Sole trader or LTD for BTL

Newheight13

Hello,

Can I setup my BTL property income as a LTD with a non LTD company mortgage, or does it have to be as a sole trader?

Thanks  

Grumpy_chap

Do you already own the BTL in your own name, or is this a property you are considering purchasing?

If you are considering purchasing a property for BTL and decide to do that through creating Ltd Co, the company would usually need to be SPV (Special Purpose Vehicle), particularly if finance is required. 

Any mortgage on the property would need to be in the name of the legal entity that will own the property, so your name if you own the property or the Ltd Co name if the Ltd Co owns the property.  If the Ltd Co owns the property and the finance, you can expect to need to provide personal guarantees.

AIUI, it is not possible to be "Sole Trader" for rental income as renting a property is not classified as a trade.  You will need to use the SA105 property income pages for the tax return.

Newheight13

Hi there, Thank you for this. It completes next week under a BTL mortgage. We are considering a holiday let as the mortgage provider will allow it. If we set it up, is there any issues me opening up a sole trader account in just my name, even though we are joint owners 50/50?

Grumpy_chap

If you will own the property in your own name (or joint names), it is not likely to be worth creating a Ltd Co after the event.

What do you mean by "open a sole trader account"? 
You will not be a sole trader if the extent of the sole trade is this BTL. 
If you are a sole trader by virtue of carrying on another trade, the BTL will almost certainly be outside the sole trader activity. 
As I said above, you will report earnings associated with the BTL via the SA105 UK Property Income pages and not SA103 self-employment pages.

The simplest thing for a bank account would be an account just for the BTL income and expenses.  This can be in just your name, or in joint names.  If there are two of you as 50-50 owners, then an account in joint names seems the most obvious.

PLEASE NOTE:  My comments are in the context of the BTL as a straightforward AST letting.  Others may comment about any variances for FHL.

As you are embarking on this venture, have you engaged the professional services of an Accountant?  It might be useful to ensure that you are not tripped up.

Are you aware of the obligations of being a Landlord?

Newheight13

Much thanks for your help. I thought I’d need to setup a sole trader account for my tax returns but as you’ve stated, I just need to fill a SA105 UK Property Income form. 

If we go down the holiday let route then we can allocate the income based of our tax brackets so any ratio we like, this is more appealing to us. Yes, I’ve done the courses and am aware of the obligations that seem to change on a weekly a basis. 

Thanks again 

Dazed_and_C0nfused

Newheight13 said:

Much thanks for your help. I thought I’d need to setup a sole trader account for my tax returns but as you’ve stated, I just need to fill a SA105 UK Property Income form. 

If we go down the holiday let route then we can allocate the income based of our tax brackets so any ratio we like, this is more appealing to us. Yes, I’ve done the courses and am aware of the obligations that seem to change on a weekly a basis. 

Thanks again 

And any other section of the Self Assessment return that is appropriate.

[Deleted User]

Newheight13 said:

Much thanks for your help. I thought I’d need to setup a sole trader account for my tax returns but as you’ve stated, I just need to fill a SA105 UK Property Income form. 

If we go down the holiday let route then we can allocate the income based of our tax brackets so any ratio we like, this is more appealing to us. Yes, I’ve done the courses and am aware of the obligations that seem to change on a weekly a basis. 

Thanks again 

I think that you are confusing ‘sole trader’ account with ‘self assessment’ account - which you will need to set up. 

Is the other half of ‘we’ a spouse or civil partner?

Newheight13

other partner is spouse. Yes I was confusing that but I thought if I was setting up a holiday let for example then it would be classed as a business, and there fee I would have to register as a sole trader or LTD company to submit my self assessment?