Property Business or Investment

Factors to consider when moving BUY to LET Property into a Company

There are many reasons why residential property investors are now rushing to incorporate, the biggest reason being the Restriction of Mortgage Interest Tax Relief.

Clause 24 of the Finance Bill sets out plans is to restrict individuals on claiming mortgage interest as a cost against their property investment income. By 2020 as a individual investor you will only get 20% relief.

For a high rate tax payer (earning £45,000+) this is a disaster leading to them paying a lot more tax.

These rules will not apply to Companies, Companies will continue to claim full relief.

I am interested in moving my property portfolio into a Company [Click here]


What is relevance of ‘Incorporation Relief’

When you sell or give a residential property to your Company you will incur Capital Gains Tax if you make a gain, many investors believe they are automatically entitled to claim incorporation tax relief, this is not always the case.

Generally Incorporation Tax Relief allows Sole Traders to postpone/hold over a Capital gain by transferring all their business assets into a limited company in return for Shares.


    The key problem area

Property Investment is generally not considered to be a Trade.
Consideration needs to be given in whether your property business is an investment or a trade. Some of the issues considered in EM Ramsay v HMRC [2013]


I am interested in moving my property portfolio into a Company [Click here]


The definitions below will assist you in determining whether you are running you are running a Property Rental Business.

What is a business Partnership

The relationship which subsists between two or more persons carrying on a business in common with a view to profit (Partnership Act 1890 (1)). A partnership is not a separate legal entity. Partnerships are governed in the UK by the Partnership Act 1890.


What is an investment

A legendary investor defined investing as “… the process of laying out money now to receive more money in the future.” The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

Jointly owned property

The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived. (Partnership Act 1890 (2)(2))

Please complete the Application Form below to be considered for Incorporating your Property Business.