Keep vs Sell vs Incorporate: The Three-Way Decision

You are choosing between three hard options: keep going as you are, sell and walk away, or swallow a big SDLT/CGT hit now to move into a company. The right answer depends on your tax band, leverage, how long you will hold, and whether you are still buying.

Below is a decision framework you can drop straight into PropertyKiln. Figures are England, residential, April 2026 rules, ignoring FHL quirks.

The decision in one line

If you are basic-rate, lowish LTV, 1-3 properties and not scaling, you usually keep in personal name and optimise, not incorporate.

If you are higher or additional-rate, highly leveraged, and plan to hold/grow for 10+ years, a company is often better long-term but only if you can stomach a big one-off SDLT/CGT bill now.

If you are tired, near retirement, or need equity out in the next 5-10 years, selling and exiting (or partially exiting) often beats a late-stage incorporation that will not have time to pay back.

Snapshot: keep vs sell vs incorporate (conceptual)

Worked examples (assumptions)

To keep this readable, use realistic but consistent assumptions you can reuse across PropertyKiln:

• Income tax 2025-26: 20% / 40% / 45%, but note: property income rates rise by 2 percentage points from 2027 to 22 / 42 / 47, so future years will be worse than the examples.
• Corporation tax: 19% small profits, up to 25% if the company's profits exceed GBP 250,000, with marginal relief in the middle. Most small property companies will sit in 19-25% effective range.
• CGT on residential property: 18% basic-rate slice and 24% higher/additional-rate slice from April 2024 change.
• SDLT: standard residential rates + 3% additional property surcharge for the company.
• Ignore NI and small allowances, use rounded numbers that a landlord can follow without a calculator.

You can refine the exact numbers with a calculator later, but the direction of travel must be right.

Scenario 1: single BTL, basic-rate, 50% LTV

Assume:

• Property value now: GBP 200,000
• Mortgage: GBP 100,000 interest-only at 5% = GBP 5,000 a year
• Rent: GBP 950 per month = GBP 11,400 a year
• Other costs (repairs, insurance, voids, etc): GBP 1,400 a year

1A. Keep in personal name (basic-rate)

Rental profit for tax: 11,400 - 1,400 = GBP 10,000

Income tax at 20% = GBP 2,000

Section 24 credit: 20% of 5,000 interest = GBP 1,000

Net tax = 2,000 - 1,000 = GBP 1,000

Cashflow: Rent 11,400 - interest 5,000 - costs 1,400 - tax 1,000 = GBP 4,000 a year in your pocket.

10-year simple view (ignoring capital growth for now): Net cash after tax over 10 years: GBP 40,000. CGT only on sale at the end.

1B. Sell and exit now

Assume you bought for GBP 150,000 and it is now worth GBP 200,000.

Gain: GBP 50,000

Allow for GBP 5,000 costs and remaining annual exemption and rounding, say taxable gain GBP 45,000.

Basic-rate CGT at 18% on full gain (if you stay in basic band) = GBP 8,100.

Sale costs and debt:

• Agent and legal fees say GBP 4,000.
• Repay mortgage GBP 100,000.

Cash released: Sale price 200,000 - mortgage 100,000 - CGT 8,100 - fees 4,000 = GBP 87,900 in your hand.

Compare: that is over 22 years of the current GBP 4,000 net cashflow. If you are not planning to keep the place 20+ years, exiting is worth a look.

1C. Transfer to a company

Company "buys" at market value GBP 200,000.

Upfront costs:

• SDLT as additional property: on GBP 200,000 at standard + 3% = GBP 7,500-8,000 (you can show the breakdown in a separate SDLT guide).
• CGT on gain of GBP 50,000 as above = GBP 8,100 (basic-rate).
• Legal, valuation, accounting, remortgage fees: assume GBP 3,000-4,000.

Total one-off cost: Roughly GBP 18,000-20,000 to move one property into a company at this size.

Inside the company:

• Profit: 11,400 - 5,000 - 1,400 = GBP 5,000
• Corporation tax at say 19% = GBP 950
• Company after-tax profit: GBP 4,050

If you leave the money in the company, that is slightly better than the GBP 4,000 you had personally. Once you start taking money out as dividends, you quickly erase the benefit.

Position for Scenario 1: At basic-rate and 50% LTV on one property, incorporation almost never pays back. The GBP 18k-20k transfer cost swallows any modest annual saving, especially with you still in basic rate. You either keep personally or sell and exit if the capital in your hand beats 20+ years of modest cashflow.

Scenario 2: three properties, higher-rate, 65% LTV

Assume:

• 3 similar properties, total value GBP 600,000
• Mortgages total GBP 390,000 (65% LTV) at 5% = GBP 19,500 interest a year
• Rent per property GBP 1,000 a month = GBP 36,000 a year total
• Other costs GBP 4,500 a year total

2A. Keep in personal name (higher-rate, Section 24 bite)

Tax:

• Rental profit for tax: 36,000 - 4,500 = GBP 31,500
• Income tax at 40% = GBP 12,600
• Section 24 credit: 20% of 19,500 interest = GBP 3,900
• Net tax = 12,600 - 3,900 = GBP 8,700

Cashflow: Net cash: 36,000 - 19,500 - 4,500 - 8,700 = GBP 3,300 a year.

You are collecting GBP 36,000 of rent and keeping about GBP 275 a month for all three properties combined. The rest goes in interest, costs and tax.

10-year simple: GBP 33,000 of net cash over 10 years, ignoring rate and tax rises. From 2027, higher property income tax goes to 42%, so this gets worse.

2B. Sell and exit

Assume:

• Combined original purchase prices GBP 450,000.
• Current value GBP 600,000.
• Gain GBP 150,000.
• After costs and allowances, say taxable gain GBP 140,000.

CGT: As a higher-rate taxpayer, most of that gain is in higher-rate at 24%: CGT = GBP 33,600.

Other cash:

• Repay mortgages: GBP 390,000.
• Selling costs say GBP 12,000 for all.

Cash released: 600,000 - 390,000 - 33,600 - 12,000 = GBP 164,400 in your hand.

That is roughly 50 years of current net cashflow (GBP 3,300 a year). If yields are poor and you are considering other investments, the numbers push you toward exit.

2C. Transfer the 3-property portfolio to a company

Treat them as a single linked transaction at GBP 600,000.

Upfront costs:

• SDLT at additional rates on 600k. Using a rough blended figure and MDR assumptions, you are likely in the GBP 20,000-25,000 SDLT region.
• CGT on gain GBP 150,000 with most at 24% = GBP 33,000-36,000.
• Legal / valuation / accounting / remortgages for 3: easily GBP 6,000-8,000.

Total one-off: You are in the GBP 60,000-70,000 cost range to incorporate three higher-rate BTLs at these values.

Inside the company:

• Real profit: 36,000 - 19,500 - 4,500 = GBP 12,000
• Corporation tax at say 19% = GBP 2,280
• Company after-tax profit = GBP 9,720

Compare personal vs company:

• Personal net cash: GBP 3,300 a year.
• Company net cash (before dividends): GBP 9,720 a year.
• Annual "saving" at company level: about GBP 6,400.
• Breakeven on a GBP 60k-70k transfer cost is roughly 9-11 years if you leave profits in the company or draw modestly. Add in the 2-point increase in property income tax from 2027 and the personal position deteriorates further.

Position for Scenario 2: At higher-rate, 3 properties and 65% LTV, the numbers start to favour incorporation if you are holding for at least 10 years and you do not need to strip out all profits personally each year. If you plan to sell in under 10 years or need the cash yourself, the SDLT/CGT hit is often too big and you either keep personally or start a new company for future purchases and slowly pivot.

Scenario 3: eight properties, additional-rate, 75% LTV

Assume:

• 8 properties, each GBP 200,000, total GBP 1.6m
• Mortgages at 75% LTV: GBP 1.2m at 5% = GBP 60,000 interest
• Rent GBP 1,000 per property = GBP 96,000 a year
• Other costs GBP 12,000 a year total

3A. Keep in personal name (additional-rate)

Tax:

• Rental profit for tax: 96,000 - 12,000 = GBP 84,000
• Income tax at 45% = GBP 37,800
• Section 24 credit: 20% of 60,000 = GBP 12,000
• Net tax = 37,800 - 12,000 = GBP 25,800

Cashflow: Net cash: 96,000 - 60,000 - 12,000 - 25,800 = GBP -1,800

So at 75% LTV and additional-rate tax, you are effectively running a loss after tax, even before personal drawings, and that is before the 2-point rate increase from 2027.

This is why a lot of larger, highly leveraged portfolios have already moved or are moving into companies.

3B. Sell and exit

Assume:

• Combined purchase GBP 1.1m, current value GBP 1.6m.
• Gain GBP 500,000.
• After allowances and costs, taxable gain say GBP 470,000.

CGT: As an additional-rate taxpayer, most of that gain is at 24%: CGT = GBP 112,800.

Other cash:

• Repay mortgages: GBP 1.2m.
• Selling costs say GBP 32,000.

Cash released: 1,600,000 - 1,200,000 - 112,800 - 32,000 = GBP 255,200.

You walk away with about GBP 255k, having eliminated a portfolio that is currently costing you money after tax.

3C. Transfer to a company

Treat as a linked GBP 1.6m sale to your own company.

Upfront costs (very rough):

• SDLT on 1.6m at higher rates: you are comfortably in GBP 70,000-90,000 territory, depending on exact banding and any reliefs.
• CGT on around GBP 500,000 of gain, mostly at 24%: around GBP 120,000.
• Legal / valuation / accounting / remortgages across 8 units: easily GBP 15,000-20,000.

Total one-off: You could easily be looking at GBP 200,000+ to incorporate a large, highly leveraged portfolio like this on a straight transfer basis.

Inside the company:

• Real profit: 96,000 - 60,000 - 12,000 = GBP 24,000
• Corporation tax at, say, 23% effective (given size) = GBP 5,520.
• Company after-tax profit: GBP 18,480.

Compare:

• Personal net cash: negative GBP 1,800 a year, getting worse from 2027.
• Company net cash: GBP 18,480 a year before dividends.
• Annual swing: about GBP 20,000 a year. Breakeven on a GBP 200k one-off is about 10 years, ignoring the fact that personal side gets worse when property tax rates rise.

Position for Scenario 3: Once you are at 8 properties, 75% LTV, additional-rate, personal ownership is a tax and cashflow car crash under Section 24 and rising property rates. Incorporation can make sense if you are holding 10+ years, expect capital growth, and can fund the one-off SDLT/CGT hit, but at this size you should also be looking hard at partial disposal, restructuring, or more sophisticated planning. A blanket "shove it all into a company" without detailed advice is dangerous.

Decision criteria you should hammer

When you write this page, you want the reader to scan a few bullets and know which way they are leaning.

Tax band

Basic-rate (under ~GBP 50k): Section 24 hurts, but not enough to justify a big incorporation bill on 1-3 properties. Keep personally or sell.

Higher-rate (40%): Section 24 starts to bite hard from 3+ leveraged properties. If you are growing and holding long-term, a company is often worth running the numbers on.

Additional-rate (45%): A geared portfolio in your own name is rarely sustainable. You either scale via a company, sell down, or deleverage. Doing nothing is the worst option.

LTV

Under 50-60% LTV: Section 24 pain is moderate. Incorporation rarely pays unless the portfolio is big and you are higher-rate.

Around 65% LTV: mid-range, as in Scenario 2. Higher-rate and long hold can justify incorporation.

75%+ LTV: Section 24 + high tax band can wipe out your cashflow. Company or deleverage or exit.

Holding period

If you expect to keep the portfolio less than 7-10 years, one-off SDLT + CGT is unlikely to pay back unless your personal position is truly awful.

If you expect to hold 10-20 years and keep gearing, a company becomes more attractive, especially with future tax rises signalling further pain for personally held property income.

Buying more properties

If you are still buying, the usual pattern is:

• Keep existing personal stock as is,
• Buy all new stock in a company,
• Then consider a structured incorporation of some or all existing stock when the numbers justify it.

If you are not buying more, you have to ask if the one-off cost of incorporation is really worth paying just to save tax on a static portfolio.

Age and retirement planning

If you are 10+ years from retirement, company structures give you more options: keeping profits inside, future succession/IHT planning, etc.

If you are close to retirement, the maths on paying large SDLT/CGT to incorporate often fail. You are usually deciding between keep and run down, sell and exit, or sell some, keep some.

What forums get wrong

Myth 1: "Incorporation is a magic bullet that lets you avoid tax."

Reality: To move existing property into a company you are treated as if you sold at market value. You still trigger CGT and SDLT, with only limited cases for incorporation relief and partnership relief.

Consequence: If you blindly "do a Property118 style structure" without understanding the SDLT/CGT and business tests, you can land a six-figure tax bill and a long argument with HMRC.

Myth 2: "HMRC will always give incorporation relief on a portfolio."

Reality: HMRC only gives incorporation relief if what you run is a business, not a passive investment. That means active management, scale, and evidence of work. A couple of single lets with an agent on full management probably fails that test.

Myth 3: "Once I incorporate, I pay less tax on everything."

Reality: The company may pay less tax on profits, but you pay further tax when you take money out as salary or dividends, and corporation tax is no longer a flat 19% for everyone. Many property companies now sit in the 19-25% band depending on profit.

Myth 4: "I should never sell, just keep rolling."

Reality: With Section 24, MTD admin, and property income tax rates rising by 2 points from 2027, holding low-yield stock in your own name can be value-destructive. Sometimes the best answer is sell the dogs and redeploy or exit completely.

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