A little-noticed change inside the 2025 Budget has sparked concern across the landlord community, after the government confirmed that Incorporation Relief under Section 162 TCGA 1992 will no longer apply automatically from April 2026. The move affects landlords restructuring portfolios into limited companies – a route often used to restore tax efficiency after Section 24.
The change was not announced during the Chancellor’s speech. Instead, it appeared in a technical document titled “Capital Gains Tax: Incorporation Relief claims,” buried within the Budget papers. Many specialist accountants and advisers say the shift could have a significant financial and procedural impact on property investors planning long-term restructuring.
CGT incorporation relief rules to become claim-based
Under current rules, Incorporation Relief automatically applies when a landlord transfers an active rental business into a company and receives shares in return. The relief defers Capital Gains Tax and has underpinned thousands of incorporations, particularly for highly leveraged or portfolio landlords.
From 6 April 2026, the relief must be claimed manually. According to the Budget policy note, the new regime introduces administrative requirements and formal deadlines.
Tax specialists say that sounds minor – but the implications are anything but.
A claims-based structure introduces three key risks:
- Missed deadlines could trigger immediate CGT liabilities
- Evidence requirements will strengthen, increasing scrutiny of “genuine business” status
- Professional advisers now carry procedural responsibility
The National Residential Landlords Association has repeatedly warned that “frequent undocumented tax changes undermine stability in the private rented sector.” The lack of formal announcement only fuels that criticism.
For many investors, incorporation forms part of mortgage strategy, succession planning or wealth protection. Now, timing becomes critical.
Why this matters for landlords considering incorporation
A significant number of landlords have already been contemplating incorporation, particularly those still affected by Section 24 mortgage interest restrictions. Incorporation remains one of the only routes to regain interest deductibility.
UK Finance data shows that around 42% of new buy-to-let lending in 2024 was arranged via limited companies, up from under 20% pre-Section 24. That trend is expected to continue into 2026.
However, the procedural change means:
- Transactions completing before April 2026 remain under the automatic relief rules
- Transactions after that date require a formal claim and supporting evidence
- Errors could result in large, unexpected tax bills payable immediately
One Midlands broker commented publicly last week that some lenders are already reviewing internal guidance for incorporation-linked refinances, stressing that clarity will be essential before the end of 2025.
Industry observers say the shift may accelerate incorporation activity over the next 18 months – just as mortgage rates begin stabilising and portfolio restructuring picks up pace following two years of volatility.
Planning ahead and avoiding costly mistakes
The technical paper confirms the new treatment but offers little practical guidance. Landlords considering restructuring should now review:
- Portfolio size and business activity evidence
- Mortgage consent timelines
- Valuation documentation
- Legal sequencing of transfer steps
- Filing deadlines post-2026
Specialist accountants warn that advisers who are unfamiliar with incorporation tax law may struggle to guide clients accurately. A Freedom of Information request earlier this year revealed that HMRC and the Chartered Institute of Taxation are planning updates to guidance – but the revised documents have yet to be released.
That delay means many landlords will be planning against moving guidance.
Editor’s view
There’s a pattern forming: policy announcements affecting landlords are increasingly hidden in the shadows rather than debated in daylight. The measure doesn’t remove incorporation relief, but it raises the stakes for anyone relying on it. The smart move now is preparation – not panic. Those who act early retain control. Those who wait risk joining the queue in March 2026.
Author: Editorial team – UK landlord & buy-to-let news, policy, and finance.
Published: 27 November 2025
Sources: Budget 2025 technical note “Capital Gains Tax: Incorporation Relief claims,” UK Finance mortgage lending data, NRLA commentary, HMRC tax document archive.
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