My client has been advised by a property management company
"If you form a limited company AND THAT WILL BE YOUR ONLY INTEREST AND SOURCE OF INCOME, the law will consider you transferring your property into that company without the payment of capital gains or stamp duty.
However should you sell the property you would be liable to pay Capital gains and stamp duty."
My client has established a NewCo and one of the individuals (a husband & Wife) has an investment property personally ( they work earning about £40k and get 10k of rent from the property) which is what they intend to transfer to the limited company.
my understanding is that the transaction would crystalise a capital gain and be liable to stamp duty. I dug deeper and the only legislation that i think the property agent can be considering making such a comment is rollover relief (incorporation) under s162 TCGA. an article in taxation says
This relief applies on the transfer of a business to a company where the transfer meets the conditions set out in TCGA 1992, s 162. It is automatic and no claim is required, but since 2002 the transferor has been able to make an election under s 162A for the relief not to apply.
HMRC provide general guidance on incorporation relief in their Capital Gains Manual at CG65700 onwards.
The conditions for s 162 relief are met if:
a person who is not a company transfers to a company a business as a going concern, together with the whole assets (the “old assets”) of the business, or together with the whole of those assets other than cash; and
the business is so transferred wholly or partly in exchange for shares (the “new assets”) issued by the company to the transferor.
Guidance on the meaning of “business” is provided at CG65715, where HMRC note that the term goes wider than “trade”.
However, at the time of writing there is no reference in the manual to the Upper Tribunal’s decision in Ramsay v HMRC  UKUT 0226.
Reversing the decision of the First-tier Tribunal, the Upper Tribunal held that the letting of flats in a single large building was sufficient in nature and extent to amount to a business for the purpose of incorporation relief. The degree of activity outweighed what might normally be expected to be carried out by a mere passive investor.
A “company” includes a body corporate or unincorporated association but does not include a partnership (see s 288).
Q. has anybody any comments to add to enlighten me - do you think the agent is talking about the above relief or something else ?
Q. reading the ramsay case and https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg65715 , I am not sure the client commits enough hours to the property for it to be a trade. does anybody have an opinion on this.