Tax expert: Now is the time for landlords to become limited companies

Landlords should take advantage of the stamp duty holiday by incorporating their existing portfolio into a limited company, property tax specialists at accountancy firm MJ Bushell have urged.

The temporary increase to the stamp duty threshold from £125,000 to £500,000 means landlords can make a significant saving when incorporating, when they’d typically need to stump up a hefty sum of money.

Matt Warwick, tax senior at MJ Bushell, said: Although landlords buying additional properties still face a 3% SDLT surcharge on their property purchases, they are not required to pay the standard rate of SDLT on top for homes valued £500,000 or less.

“This also applies to the transfer of properties into a business, which would normally attract a substantial SDLT bill. In fact, the savings could mean they pay up to half as much.”

Being in a limited company structure means landlords can benefit from mortgage interest tax relief on buy-to-let properties, which isn’t the case for landlords classed as individuals.

Warwick added: “Before the SDLT holiday there had been a lot of debate about whether incorporation is the right approach to take and whether it saves sufficient money to merit the switch,” he added.

“Now though, it is clear to see that there is a chance for landlords to take advantage of the higher allowance and lower property prices to expand their property empires.”

“Of course, each person’s situation is different, but with a potential saving of £15,000 in stamp duty per property there surely isn’t a better time to re-evaluate your position and consider incorporation. With only six months or less of relief available, investors must act soon.”