Putting inherited property into a limited company: what it costs
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Putting inherited property into a limited company is a sale for tax purposes: if you transfer a property you own to a company you control, Capital Gains Tax treats it as a disposal at market value, and Stamp Duty Land Tax is charged on at least the market value too [1][2][3]. Because an inherited property's base cost is its value at the date of death [4], a transfer soon after inheriting may produce little or no gain, but the Stamp Duty cost remains.
For Capital Gains Tax, a transfer to a company you control is between connected persons and is treated as made at market value [1][2][5]. Your gain is that value less the value at death [4]. For Stamp Duty Land Tax, the company is treated as paying at least market value when buying from a connected person [3]. Incorporation relief can defer the gain only where a business is transferred as a going concern, with all its assets, in exchange for shares, and must be claimed [6]. Inside a company, mortgage interest is an allowable expense, unlike for individuals [7][8]. Take advice before doing anything.
This is general information. Transferring property to a company has tax, legal and lending consequences; speak to a qualified adviser first.
Why people consider a company after inheriting
| Reason | What GOV.UK says |
|---|---|
| Mortgage interest relief | Companies paying Corporation Tax "can claim interest on property loans as an allowable expense"; individuals cannot [7] |
| Section 24 doesn't apply | UK resident and non-UK resident companies are not affected by the finance cost restriction [8] |
| Rental profit taxed in the company | A company counts rental income like any other business income [7] |
| Low gain right after inheriting | Base cost is the value at death [4] |
But there are costs on the way in, and extracting money from a company has its own tax.
Putting inherited property into a limited company: Capital Gains Tax
Capital Gains Tax treats a disposal "otherwise than by way of a bargain made at arm's length" as made at market value [1]. Transactions between connected persons are treated as not at arm's length [2]. A company is connected with a person who controls it [5].
So if you own the inherited house personally and transfer it to your company, you're treated as selling at market value, whatever the company actually pays.
Why timing matters
Your base cost is the value at death [4]. If you transfer soon after the property is passed to you and values haven't moved much, the gain may be small, possibly within your £3,000 allowance [9]. If you wait years, the gain since death will be larger. Gains on UK residential property must be reported and paid within 60 days [10].
Incorporation relief
Section 162 of the Taxation of Chargeable Gains Act 1992 can defer a gain when a person who is not a company "transfers to a company a business as a going concern, together with the whole assets of the business" (or all except cash), wholly or partly in exchange for shares, and claims the relief on time [6]. Whether letting a property is a "business" for this purpose depends on the facts; many single buy-to-lets won't qualify. This is specialist territory.
Stamp Duty Land Tax on the transfer
Where the buyer is a company and the seller is connected with it, the chargeable consideration is taken to be not less than the market value at the effective date [3]. So even if you "gift" the property to your company, Stamp Duty is calculated as if it paid full value. GOV.UK says there are "different SDLT rules and rate calculations" for corporate bodies and for companies and trusts buying residential property [11], so don't assume the standard rates apply. For reference, the standard residential rates for a single property are [11]:
| Portion of value | Standard rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Above £1.5 million | 12% |
Individuals usually pay 5% on top of these rates if buying means they'll own more than one residential property [11]. A company's calculation follows its own rules; use HMRC's calculator and get advice.
You don't pay Stamp Duty when you inherit a property [12]. The charge arises on the later transfer to the company.
Worked example
Hannah inherits a flat valued at £250,000 at her mother's death. Eight months after probate, it's worth £255,000. She's thinking of moving it into her new company.
| Item | Figure |
|---|---|
| Market value at transfer | £255,000 |
| Base cost (value at death) | £250,000 |
| Gain | £5,000 |
| Less annual allowance | minus £3,000 |
| Taxable gain | £2,000 [9] |
| Stamp Duty Land Tax | On at least £255,000 at the rates that apply to the company [3][11] |
The Capital Gains Tax is small. The Stamp Duty and legal costs, plus refinancing the mortgage into the company's name, are what make or break the plan.
The mortgage
A personal mortgage can't usually just be moved into a company; the company will need its own lending. GOV.UK says anyone letting a mortgaged property needs the lender's permission [13]. If there's no mortgage, this issue doesn't arise.
Inheritance Tax on property held through a company
If you hold property through a company, your estate later holds shares rather than houses. Valuing and taxing shares is different from valuing property, and the reliefs that apply to trading businesses don't automatically apply to property investment companies. This is an area for an adviser.
Can a company inherit property directly?
A will can leave assets to many kinds of beneficiary. If a property passes to a company, it's the company, not you, that owns it. In most families the property passes to individuals first, and any move into a company is a separate later transaction, with the tax effects above. Ask the solicitor administering the estate.
Alternatives to a company
- Keep it personally. Simpler; interest gets a 20% tax reduction rather than a deduction [8].
- Sell and reinvest. A quick sale often has little Capital Gains Tax [4][9].
- Vary the will. Within two years of the death, a deed of variation can redirect an inheritance; for Inheritance Tax, it's treated as made by the deceased if the document says so [14].
A checklist before you decide
| Question | Why it matters |
|---|---|
| What's the gain since death? | Sets the Capital Gains Tax on transfer [4] |
| What will the Stamp Duty be? | Market value applies for connected companies [3] |
| Is there a mortgage? | The company needs its own finance |
| Do you want income now? | Taking money out of a company is taxed |
| Does incorporation relief apply? | Only for a business transferred as a going concern [6] |
| What are the running costs? | Company accounts and filings every year |
How Gaffy fits
Whether the property's in your name or your company's, the compliance duties are the same. Gaffy tracks gas, EICR, EPC and deposit dates, stores documents and gives tenants a repair link. £12 a month for up to 5 properties, plus £4 a month per extra property, first month free, and we'll set your properties up for you.
Steps if you decide to go ahead
- Get the facts. A current market valuation, the probate value, the mortgage position and the tenancy details.
- Model the costs. Capital Gains Tax on the gain since death [4], Stamp Duty on at least market value [3], legal fees and refinancing costs.
- Check incorporation relief with an adviser, if you run a genuine property business [6].
- Arrange company finance if there's a mortgage, and get lender consent [13].
- Complete the transfer with a conveyancer and register it with HM Land Registry.
- Report the gain within 60 days if tax is due [10].
- Tell the tenants the new landlord's name and address within the legal time limit, as a change of landlord requires [15].
- Update certificates and the deposit scheme to show the company as landlord.
A note on timing and the estate
If the property hasn't yet been transferred to you, the transfer from the estate to you isn't a sale by the estate [16]. Only the later move from you to your company triggers the market value rules [1][3]. Keep the dates of death, transfer and company transfer clearly recorded.
People also ask
Can I put an inherited property into a limited company?
Yes, but it's treated as a sale at market value for Capital Gains Tax and Stamp Duty [1][3].
Is there capital gains tax when transferring inherited property to a company?
On any rise in value since the date of death [1][4].
Do I pay stamp duty transferring property into my own company?
Yes, on at least market value, because you're connected to the company [3].
Does section 24 apply to limited companies?
No. Companies get relief for interest in the usual way [8].
Can I avoid capital gains tax by transferring to a company?
Only incorporation relief, where a whole business is transferred for shares, can defer it, and conditions apply [6].
FAQ
Is it better to transfer straight after inheriting?
The gain is usually smallest then [4], but Stamp Duty still applies [3].
Do I need an accountant?
Yes, for this decision.
Try Gaffy free for a month · Inherited property hub · Section 24 for landlords · Capital Gains Tax on inherited property · Buy-to-let mortgage on inherited property
Sources
- Taxation of Chargeable Gains Act 1992, section 17: https://www.legislation.gov.uk/ukpga/1992/12/section/17
- Taxation of Chargeable Gains Act 1992, section 18: https://www.legislation.gov.uk/ukpga/1992/12/section/18
- Finance Act 2003, section 53: https://www.legislation.gov.uk/ukpga/2003/14/section/53
- HMRC, HS282 Death, personal representatives and legatees (2026): https://www.gov.uk/government/publications/death-personal-representatives-and-legatees-hs282-self-assessment-helpsheet/hs282-death-personal-representatives-and-legatees-2026
- Taxation of Chargeable Gains Act 1992, section 286: https://www.legislation.gov.uk/ukpga/1992/12/section/286
- Taxation of Chargeable Gains Act 1992, section 162: https://www.legislation.gov.uk/ukpga/1992/12/section/162
- GOV.UK, Renting out your property: paying tax: https://www.gov.uk/renting-out-a-property/paying-tax
- HMRC, Income Tax when you rent out a property: working out your rental income: https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income
- GOV.UK, Capital Gains Tax: rates and allowances: https://www.gov.uk/capital-gains-tax/rates
- GOV.UK, Report and pay your Capital Gains Tax: if you sold a property in the UK: https://www.gov.uk/report-and-pay-your-capital-gains-tax/if-you-sold-a-property-in-the-uk-on-or-after-6-april-2020
- GOV.UK, Stamp Duty Land Tax: residential property rates: https://www.gov.uk/stamp-duty-land-tax/residential-property-rates
- GOV.UK, Tax on property, money and shares you inherit: property: https://www.gov.uk/tax-property-money-shares-you-inherit/property
- GOV.UK, Renting out your property: landlord responsibilities: https://www.gov.uk/renting-out-a-property/landlord-responsibilities
- Inheritance Tax Act 1984, section 142: https://www.legislation.gov.uk/ukpga/1984/51/section/142
- Landlord and Tenant Act 1985, section 3: https://www.legislation.gov.uk/ukpga/1985/70/section/3
- GOV.UK, Dealing with the estate: managing and selling assets: https://www.gov.uk/probate-estate/managing-and-selling-assets