed up with Ross Boulding & James Cornelius from Howzit Mortgages to provide a comprehensive guide on what it takes to transfer buy-to-let properties to a limited company in the UK.

Weighing up the pros and cons:

Before diving in, it’s key to understand the motivations behind this move. Key drivers include:

  • Tax efficiency: Limited companies typically pay corporation tax, which can be lower than income tax for higher earners.
  • Asset protection: Personal liability separates from the company, potentially shielding your other assets in case of unforeseen issues.
  • Succession planning: Passing properties through a company can simplify inheritance matters.

Understanding the benefits of transferring property to a limited company is only half of the battle. Being familiar with potential drawbacks and limitations is important when completing this process. Seeking professional guidance will be your ultimate lifeline for navigating tax implications, legal obligations, and financial feasibility. Consult with experts who specialise in this area such as:

  • Solicitors: Ensure legal aspects of the transfer are handled flawlessly.
  • Accountants: Assess the financial impact and advise on tax optimisation.
  • Mortgage brokers: Secure financing for the limited company purchase.

Financial considerations:

Transferring properties to a limited company involves financial implications such as:

  • Stamp Duty Land Tax (SDLT): Expect higher rates for limited company purchases.
  • Capital Gains Tax (CGT): Selling to your company triggers CGT, although potential reliefs may apply.
  • Mortgage refinancing: Explore options and terms for financing the transfer.

How does it work?

  1. Form a limited company:
    Choose the appropriate structure, register with Companies House, and open a bank account.

  2. Gather documentation:
    Prepare transfer deeds, stock transfer forms and mortgage documents.

  3. Engage legal expertise:
    Ensure contracts and documentation comply with legal requirements.

  4. Seek tax advice:
    Understand the impact of corporation tax, income tax, and capital gains tax.

  5. Inform stakeholders:
    Tenants, lenders, insurers and local authorities need to be notified, and all relevant agreements updated, such as insurance policies and tenancy agreements.

  6. Maintain compliance:
    Fulfil ongoing statutory obligations as a limited company, like filing annual accounts, submitting tax returns and maintaining statutory registers.

Of course, this is a simplified overview, designed to get you thinking about the process. Every situation is unique and will require specialist guidance. Our goal is to get you thinking about the benefits of transferring your portfolio to a limited company.

Ross doesn’t just talk the talk, he walks the walk too. Ross is a seasoned Property Investor and client of Ultralets. His credibility, knowledge and experience go beyond being a Mortgage Broker - he has been through it all and learned these lessons. You can hear more about his story on our podcast episode with him below ⬇️

If you want to explore this avenue deeper, you can talk to Ross & James at Howzit Mortgages today. Simply give them a call or get in touch 🔗 

Please remember, this blog post is not financial or legal advice. Please consult with qualified professionals for personalised guidance.


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