Higher rate taxpayers who own property in their own names will pay income tax at 40% (or higher). The same profits are taxed at 19% in a limited company (this rate may increase after 1st April 2023 for profits over £50,000 or more). Using the tax savings, the company can pay off any mortgages or fund a deposit for additional properties.

Additionally, you are no longer eligible for full tax relief on mortgage interest on property held in your name as a higher rate taxpayer. There is a 20% limit on the tax relief on mortgage interest. It is still possible for a company to get full tax relief.

It is also possible to withdraw tax-free dividends from a limited company up to £2000.

For any loans or deposits that you have given the company to purchase a property, you can also receive up to £500 interest tax-free as a higher rate taxpayer (provided your total income is less than £150,000).

This is possible, but it must be done with great caution. Transfers are considered to be sales at market value, so the following considerations apply:

To pay off any outstanding loan, what are the additional costs of a company mortgage? Limited companies may have higher financing costs.

Does stamp duty apply? In addition to the standard SDLT rate, a higher rate surcharge of 3% applies to properties worth more than £40k.

Is there a capital gains tax due?

Without professional advice, combining these three factors could lead to a very expensive tax bill.

It may be more advantageous to purchase a property from the outset rather than transfer in.

You can extract funds from your property company as a shareholder/director in the following ways:

Dividends are paid from after-tax profits. If you don’t have other dividend income, the first £2000 is tax-free.

You should pay yourself a salary. A salary may be a good idea if you don’t have any other income. In order to qualify for corporation tax benefits, the salary must be justified. You would probably have trouble justifying paying a salary to yourself if a letting agent managed your properties.

Repay a loan you made to the company. Taxes would not apply to this.

The company pays you interest on loans or money owed to you. A basic rate taxpayer can claim a tax exemption of £1000 and a higher rate taxpayer can claim a tax exemption of £500 (income up to a top rate of £150,000).

Yes, of course. Since April 2015, the number of lenders and mortgages for limited companies has steadily increased. In spite of this, a limited company mortgage still incurs higher interest rates than an individual’s mortgage. It is important to note, however, that some lenders charge the same rate regardless of the type of mortgage.

An account for directors loan (DLA) keeps track of how much you borrow from or lend to your company. The account is in credit if the company borrows more from its directors than it lends. The tax consequences and penalties of borrowing money from your company makes it often unwise to do so.

Yes, it is possible to borrow money from your company to buy a house. However, there are tax consequences and penalties associated with this, so it is often unwise to do so. If you have loaned the company money for a deposit or other purposes, you are entitled to charge the company a commercial rate of interest for the loan. Higher rate taxpayers can receive £500 tax-free, and basic rate taxpayers can receive £1000 tax-free each year.

Yes, you can live in a property owned by your limited company. However, there are a few important points to consider:

– Personal Use: If you choose to live in a property owned by your limited company, it will be considered a benefit in kind and may have tax implications. You may need to pay tax on the value of the benefit received.

– Market Rent: To avoid tax implications, it is advisable to pay market rent to your limited company for living in the property. This ensures that you are treating the arrangement as a commercial transaction.

– Mortgage and Financing: Financing a property owned by a limited company may have different requirements compared to personal mortgages. It’s important to consult with a mortgage advisor who specializes in limited company buy-to-let mortgages.

– Legal and Accounting Advice: It is recommended to seek professional advice from a solicitor and an accountant who are experienced in property and company law. They can guide you through the legal and tax implications of living in a property owned by your limited company.

Yes, you can rent your property to your limited company. Renting your property to your limited company can have certain benefits, but it’s important to consider all the relevant factors and seek professional advice to make the right decision for your specific circumstances. It’s advisable to consult with a tax advisor or accountant who specializes in landlord tax and limited company structures to ensure you understand the implications and make an informed decision.

Yes, it is possible to sell your house to your limited company. However, there are several considerations to keep in mind:

– Transfers of properties to a limited company are considered sales at market value.

– You would need to pay off any outstanding loans on the property.

– Additional costs, such as company mortgage financing costs and stamp duty, may apply.

It’s important to approach this process with caution and seek appropriate professional advice. UK Landlord Tax can provide guidance and help you make the right choice based on your specific circumstances.

Transferring your property to a limited company is possible, but it should be done with caution. Here are some considerations:

– Transfers are treated as sales at market value, so additional costs like paying off outstanding loans and company mortgage financing costs should be taken into account. – Stamp duty may apply, including a higher rate surcharge of 3% for properties worth more than £40,000.

– Administrative responsibilities come with being a limited company director, such as filing accounts with Companies House and submitting corporation tax returns to HMRC.

– Transferring a property you already own to a limited company can be complicated and may incur stamp duty and capital gains tax charges.

– Owning property through a limited company offers asset protection and potential tax advantages, such as tax relief and tax-free dividends.

Yes, it is. A commercial rate of interest can be charged for loans that are made to the company for deposits or other purposes. Every year, higher rate taxpayers can receive £500 tax-free and lower rate taxpayers can receive £1000 tax-free.

There are some advantages to being a limited company when it comes to IHT. Family Investment Companies can be set up to mitigate IHT in future years. In brief, a company consists of two types of shares. There are shares A and B. As the owner of the A shares, you are entitled to dividends and voting rights.

All future growth belongs to the B Shares. In this way, the director retains control while giving away value.

As far as IHT is concerned, the growth on the investments will largely be outside of individuals’ estates.

It can be difficult to implement this type of tax structure without the assistance of a professional advisor who has the necessary expertise and knowledge in these matters. Please see the following for further information. You can also contact us for more information.

SPV – Special Purpose Vehicle

A SPV is a generic term for any entity that you establish for a particular purpose. SPVs can be limited companies, limited liability partnerships, or partnerships.

When purchasing property through a company, many lenders require you to establish a limited company SPV.

Profits of limited companies are taxed at 19%.

The Government has proposed taxing the first £50,000 of profits at 19%, the next £200,000 at 26.5%, and the remaining profits at 25% from 1st April 2023. Associated companies that share common control share the bands equally.

Yes, this is correct. Limited company shareholders are normally able to receive tax-free dividends up to £2000.

Here are some key points to know when buying a property through your limited company:

– Individual Ownership vs. Limited Company: Properties can be held either in individual names or in a limited company. Owning through a limited company has its advantages and disadvantages, so it’s important to weigh the factors specific to your circumstances and objectives.

– Tax Implications: Owning a buy-to-let property through a limited company can have different tax implications compared to individual ownership. Limited companies are subject to corporation tax on rental profits, which is currently lower than the income tax rates for individuals. However, recent tax changes have reduced some of the tax advantages of owning through a limited company.

– Mortgage Availability: Finding mortgage lenders for limited company buy-to-let properties can be more challenging compared to individual ownership. The number of lenders offering such mortgages may be limited, and interest rates might be higher.

– Inheritance Tax Planning: Limited companies can offer certain advantages for inheritance tax planning, such as using alphabet shares. However, other strategies, such as selling properties in retirement and gifting money to children, may also be considered.

In the UK, a company can rent a house for an employee. This is known as a company let or a corporate let. It is a common practice for companies to provide housing for their employees, especially for those who are relocating or on temporary assignments. Renting a house for an employee can offer convenience and flexibility for both the company and the employee. The rental agreement would be between the company and the landlord, and the employee would typically be the occupant of the property.

Yes, a limited company can lend money to an individual. However, it’s important to note that there may be tax implications and considerations when lending money between a company and an individual.