ltd company for property and other investments

strongboes

Hi,

Just as title suggests, can someone outline pros/cons of investing in a btl thru a ltd company. It would not be in the near future. It could end up growing into more than 1 property tho i suspect. Many regards

takoo

Hi Strongboes

Points to consider:

1. If you "go in" with others it may be a way of reflecting your respective capital inputs.
2. As you get older you may want to pass on your wealth to others in the form of a shareholdings, eg to grandchildren.
3. By keeping a majority of the shares you would maintain voting control over big decisions.
4. You may be able to keep personal and business matters separate which may be useful for taxation, spouse-relations, etc.
5. As you tire of the day to day management, the company could be managed separately by other directors / managers
6. You could have a group of investment businesses - one not affecting the others.

My points are not expert so you will need accounting / legal advice etc. Never thought about downside but I suppose there is one!

Good luck

Takoo

strongboes

Hi,

No it would be funded by me only, yes I expect I would like to pass it on to my kids when I have them at some point.

I think the tax implications are less although you can't claim any CGT allowance. Although I would not be looking to take any capital out any time in the future unless my aims change. All profits would be reinvested but am likely to want to invest in shares using this income also. Would there be a problem doing this through the company?

I suppose the aim of this particular investment would be to eventually provide an income just under the upper tax bracket so around (36k today) which would be withdrawn as dividends.

Anyone else with a view?

chappers

The biggest problem is if you do want to take out any profits over the £36K threshold then you will be charged twice, once on the company's profits (corporation tax) and again on the money you take out (income tax).
Anything you buy through the company will belong to the company and taxed accordingly then anything you take out will also be taxed accordingly as your income , as I said anything over £36K will attract 40% income tax.

strongboes

Hi Chappers

What your saying is not strictly true. If the company makes 36k clear profit after tax at 20% then assuming I have no other income then I will not be taxed on this dividend at all. Over 36k then its 32.5% I believe which is considerably less than 40% when you also take nic into account.

chappers

You are correct the rate is 32.5%, for corporation tax however my original point still stands if you wish to withdraw any of the companies profits over £36K you will pay tax on it twice unless you take it as salary then it will attract 40%

strongboes

Hi Chappers,

yes you are correct in what your saying I misunderstood you, sorry.

Any other points that anyone can see?

chappers

A major plus that nobody has mentioned although it is probably a lesson in egg sucking, is the main reason for setting up a Ltd.company is the Limited liability.provided you run your company with due dilligence and within the law, then you have no personal liability if it all goes pear shaped.i.e your own home would not be at risk if the business failed