Passing Property Wealth

Introduction

For many landlords, buy-to-let isn’t just a source of income — it’s a long-term investment, a retirement plan, and a way to provide for children or grandchildren.

Passing on property wealth, however, isn’t straightforward. Without careful planning, taxes such as Inheritance Tax (IHT) and Capital Gains Tax (CGT) can significantly reduce the value of your estate.

Transferring your portfolio into a limited company can provide both tax efficiency during your lifetime and flexibility for inheritance planning.

In this guide, we’ll explain:

Why landlords need to consider IHT sooner rather than later
How holding properties in a company makes succession planning easier
The advantages of company shares versus direct property ownership
Practical steps to safeguard your family’s future
Why specialist advice is essential

The Inheritance Tax Challenge for Landlords

Inheritance Tax is charged at 40% on estates above the nil-rate band (currently £325,000, plus potential residence nil-rate band). For landlords, even modest portfolios can quickly exceed this threshold.

Key challenges include:

Illiquid assets – properties can’t easily be split among multiple beneficiaries
High valuations – rising property prices push estates over the IHT limit
CGT exposure – gifting or transferring property can trigger tax
Limited flexibility – passing on properties directly can be slow, costly, and complicated

Without proper planning, families may face both a significant tax bill and a complex legal process.

Why Incorporation Can Help with Inheritance

When your properties are held in a limited company, you no longer own them personally — you own shares in the company. This simple shift can make a big difference:

1. Easier Wealth Transfer

Instead of transferring entire properties, you can gift shares to family members gradually. This avoids triggering large SDLT or CGT bills all at once.

2. Tax-Efficient Succession

Shares can be transferred strategically, using allowances and exemptions to reduce IHT exposure. In some cases, Business Property Relief (BPR) may apply, depending on how the property business is structured.

3. Greater Flexibility and Control

As a company director, you retain control while gradually bringing the next generation on as shareholders. This allows a smooth, staged handover rather than an all-or-nothing transfer.

4. Future-Proofing Against Tax Changes

Company structures offer flexibility to adapt to evolving tax rules, from dividends to directors’ loans, ensuring wealth distribution remains efficient.

Shares vs. Direct Property Ownership – A Practical Example

Scenario: Two landlords each own a £1.5m portfolio.

Landlord A owns properties personally.
Estate valued at £1.5m on deat
Heirs face potential 40% IHT
Properties may need to be sold to pay the tax

Landlord B transfers properties into a limited company.
Heirs inherit company shares, not bricks and mortar
Structure can maximise tax reliefs and allow phased transfer
Wealth is easier to divide, IHT exposure reduced, and income continuity preserved

Result: Landlord B’s family retains more of the portfolio with fewer complications.

Additional Benefits of Incorporation for Families

Beyond inheritance planning, a company structure offers:

Separation of personal and business finances – protecting personal assets
Professionalised structure – attractive to lenders, investors, and family members
Growth opportunities – easier to refinance, reinvest, and scale
Ongoing income streams – rental profits continue to flow and can be distributed efficiently

What to Watch Out For

Incorporation requires careful planning:

SDLT and CGT on transfers – reliefs exist, but advice is essential
Mortgage refinancing – lenders often require new company arrangements
Ongoing compliance – annual accounts, corporation tax returns, and filings

These challenges are manageable with the right guidance.

How Hammond & Co Supports Landlords with Inheritance Planning

We help landlords future-proof property wealth through a complete, tailored approach:

IHT Review – forecast exposure and identify risk areas
Incorporation Strategy – structure portfolios to minimise SDLT and CGT
Company Setup & Administration – handle Companies House and HMRC registrations
Succession Planning – design a share structure for gradual, tax-efficient transfer
Ongoing Support – corporation tax, dividend planning, and portfolio management

Through our Network & Nosh partnerships, we can also connect you with trusted solicitors, mortgage brokers, and wealth advisors for a full inheritance planning solution.

Conclusion

Your property portfolio is more than an investment — it’s your family’s future. Without careful planning, inheritance tax and complex transfers can erode that legacy.

Incorporation allows you to: