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Rental Income - Ltd Company V personnal tax return
Toshi_2
Posts: 25 Forumite
Hi all
What are advantages of forming a Ltd Company for rental income if you have only two properties.
Can you save on tax bill
Thanks advance for any help.
What are advantages of forming a Ltd Company for rental income if you have only two properties.
Can you save on tax bill
Thanks advance for any help.
0
Comments
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Are you on PAYE and already using up your personal allowance?Who having known the diamond will concern himself with glass?
Rudyard Kipling0 -
Are you a higher rate tax payer. with or without the property income?Who having known the diamond will concern himself with glass?
Rudyard Kipling0 -
You can take income in form of dividends which are taxed at lower rates. Most mortgage companies will not allow Co' ownership.
Accountants costs for a Ltd Co will tend to be more than for a sole trader unless you do your own books.
More hassle being Ltd - annual Directors returns / you cannot just wind a company up without this being advertised in the papers etc.
Paying more tax means more money for hospitals and immigrants, so at least console yourself with this!0 -
Currently on PAYE - will use up my personal allowance.
Hoping to have two properties - but no mortgage.0 -
How is the Ltd Co going to purchase the properties off you?This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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It is not so much the number of properties but the income that determines whether or not it is worth setting up a company.
I know someone with two BTLs. He just does a personal tax return as he has stopped working for an employer.
It is worth doing some background reading to get some ideas. This looks like a good place to start:
http://www.duport.co.uk/guides/company-structure/holding-property-benefits.phpWho having known the diamond will concern himself with glass?
Rudyard Kipling0 -
Consider corporation tax rates compared to personal tax rates. Getting the money into the company is straight forward, getting the money out will have to be planned. Also consider CGT if you plan on selling at some point.
Also mortgages are fewer and at higher rates for companies.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
This country has a £1.56 trillion national debt and cuts are making life very tough for many peope who are struggling, so why not just pay the fair tax owed?0
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What is fair tax? If the OP pays less tax, he may spend more and help the economy that way.Who having known the diamond will concern himself with glass?
Rudyard Kipling0 -
MarkBargain wrote: »This country has a £1.56 trillion national debt and cuts are making life very tough for many peope who are struggling, so why not just pay the fair tax owed?
OP is under no obligation to organize his business affairs such that he pays the maximum amount of tax.
If you already own the properties, be aware that transferring them to Ltd Co will;
(a) be classed as a disposal for CGT purposes (personal taxation)
(b) be classed as a purchase by for stamp duty purposes.
So make sure you decide which route you wish to take before you set up the portfolio."Real knowledge is to know the extent of one's ignorance" - Confucius0
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