I agree the mortgage interest restriction is going to have a huge affect for landlords and the effects are only starting to emerge now.
Managing the properties yourself without the use of a letting agent is certainly a good start for proving the existence of a "business" which is important for claiming incorporation relief. Other (potentially overlapping) characteristics would be:
- Inspecting the properties
- Overseeing the maintenance of communal areas e.g. hiring contractors
- Being responsible for clearing and cleaning properties when the tenants leave
- Directly interact with tenants including collecting rent yourself
- Send correspondence to tenants, third parties
- Document and file all decisions made
- Maintaining a separate bank account
- No other serious commitments of your time
For the SDLT relief you need to evidence the existence of a partnership. Typically partnerships would show:
- Business set up with a view to making a profit and evidenced by partnership accounts and tax returns
- A formal partnership agreement
- Vat registration in the name of the partnership
- Properties shown as partnership assets in the accounts
- Income received gross, partnership costs deducted and net amounts (profits) split between partners as evidenced by the accounts
- A history of minuted partnership meetings
- Correspondence/invoices sent from partnership stationary
These suggestions for both SDLT and CGT relief are just indicative and no single or combination of factors determine whether relief will be available. Typically the tax advice surrounding property portfolio incorporation is expensive because of these grey areas.
As you are exposed to the mortgage interest restriction I do think it is worth considering taking formal advice on how to restructure and how to implement incorporation. It sounds as though you already have a decent case for having a business, as you have a number of properties and you do not use management agents, and it may just be a case of restructuring and documenting operation as a partnership to tick the box for SDLT relief.
Kind regards, Peter