Incorporation relief lets a landlord move a property business into a company without an immediate capital gains charge. One thing about it changed fundamentally on 6 April 2026: the relief is no longer automatic. For transfers from that date it must be claimed, by the first anniversary of the 31 January following the tax year of transfer — and section 162A, the election that used to disapply it, has been repealed.
What section 162 does
Section 162 TCGA 1992 rolls the gain on the business assets into the base cost of the shares received. Nothing is forgiven; the charge is postponed until the shares themselves are sold. Relief is available to individuals, partners and LLP members. It is not available to companies.
Three statutory conditions have to be met, and HMRC's manual states them plainly:
- The business is transferred as a going concern;
- The whole of the assets of the business are transferred — or the whole of the assets other than cash;
- The consideration is satisfied wholly or partly by an issue of shares in the company to the person transferring the business.
Where the consideration is only partly in shares, relief is restricted proportionately. Leaving cash behind is expressly permitted; leaving anything else behind is not.
The change that catches people: relief must now be claimed
Section 39 of Finance Act 2026 inserts a new requirement into section 162(1): the person must make a claim in respect of the transfer, including such information as HMRC requires, on or before the first anniversary of the 31 January following the tax year in which the transfer took place. The same section omits section 162A entirely. Both changes have effect for transfers of businesses made on or after 6 April 2026.
For a transfer in 2026/27, that deadline is 31 January 2029. The claim is made in the Self Assessment return for the year of transfer.
The practical consequences run both ways. Relief that used to apply whether or not anyone thought about it now has to be actively claimed, and a business transferred without a claim is a business whose gain crystallises. But the planning route also simplifies: where you want the gain to crystallise — to use losses, or the annual exempt amount, or to establish a higher base cost in the shares — you no longer make an election to disapply relief. You simply do not claim.
One warning for anyone researching this. HMRC's own manual page at CG65700 still carries legacy wording that a claim is not required because the relief is automatic. That statement is correct only for transfers before 6 April 2026, and it sits on the page alongside the new rule.
Is a property letting business a "business"?
This is the threshold question for landlords, because section 162 needs a business and not merely an investment. "Business" is not defined for the purposes of TCGA 1992, so the word takes its normal meaning.
The authority is Ramsay v HMRC [2013] UKUT 226 (TCC), where the Upper Tribunal held that it is the degree of activity as a whole which is material to whether there is a business, and not the extent of that activity when compared with the number of properties or lettings. A small portfolio actively managed can qualify; a large one run passively through an agent may not.
HMRC's stated practice gives a working benchmark: it will accept that incorporation relief is available where an individual spends 20 hours or more a week personally undertaking the sort of activities indicative of a business. Fewer hours is not automatically fatal, but the position then has to be argued against the established factors rather than assumed.
Document the activity contemporaneously. A claim resting on a recollection of how busy the last few years felt is weaker than one resting on records.
Stamp duty is the real cost
Capital gains is only half the analysis, and SDLT is where incorporations most often fail on the numbers. The treatment turns on whether the business is run through a partnership.
For a sole trader or individual landlord, section 53 FA 2003 deems a transfer to a connected company to take place at not less than market value. There is no relief from that, so SDLT is payable on the full value of the properties transferred.
For a genuine partnership, paragraph 18 of Schedule 15 FA 2003 applies instead, and HMRC confirms it takes precedence over section 53. Chargeable consideration is market value less the "sum of the lower proportions" — a five-step calculation in which each partner's lower proportion is the proportion of the interest attributable to them, or their partnership share if lower. Where the partners' proportions carry across into the company unchanged, the chargeable consideration can fall to nil.
That difference is frequently decisive, and it is why the existence and history of a genuine partnership matters so much here. It cannot be created on the eve of the transfer and expected to work.
Whatever the route, remember the rates the company will face on any chargeable consideration: the higher rates for additional dwellings, and a flat 17% on residential property costing more than £500,000 bought by certain corporate bodies, subject to reliefs including one for a property rental business. And if the company is under non-UK control, the 2% non-resident surcharge can sit on top of all of it.
Running the decision
Incorporation is a package, not a single relief. Model the SDLT first, because it is a cash cost now against a deferral later. Establish whether the activity level supports a business. Check whether a partnership genuinely exists rather than assuming one. Then diarise the claim deadline at the point of transfer — because for transfers from April 2026, a relief nobody claims is a relief nobody gets.
Acumon advises landlords and property businesses on incorporation through property tax, capital gains tax and SDLT work, with landlord accounting alongside. If you incorporated a property business after April 2026 and nobody has mentioned a claim, that is the deadline to establish now.