Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.
Section 162 Incorporation Relief Now Requires Active Claim from April 2026
From 6 April 2026, landlords and other business owners transferring a qualifying business to a company must actively claim Section 162 Incorporation Relief through their Self Assessment tax return. The relief is no longer automatic for transfers completed on or after this date.
Section 162 Incorporation Relief, under TCGA 1992, has not been abolished. Qualifying businesses can still transfer to a company and roll the relevant capital gain into the shares received. However, the process now requires each transferor to make an explicit claim in the tax return for the year of transfer.
Previously, the relief applied automatically if statutory conditions were met, with no need for a separate application or HMRC approval. The transaction still needed to be correctly implemented, calculated, and reported, but no standalone claim was required.
Under the new rules, HMRC requires claimants to provide brief details of the incorporation transaction, relevant tax computations, and the type of business transferred. This change applies only to transfers from 6 April 2026 onwards and does not affect transfers completed before that date.
Property118 notes that, in the past, detailed non-statutory clearance submissions were sometimes prepared for HMRC, but these were not the statutory mechanism for obtaining relief. HMRC’s non-statutory clearance service is intended for cases involving genuine legislative uncertainty and does not provide confirmation on questions of fact, such as whether particular activities amount to a business.
For letting agents and inventory clerks supporting landlords, the new requirement means greater attention must be given to the claim process, supporting calculations, and evidence retained at the time of incorporation. Suggested documentation includes professional valuations, mortgage statements, evidence of business activities, records of commercial reasons for incorporation, executed legal and company documents, and calculations supporting the relief claimed. Not all documents will necessarily be submitted with the tax return, but comprehensive evidence should be assembled and retained.
Source: Property118