Introduction
For many landlords, buy-to-let is more than just a source of income — it’s a long-term investment, a retirement plan, and often, a way to provide for children and grandchildren. But passing on property wealth isn’t always simple. Tax rules can erode the value of your estate, and without careful planning, the legacy you’ve worked hard to build could be reduced significantly.
This is where incorporation — transferring your property portfolio into a limited company — can make a big difference. Not only does it create tax efficiency during your lifetime, but it also opens up powerful opportunities for inheritance planning.
In this blog, we’ll cover:
- Why landlords should think about inheritance tax (IHT) sooner rather than later.
- How holding properties in a limited company can make succession planning smoother.
- The advantages of company shares vs. directly owning bricks and mortar.
- Practical steps for landlords to safeguard their family’s future.
- Why specialist advice is essential — and how Accounting Matters can help.
The Inheritance Tax Challenge for Landlords
Inheritance Tax (IHT) is charged at 40% on estates over the tax-free allowance (currently £325,000, plus possible residence nil-rate band). For landlords with even a modest portfolio, it’s easy to exceed these limits.
Key challenges include:
- Properties are illiquid assets – difficult to split fairly among beneficiaries.
- High valuations – property prices often push estates above IHT thresholds.
- Capital gains tax (CGT) – gifting or transferring property during your lifetime can trigger CGT.
- Limited flexibility – passing on property directly can be complicated, costly, and slow.
Without proper planning, your family could face both a large IHT bill and a stressful legal process.
Why Incorporation Can Help with Inheritance
When you move your property portfolio into a limited company, you no longer personally own the properties — the company does. What you own are shares in the company. This subtle but powerful shift brings major benefits for inheritance planning:
1. Easier Wealth Transfer
Instead of transferring entire properties (which can trigger SDLT and CGT), you can gradually gift shares in your company to family members. This makes it easier to pass wealth on over time, without triggering huge immediate tax bills.
2. Tax-Efficient Succession
Shares can be transferred strategically using allowances and exemptions, helping reduce exposure to inheritance tax. In some cases, reliefs such as Business Property Relief (BPR) may apply, depending on how your property business is structured.
3. Greater Flexibility and Control
As a director, you can retain control of the business while bringing the next generation in as shareholders. This allows a gradual handover of responsibility, rather than an all-or-nothing transfer.
4. Future-Proofing Against Tax Changes
Tax rules evolve — and company structures give more flexibility to adapt. From dividends to directors’ loans, a company provides more options for efficient wealth distribution than personal ownership ever could.
Shares vs. Direct Property Ownership – A Practical Example
Imagine two landlords, both with a £1.5m portfolio:
- Landlord A owns the properties personally.
- On death, the estate is valued at £1.5m (minus any allowances).
- Heirs inherit the properties directly, but face a potential 40% IHT bill on a large chunk of the estate.
- Properties may need to be sold to cover the tax.
- Landlord B transferred his portfolio into a limited company.
- On death, his heirs inherit shares in the company, which can be structured to maximise tax reliefs.
- Wealth is easier to divide (shares vs. indivisible houses).
- Heirs may benefit from strategic planning, reduced IHT, and continuity of income.
The result? Landlord B’s family retains more of the wealth and faces fewer complications.
Additional Benefits of Incorporation for Families
Beyond inheritance planning, incorporating your property portfolio also provides:
- Clear separation between personal and business finances – protecting personal assets.
- Professionalised structure – lenders, investors, and family members often find it easier to work with a company.
- Growth opportunities – easier to refinance, reinvest, and scale the portfolio.
- Ongoing income streams for heirs – rental profits can continue flowing into the company and be distributed as dividends.
What to Watch Out For
Of course, incorporation isn’t without challenges. Landlords need to consider:
- SDLT and CGT on transfers – reliefs may be available, but planning is crucial.
- Mortgage refinancing – lenders often require new company arrangements.
- Ongoing compliance – annual filings, accounts, and corporation tax returns.
These aren’t reasons to avoid incorporation — but they highlight why it’s important to get the right advice.
How Accounting Matters Helps Landlords with Inheritance Planning
At Accounting Matters, we specialise in helping landlords future-proof their property wealth. Here’s what we do:
- Inheritance Tax Review – We analyse your portfolio and forecast your estate’s IHT exposure.
- Incorporation Strategy – We identify if incorporation makes sense for you, and structure it to minimise SDLT and CGT.
- Company Setup & Administration – We handle all registrations with Companies House and HMRC.
- Succession Planning – We work with you to design a share structure that supports gradual, tax-efficient wealth transfer.
- Ongoing Support – From corporation tax to dividend planning, we keep your portfolio compliant and optimised.
And because we’re connected through our Network & Nosh partnerships, we can also connect you with trusted solicitors, mortgage brokers, and wealth advisors to complete the inheritance planning process.
Conclusion
Your property portfolio is more than an investment — it’s your family’s future. But without the right planning, inheritance tax and complex transfer rules can eat away at that legacy.
By moving your portfolio into a limited company, you not only regain tax efficiency today, but also create a smoother, more flexible pathway to pass on wealth tomorrow.
At Accounting Matters, we help landlords like you protect assets, reduce tax exposure, and plan confidently for the next generation.
Call us today on 01773 747990
Email us at welcome@accountingmatters.co.uk
Learn more atAccounting Services for Landlords Incorporating Property Portfolios
👉 Don’t leave your family’s future to chance — let’s plan it together.