You've decided to incorporate, or you're weighing it up, and now you're wondering what happens to the things you already own. Your equipment, your van, maybe a property. Moving them into a limited company isn't as simple as changing the name on a label.
Each transfer is a transaction in HMRC's eyes, and some of them carry a tax bill. Get it right and you can defer or reduce that bill. Get it wrong and you can trigger Stamp Duty Land Tax, Capital Gains Tax, and an HMRC enquiry you didn't need.
This guide is for sole traders and small business owners in England, Wales and Northern Ireland who want to understand the process, the real disadvantages (especially around property), and the reliefs worth knowing about. All figures are for the 2025/26 tax year unless stated.
What's the difference between a sole trader and a limited company?
As a sole trader, you and your business are the same legal person. You keep your profits after tax, your reporting is simpler, and there's no separate entity to maintain. The catch is personal liability. If the business owes money or faces a claim, your personal assets are exposed.
A limited company is a separate legal entity. That gives you limited liability, so the company's debts are the company's, not yours, and your home, car and savings are generally protected if the business runs into trouble.
That separation is exactly why asset transfers matter. Once you incorporate, the company is a different "person" from you, so handing it your van or your premises is a genuine transfer of ownership with tax consequences attached.
Should every sole trader incorporate?
No. Incorporation isn't compulsory, and plenty of sole traders do well without ever forming a company.
It tends to suit businesses that are growing, where company status can be more tax efficient and opens up better financing and credibility. Against that, you take on more complex reporting, higher accountancy costs, and stricter rules on taking money out. You can't just help yourself to cash anymore; everything runs through salary, dividends or properly documented expenses.
It's a numbers decision specific to you. If you're not sure, our tax advisory team can model both routes before you commit.
Which assets can you transfer to your limited company?
Start with an inventory. Knowing exactly what you're moving makes everything that follows cleaner.
Common assets fall into two groups:
Tangible assets
- Business premises or commercial property
- Computers, laptops and IT equipment
- Machinery and manufacturing equipment
- Tools and specialist kit
- Vehicles used for the business
Intangible assets
- Trademarks and registered brand names
- Copyrights and patents
- Customer databases and mailing lists
- Domain names and websites
- Goodwill
Once you've listed everything, review it with your accountant. Transferring an asset can unlock Capital Allowances against the company's profits, but not every transfer is worth doing. And remember: once an asset is transferred, the company owns it, not you. That single fact drives most of the tax treatment below.
What are the disadvantages of selling property to a limited company?
Property is where owners most often come unstuck. There can be a case for holding buy-to-let through a company, but the downsides are real and frequently outweigh the benefits unless you're running a genuine portfolio.
Stamp Duty Land Tax on the market value, not what you pay
When you transfer property to a company you're connected to, SDLT is charged on the property's market value, even if the company pays you less (or nothing). So if the property is worth £300,000 but the company only "pays" £150,000, SDLT is still calculated on £300,000. The standard SDLT rate sits alongside the higher rates for additional dwellings, so this is rarely a small bill. See HMRC's guidance on transfers to connected companies.
Capital Gains Tax on the gain
If the property has gone up in value since you bought it, you may face Capital Gains Tax on the difference. For residential property in 2025/26, the CGT rates are 18% within the basic rate band and 24% above it, after deducting the £3,000 annual exempt amount.
Mortgage complications
Many residential mortgages don't allow a transfer into a company. You may need to refinance onto a commercial or buy-to-let company mortgage, which usually means higher rates and bigger deposits.
Loss of Private Residence Relief
If you transfer your own home, you lose Private Residence Relief, the relief that normally keeps your main home out of CGT when you sell. A company can't claim it.
Getting money back out is harder
When the company eventually sells the property, it pays Corporation Tax on the gain. Extracting the proceeds to you personally then means dividends or a winding-up, with further tax on the way out. You can be taxed twice on the same money.
Higher transaction costs
Solicitors, valuations, Land Registry fees and extra accountancy all add up, on top of the taxes above.
Always take advice before any property transfer. For landlords weighing this up, our landlord accounting service and the capital gains tax calculator are good starting points.
What tax reliefs can reduce the cost of transferring assets?
A few reliefs can defer or reduce the tax when a transfer is structured correctly.
Incorporation Relief
This defers Capital Gains Tax when you transfer your whole business as a going concern to a company in exchange for shares. Instead of paying CGT now, the gain is rolled into the base cost of your new shares and crystallises only when you sell them.
To qualify you must transfer the entire business as a going concern (not cherry-pick assets), and the consideration must be wholly or partly in shares. The more of the consideration you take as shares, the more gain you can defer.
Business Asset Disposal Relief
Business Asset Disposal Relief (formerly Entrepreneurs' Relief) applies a reduced CGT rate to qualifying gains, up to a £1 million lifetime limit. For disposals from 6 April 2025 the rate is 14% for 2025/26. This is most relevant when you later sell qualifying business assets or shares, rather than on the incorporation itself.
Where the reliefs don't help
These reliefs are built around trading businesses. A pure buy-to-let isn't a trade, so transferring an investment property into an SPV generally won't qualify for Incorporation Relief. That's why standalone property transfers tend to face the full disadvantages with little to soften them.
Illustrative example: Priya's design studio Priya has run her design studio as a sole trader for five years. Her business has built up equipment, software and goodwill, and on incorporation she'd have an estimated chargeable gain of around £20,000, mostly on goodwill. Her accountant advises transferring the whole business as a going concern in exchange for shares, so Incorporation Relief applies. After the £3,000 annual exempt amount, the remaining £17,000 gain would otherwise be taxable. As a higher-rate taxpayer at 24%, that's roughly £4,080 of CGT she defers rather than pays now. The gain rolls into the base cost of her shares and is only revisited if she sells them. Figures are illustrative and rounded. Your own numbers depend on your asset values and tax position.
How do you actually transfer assets to your company?
There are two common routes: sell the asset to the company, or credit your Director's Loan Account.
Selling the asset to the company
You sell the asset to the company at market value, meaning what it would fetch on the open market today, not what you originally paid. The company pays you, and the transaction appears in its accounts.
The tax point: you may owe Capital Gains Tax on any gain, the difference between your original cost and the market value the company pays. This is why an accurate valuation matters. Undervalue it and HMRC may challenge it; overvalue it and you create needless tax for yourself.
Using your Director's Loan Account
If the new company has no cash to buy the asset, you can credit your Director's Loan Account (DLA) instead. Say you move a £20,000 van into the company through your DLA: the company owns and uses the van, and it now owes you £20,000. That credit can be repaid to you tax-free as the company generates profit.
The DLA also records personal money you take out that isn't salary, dividends or a legitimate expense repayment. Watch the direction of travel here. If your DLA goes overdrawn, meaning you owe the company, and it's still overdrawn more than nine months and one day after the company's year end, the company pays a Section 455 charge of 33.75% on the outstanding amount. It's refundable once you repay the loan, but it ties up cash in the meantime.
Transferring from a partnership
If you're a partnership incorporating, similar principles apply: valuations, an update to the partnership agreement, and careful planning for each partner's individual tax position.
Do you need a professional valuation?
Not always, but for significant assets it's money well spent.
For everyday items like standard office kit or laptops, a sensible market estimate based on recent comparable sales is usually fine. For higher-value or complex assets, get a professional valuation:
- Commercial property or land
- Specialist machinery or equipment
- Intellectual property such as patents or trademarks
- Business goodwill
- Substantial vehicle fleets
A professional valuation gives you defensible evidence if HMRC ever questions your transfer pricing, and it's particularly important for property, where a wrong figure can cause real problems later.
What else changes when you incorporate?
Incorporation touches more than asset transfers.
Employees. Staff need new contracts naming the company as employer, and your PAYE records and workplace pension need updating.
Insurance. Policies don't automatically carry over. You'll want public liability, professional indemnity where relevant, and employer's liability (a legal requirement if you have staff) in the company's name.
Tax. The company files a Company Tax Return and pays Corporation Tax on its profits. The Corporation Tax small profits rate is 19% on profits up to £50,000, rising to a 25% main rate on profits over £250,000, with marginal relief in between. You may still need a personal Self Assessment return if you take dividends or have other untaxed income.
VAT. If you were VAT registered as a sole trader, the company generally needs its own registration, so the VAT number changes.
Banking. Company and personal money must be kept separate. Open a dedicated business bank account before the company starts trading.
If this list feels like a lot, that's normal. Getting the statutory accounts and Corporation Tax right from day one saves a great deal of unpicking later.
Want help getting the transfer right?
Asset transfers and incorporation are easy to get wrong and expensive to fix. Book a free 20-minute call with a Zmartly accountant and we'll tell you, plainly, whether moving your assets into a company makes sense for you, and how to do it tax-efficiently. Talk to a Zmartly accountant.
FAQs
Can I transfer my home to my limited company?
Technically yes, but it's rarely advisable. It can trigger Stamp Duty Land Tax (charged on market value because you're connected to the company), potential Capital Gains Tax, and the loss of Private Residence Relief. Most residential mortgages also prohibit the transfer without lender consent. Get specialist advice first.
Is transferring an asset the same as selling it to my company?
In practice, yes, when done at market value. The company takes ownership and you're compensated, either by payment now or as a credit on your Director's Loan Account. Both routes need a proper market valuation to satisfy HMRC.
Do I pay tax when I transfer business assets to my company?
You might. Capital Gains Tax can apply if the asset has gone up in value since you acquired it, and Stamp Duty Land Tax can apply to property. Reliefs and allowances may reduce or defer the bill, so it's worth taking advice before you move anything significant.
What reliefs are available when transferring assets?
The main one is Incorporation Relief, which defers Capital Gains Tax when you transfer your whole business as a going concern in exchange for shares. Business Asset Disposal Relief can reduce the CGT rate on qualifying gains (14% for 2025/26 disposals from 6 April 2025, up to a £1 million lifetime limit). Neither typically applies to investment property or to transfers of selected assets only.
Can I transfer just my property without the whole business?
You can, but you lose access to Incorporation Relief and face the full disadvantages, including SDLT and CGT, with no deferral. That's why standalone property transfers rarely make sense unless you're running a substantial portfolio with specific planning objectives.
What happens if I undervalue assets when transferring them?
HMRC can investigate, substitute realistic values, charge the tax that should have been paid, and add penalties and interest. Use sensible market valuations, and professional valuers for significant assets.
