The transaction may qualify, but the relief no longer happens automatically
HMRC’s current
CG65700 guidance
confirms that, for transfers from 6 April 2026, a satisfactory claim must be made before Section 162 relief can apply. The underlying statutory conditions remain important, but there is now a separate compliance requirement as well.
Relief was automatic
Where the statutory conditions were satisfied, Section 162 Incorporation Relief generally applied automatically. A transferor who did not want the relief could make an election under the former Section 162A.
A positive claim is required
The transferor must now make a satisfactory claim containing the information required by HMRC. Section 162A elections are no longer available for these later transfers.
The Section 162 conditions
The relief still depends on the transfer of a qualifying business as a going concern, with the required business assets, wholly or partly in exchange for shares issued by the company.
HMRC now specifies what it expects to see
HMRC’s
CG65735 guidance
identifies the disposals and relief amount that must be shown on the return and sets out the supporting information expected with the claim.
What was transferred?
Who received it?
What was issued?
How much relief?
HMRC does not require a valuation of the new company shares
HMRC expressly says that a valuation of the shares is not required or expected for the Section 162 calculation because their relevant base cost is calculated through the relief machinery. That does not remove the need for defensible values of the underlying properties and other chargeable business assets.
There is now a specific statutory deadline
The claim must be made by the first anniversary of the 31 January following the tax year in which the transfer took place.
UK residential property can bring Section 162 into the 60-day reporting process
Where a CGT on UK Property Account return is otherwise required, HMRC says the amount of Incorporation Relief claimed should be reported and the supporting Section 162 information should accompany that return. The claim must then also be included in the annual Self Assessment return.
Check the 60-day rules
Establish whether a CGT on UK Property Account return is required at the time of the transaction.
Include the claim details
Where applicable, provide the Section 162 relief amount and supporting information with the property return.
Repeat it in Self Assessment
The relief must also be reflected in the tax return for the year in which the disposal occurred.
A claim cannot cure a transaction that did not satisfy Section 162
The claim is the mechanism through which Incorporation Relief is requested. It does not replace the need to establish that a qualifying business existed, that it was transferred as a going concern and that the statutory asset and consideration requirements were satisfied.
HMRC’s
CG65715 guidance
confirms that whether property activities amount to a business is a question of fact and degree.
HMRC amended CG65715 in August 2026 to say expressly that where an individual spends fewer than 20 hours a week on the relevant activities, those activities may still constitute a business for Section 162 purposes. Property118 had previously asked HMRC to clarify this issue in our
open letter on the 20-hour guidance
.
The claim should be the end of an evidence-led process, not an afterthought
A substantial landlord incorporation can involve legal, valuation, accounting, finance and tax workstreams. The objective is to ensure that the professionals responsible for those different disciplines are working from the same facts and that the resulting documents and calculations reconcile.
Establish the business facts
Document how the property operation is organised, the activities undertaken, ownership history, management arrangements and the evidence supporting the existence of the business.
Reconcile ownership and liabilities
Identify the relevant ownership interests, mortgage balances, business liabilities and partnership or capital-account records.
Obtain appropriate values
Establish defensible market values for the chargeable assets at the transfer date and retain the evidence supporting those figures.
Coordinate the legal transaction
The business transfer documents, consideration, liabilities and share issue should be consistent with the tax and accounting analysis.
Review the tax computation
The client’s appointed accountant or tax adviser should independently verify the gains, valuations, consideration and resulting Section 162 relief.
Submit the claim and retain the file
The relevant returns, attachments and claim should be filed within the applicable deadlines, with a permanent evidence file retained in case HMRC subsequently asks questions.
Who is responsible for what?
Coordination does not mean that one organisation performs every professional role. Each adviser should understand their assignment, work from the same factual information and remain responsible for the work carried out within their own professional engagement.
The client
Provides the facts, explains commercial objectives, appoints advisers and makes the final commercial decisions.
Property118
Explores objectives, organises relevant information and coordinates professional workstreams where commissioned.
The accountant or tax adviser
Independently reviews the facts and calculations, considers the tax treatment and deals with tax returns and claims within their engagement.
Solicitors, valuers and finance professionals
Each professional remains responsible for the legal, valuation, lending or other work undertaken within their own specialist remit.
Official guidance and further reading
Important professional notice
This page provides general information about Section 162 Incorporation Relief and Property118’s consultation and project-coordination process. It does not constitute tax, accounting, legal, mortgage, valuation, investment or other regulated professional advice.
Whether Incorporation Relief is available depends upon the legislation, the facts of the particular business, the assets transferred, the consideration, the legal documentation and other circumstances. Clients should obtain advice from appropriately qualified and insured professional advisers before undertaking an incorporation or submitting a tax claim.