Can you wrap an ISA around a property investment?

PosterBoy77

spider42 said:

In many cases a director can receive tax free interest from their own company anyway. The ISA may well be an unnecessary complication. The optimum remuneration strategy for a director of an owner managed company is typically salary at the secondary NI threshold (£9,100 in 22/23) and then the rest dividends. But because there is £5,000 at the 0% starting rate for savings and the £1,000 savings allowance, if they receive interest of up to £9,470 on top of the £9,100, then that interest is taxed at nil for the director and the company gets CT relief. And then you can then reduce dividends accordingly (as they have been replaced by the interest) which generates a further Income Tax reduction for the director.

No extortionate fees, and the ISA allowances are still available to invest elsewhere.

This is quite right. However this Director's Loan ISA would come into its own I someone had accumulated a large ISA pot from previous years and then lent it to their own company to make a large investment.

PosterBoy77

masonic said:

mikael said:

dunstonh said:

Can you wrap an ISA around a property investment?

Thankfully not.

Not entirely true. You can use the directors loan ISA offered here :  https://www.rebuildingsociety.com/dla-isa/

The ISA money can be lent to your own limited Company, which itself could buy an investment property and would pay interest back to the ISA.

Could that be done without selling the property? The OP didn't want to do that. As it seems the property is jointly owned with others, perhaps the OP's own interest could be sold into a limited company without impacting the other owners. In which case, there would just be the capital gains considerations on the OP's interest. Seems like there would need to be some creative accounting to make this work in practice, and as a tax avoidance strategy, some potential risks for which advice would be recommended.

If the properties were owned jointly with someone else and it could be demonstrated that the property business was a partnership, then the properties could be bought into a company without having to pay SDLT or CGT. If not SDLT would be due.

Some info here:

https://www.bkl.co.uk/insights/property-buy-to-let-incorporation/