Should I Sell, Keep, or Incorporate?

You are choosing between pain now (sell), pain every year (personal), or complexity for tax savings (company). The right answer depends on your tax band, mortgage level, time horizon, and whether you are still buying.

"This guide provides general information about UK landlord tax obligations. It is not financial or legal advice. Tax treatment depends on your individual circumstances and may change. Consider consulting a qualified accountant or solicitor for advice specific to your situation."

1. The key questions to answer first

Write down, honestly:

Tax band now and likely later

• Basic (20%), higher (40%), additional (45%)?
• Are you close to thresholds where more rental profit pushes you up?

Loan-to-value (LTV) and interest rate

• Rough LTV: under 50%, 50-75%, over 75%?
• Interest vs rent: is Section 24 already biting hard or not?

Holding period

• Are you likely to hold this property 5 years, 10+ years, or are you already thinking of an exit in 2-3 years?

Future buying plans

• Done buying, or building a portfolio?
• Is this your only BTL, or one of many?

You cannot decide incorporation vs sell vs keep until you are clear on those four.

2. Quick comparison table

Very simplified, 2026 rules (England and NI; Wales/Scotland same principles, different LBTT/LTT).

3. When personal ownership is still the boring but right answer

Keeping it in your own name usually wins when:

• You are a basic-rate taxpayer overall, even after rental income.
• Your LTV is low (under approx 50-60%), so interest is a small slice of rent.
• You are not buying lots more; this is one or two BTLs as a pension top-up.
• You might sell within 5-8 years, for example to pay down your own home mortgage.

Why:

• Section 24 hurts far less at basic rate or with tiny mortgages.
• The CGT + SDLT/LBTT/LTT cost to move into a company often takes 8-15 years to break even, sometimes longer. You will not see the benefit if you sell sooner.
• Admin and lender choice are simpler in personal names.

4. When a company is worth serious consideration

A company starts to make sense when:

• You are firmly higher-rate or additional-rate once rental income is included.
• You carry high LTVs across several properties (interest a big line item).
• You intend to hold for 10+ years and grow the portfolio (reinvest profits).
• You do not need to extract all profits personally each year (you are happy to leave money in the company for the next deposit).

Why:

• In a company, full interest deduction means you are taxed on true profit, not "profit plus disallowed interest".
• The headline 19-25% CT is usually lower than 40-45% income tax on the same profit.
• If you leave most profits in the company to fund more purchases, the "double tax" is less painful; you only incur extra tax when you pull money out.

But:

• Moving existing properties into a company is treated as a sale at market value:
• You pay CGT personally on the gain now.
• The company pays SDLT / LTT / LBTT including any surcharges on the acquisition.
• Reliefs (like incorporation relief for genuine property businesses) help in some scenarios but not all; get proper tax advice before committing.

5. When selling is quietly the best business decision

Selling is often the correct move if:

• The property is low-yield, high-value and heavily affected by Section 24 (London flats with high mortgages are classic).
• You need cash for other goals (paying down your own residential mortgage, business, retirement) more than you need extra leveraged risk.
• Future regulation (EPC C, licensing, Renters' Rights enforcement) will hammer your margins and you do not want to keep feeding a marginal asset.
• The CGT hit now is manageable and you can redeploy into better-yielding or simpler assets (or even passive investments).

Here the question is simple:

If you sold, paid CGT, cleared the BTL mortgage and put the net into something else, would you be better off on a risk-adjusted basis than grinding through another 10 years of Section 24, EPC upgrades and eviction rules?

6. Putting it together: a simple decision filter

Use this as a blunt rule-of-thumb filter before calling your accountant:

You are basic-rate, single BTL, LTV under 60%, no more buying planned = Keep in personal name. Focus on fixing finance costs, upgrading EPC, and keeping voids low. Incorporation costs rarely pay back.

You are higher-rate, 3+ properties, portfolio LTV 65-75%, plan to hold/grow 10+ years = Strong case for buying new properties in a company. = Whether to roll existing ones in depends on break-even year; often you keep older stock personal and buy new in the company.

You are stressed by cashflow, tax and regulation, yields are poor, and you are not excited by more landlording = Seriously consider selling, at least the weakest units, and simplify. Do the CGT and reinvestment sums, then decide.

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