Buying in house in Ltd Co - asset protection

PeterJones2018

I work in a field where litigation is increasing. I am working as an individual, i.e. not through my own Ltd Co.

I currently own my own house in the UK. I work in the UK.

I have legal indemnity insurance, but I have also seen some videos online regarding asset protection. Some advocate putting your house into a Trust. Others advise putting your own home into a limited company, so if I am sued personally, the house does not count legally as my own asset.

This doesn't seem to be that common in the UK. Much more common is to work through a limited company and own your home personally.

A lot of the videos online are from the U.S. However, I would consider the UK just as litigious as the U.S. and it seems the UK does not have "homestead protection" from litigation, that many U.S. states seem to offer. So in effect, litigation risk is actually higher in the UK than in many U.S. states (given that most people's greatness asset is their home).

Any advice or experience?

Thanks,

Peter

Annie35

3 words CAPITAL GAINS TAX

eddddy

The obvious solution would be to carry on your business through a limited company.

If your house was owned by a limited company, it would have tax implications - you would lose CGT exemption, and you might have a tax liability when you eventually take funds out of the company.

PeterJones2018

Annie35 wrote: »

3 words CAPITAL GAINS TAX

You mean if I buy a house in a Ltd Co and it increases in value, then I'm liable (well, "the company is liable) to pay CGT when the house is sold? i.e. no PPR relief?

Thanks. I will look into that.
This probably wouldn't put me off the idea completely though. Houses don't seem to be rising in value and I take it that any renovations would be allowable against the CGT.
I'd rather face a potential CGT bill than have my house seized by a creditor lawsuit.

PeterJones2018

eddddy wrote: »

The obvious solution would be to carry on your business through a limited company.

If your house was owned by a limited company, it would have tax implications - you would lose CGT exemption, and you might have a tax liability when you eventually take funds out of the company.

Problem is that a lot of end clients are becoming reluctant to engage with limited companies. They now prefer people on the payroll.

Also, more importantly, limited company liability has not always been enough to protect against negligence claims, as the claim can still be made against you as an individual, ignoring the fact you are working via a limited company. If you went into a supermarket tomorrow and one of their employees wronged you in some way, you would probably think of suing the supermarket. But you wouldn't have to. If you believed that the employee had more money than the supermarket, you could sue the employee personally.

eddddy

Peterjones2018 wrote: »

Problem is that a lot of end clients are becoming reluctant to engage with limited companies. They now prefer people on the payroll.

On the payroll? Are you talking about being an employee or running a business?

Peterjones2018 wrote: »

Also, more importantly, limited company liability has not always been enough to protect against negligence claims, as the claim can still be made against you as an individual, ignoring the fact you are working via a limited company. If you went into a supermarket tomorrow and one of their employees wronged you in some way, you would probably think of suing the supermarket. But you wouldn't have to. If you believed that the employee had more money than the supermarket, you could sue the employee personally.

I think you've been getting some very strange legal advice.

Do you have an example of where this has happened?

PeterJones2018

Public sector clients are now responsible for any tax deficits with regards to contractors, who are found to be engaging in disguised employment through an intermediary organisation.

Yes, I know of a few examples. Didn't involve a supermarket, obviously. It involved professionals contracting though their own limited companies. The limited company is (well, was!) obviously just a method of reducing tax (and possibly shielding from litigation). Most professionals contracting through such an arrangement will hold much more wealth personally, than the "company" does. So why would any litigant even try to sue such a "company"?.

I'm talking about contracting and / or disguised employment. So the most appropriate description is probably de facto employee, acting as if they are running a business.

I haven't sought any legal advice. Just been looking around online.
If I were to seek legal advice, I expect such advice would be to carry on paying professional indemnity insurance. Which I do. This is more about a "belt and braces" approach.

PeterJones2018

I have read online that trusts are:
1. Expensive to set up.
2. Can be ignored by local authorities, with regards to care home fees.

So they don't seem such a good idea. In fact, they have been described as the next potential miss selling issue..

Just enter "asset protection" into YouTube and you'll find a number of videos on this topic. But very few seem to originate from the UK.

davidmcn

Peterjones2018 wrote: »

This is more about a "belt and braces" approach.

But you don't wear braces if you've got a perfectly good belt, do you?

Your shares in your property-owning limited company aren't going to be any safer than the property you own directly.

How are you financing the property purchase? Standard residential mortgage products only deal with individuals.

PeterJones2018

davidmcn wrote: »

But you don't wear braces if you've got a perfectly good belt, do you?

Your shares in your property-owning limited company aren't going to be any safer than the property you own directly.

How are you financing the property purchase? Standard residential mortgage products only deal with individuals.

Thanks.
I had been thinking along similar lines.
The house would be purchased with "cash" i.e. no mortgage.

So if the house was worth £100k, then the Ltd Co that owned it would be valued at £100k I guess? I'd be the only share holder, so would my shares automatically be valued at £100k? I guess they would, because that's what the company balance sheet would show.

I don't know a lot about Ltd Companies, but I have seen people set them up and usually have one share for £1000. Presumably, this figure becomes meaningless, once the company purchases assets?

00ec25

Peterjones2018 wrote: »

I don't know a lot about Ltd Companies, but I have seen people set them up and usually have one share for £1000. Presumably, this figure becomes meaningless, once the company purchases assets?

then go away and talk to someone who does know what they are talking about because this whole thread is utter tosh

1. personal service companies are, quite rightly, being reined in because they are indeed often (but not always) disguised employment. In the context of the public sector some instances are also morally reprehensible given the tax advantages for the PSC boss compared to the position of the low paid workers still employed by the public sector, but managed by "the boss".

2. I don't expect you to be able to get up to speed based only on internet reading, so pay a professional (employment solicitor would be ideal) to explain to you what "IR35" means and its implications for a PSC

3. in what way are the shares in a "close company" not part of the assets of the person you wish to sue hmmm?

4. Stop trying to fly to the moon before you have even invented wings. Go back to basics and find out how the UK works, THIS IS NOT AMERICA, and take a lesson in reality, not flights of inventive fancy.