Incorporation got more attractive on income and less attractive on exit.

Two things happened within an hour of each other in the Budget, and almost all the commentary will treat them as separate stories.

Property income tax rose to 24%, 44% and 49% from April 2027, which strengthens the case for holding property in a limited company. Business Asset Disposal Relief was halved, which weakens the case for ever getting out of one. For a landlord weighing incorporation, those are not two stories. They are the two halves of the same decision.

The income case got stronger

A higher rate landlord holding personally pays 40% on rental profit today and 44% from April 2027. Property held in a limited company pays corporation tax on its profits, and that was left alone.

Companies also still get full relief on finance costs as a business expense, where individuals get a basic rate tax credit instead. For a geared portfolio that difference was already the main driver of incorporation, and a four point rise on the personal side widens it further.

The exit case got weaker

The BADR lifetime limit fell from £1m to £500,000 for disposals from 6 April 2027. If you incorporate and later want to wind the company up or sell it, the relief available on that gain just halved.

Illustratively, on a £1m qualifying gain that is in the region of £30,000 of additional tax, though it depends entirely on your circumstances. The direction is what matters: the cost of the eventual exit went up on the same day the cost of holding went down.

Holding period is the deciding variable

This is the part nobody will say plainly, so here it is.

The income saving from incorporating is annual and recurring. The exit cost is one-off and deferred. The longer you hold, the more the recurring saving compounds and the less the one-off cost matters in present value terms.

Anyone telling landlords to incorporate without asking how long they intend to hold is giving half an answer.

And incorporation itself is not free

Before any of the above applies, moving a portfolio into a company has immediate costs that are frequently underestimated.

Reliefs exist in some circumstances, incorporation relief and multiple dwellings considerations among them, and whether they apply is a question for a qualified adviser rather than an article. The point is that the entry cost is real and it has to be recovered out of the annual saving before incorporation is ahead.

What this means practically

This article is general information about the Budget and property finance. It is not tax advice. Rates and thresholds announced on Budget day can change as legislation passes. Speak to a qualified accountant or tax adviser about your own position.