Incorporation and Capital Gains Tax (CGT) – a quick overview

Some landlords choose to incorporate their rental business into a limited company, often for tax or long‑term planning reasons. Incorporation Relief can play an important role in making this viable – but from April 2026, the way it’s accessed has changed.

Here’s what you need to know.

What has changed from April 2026

From 6 April 2026, Capital Gains Tax Incorporation Relief is no longer automatic.

Instead, landlords must actively claim the relief through their Self-Assessment tax return. If no claim is made, even where the incorporation would otherwise qualify, Capital Gains Tax may become immediately payable.

This introduces a new layer of process risk. Missing deadlines or failing to make the correct claim could result in an unexpected tax bill.

What hasn’t changed

The relief itself has not been withdrawn.

Where conditions are met:

• Qualifying landlords can still defer CGT when transferring a genuine rental business into a limited company
• The capital gain can still be rolled into the value of the shares received

In principle, obtaining incorporation relief remains possible, but execution now matters more.

Why this matters for landlords

A claims‑based system means:

• Deadlines are critical
• Documentation and evidence are more important
• Professional advice is increasingly valuable

What was once automatic now requires deliberate planning and careful follow‑through.

The key takeaway

Incorporation can still make sense for some landlords, but from April 2026, calculating relief is no longer something that “just happens”.

Eligibility alone isn’t enough. Timing, paperwork and complete claims are now just as important as the underlying transaction itself.

If you’re considering incorporation, understanding the new rules and getting the right advice early has never been more important.

This article is for information purposes only and does not constitute advice.