Tax optimisation after property

Mlasso

Hello,

I have been trying to sell my old home and I couldn't find a buyer for 2 years now. I have decided to give up and rent it. I didn't really want to do that as home is in my personal name and I wanted to sell it but it is what it is.

Now, it is bringing me a tax complication and I never really checked how it all works.

So far, my income was:

12,570gbp salary
38,000gbp dividend

I own my LTD company and I can split salary / dividend any way I like.

I would like to avoid getting into higher tax rates.

Now, property will bring me around 18,000gbp per year, and after I remortgage from residential to BTL, my interest will be the same as my income (18,000gbp per year).

All that said, what would be the best optimisation for me to avoid getting into higher tax bands? It is not too important for me how much money I take out of the company, I would just like to avoid entering higher tax bands.

My salary/dividend split worked well for me, now when property income is added, I really don't know how it all works.

Thanks!

Dazed_and_C0nfused

Mlasso said:

Hello,

I have been trying to sell my old home and I couldn't find a buyer for 2 years now. I have decided to give up and rent it. I didn't really want to do that as home is in my personal name and I wanted to sell it but it is what it is.

Now, it is bringing me a tax complication and I never really checked how it all works.

So far, my income was:

12,570gbp salary
38,000gbp dividend

I own my LTD company and I can split salary / dividend any way I like.

I would like to avoid getting into higher tax rates.

Now, property will bring me around 18,000gbp per year, and after I remortgage from residential to BTL, my interest will be the same as my income (18,000gbp per year).

All that said, what would be the best optimisation for me to avoid getting into higher tax bands? It is not too important for me how much money I take out of the company, I would just like to avoid entering higher tax bands.

My salary/dividend split worked well for me, now when property income is added, I really don't know how it all works.

Thanks!

Unless you have omitted some key information you are already a higher rate taxpayer.

Relief at source pension contributions (of Gift Aid donations) would increase your basic rate band.  But that might not be the optimum choice when you have a limited company.

Extra employer contributions and a smaller dividend might be worth discussing with your accountant.

I presume you are aware that finance costs like interest are no longer an allowable expense against the rental income?

SiliconChip

Rather than starting a letting business unnecessarily you might be better to post details of the property on the Housing board to try to establish why you've had difficulty selling it and get some suggestions about how you can make it saleable.

https://forums.moneysavingexpert.com/categories/house-buying-renting-selling