New BTL - Should I buy as me? Or as a company?

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  • Smiler
    started a topic New BTL - Should I buy as me? Or as a company?

    New BTL - Should I buy as me? Or as a company?

    Looking at getting another BTL. For various reasons it will be a cash purchase.

    My Wife owns our current BTL's for tax reasons although I'm now a lower rate tax payer.

    Buying a new place as ourselves is straightforward.

    However should we look at setting up a company and buying through it? We could loan the company the money and thus get rid of any profit by repaying us the loan (so no corp tax).

    GCT isn't a worry as no plans to sell but pass onto children.

    So some questions

    How easy is it to set up a company with Wife and I as Directors? Possibly add children in years to come

    How much of an admin chore is it?

    Can we loan the firm money, and then repay that loan in stages avoiding Corp tax?

    What are the costs associated in running a firm?

    All help and comments appreciated

    what gordon says is correct, a loan repayment isnt a cost so it therefore doesnt effect your profit ie your rental income. tax is payed on profits so you will be paying tax on all of your rental income.

    Leave a comment:

  • Gordon999
    You asked " Can we loan the firm money, and then repay that loan in stages avoiding Corp tax? "

    Answer : Repaying a loan in stages does NOT avoid Corp tax .

    You don't understand how Corp tax is calculated. Better for you to buy a Which Guide on Taxation before you act. .

    Leave a comment:

  • Lawcruncher
    Tax advice is certainly an area covered by both lawyers and accountants - there are also other professionally qualified tax advisers such as Chartered Tax Advisers. On the whole, the average high street accountancy firm is likely to know more about tax than the average high street solicitors. Whoever you choose, the important thing is not to let the tax tail wag the everything else dog.

    Leave a comment:

  • jpkeates
    You might actually find that a family solicitor is helpful as an alternative to (or as well as) an accountant.
    Whatever you end up doing, it's likely that your wills should reflect your plans.

    Leave a comment:

  • Lawcruncher
    You need to discuss all aspects with an accountant as the over all position of you and your wife needs to be taknen into account as well as your plans for the future.

    Leave a comment:

  • jpkeates
    The above advice is sound.

    Four points to consider that occurred to me reading your post:

    While CGT "isn't an worry", the rate of CGT is lower than the rate of IHT you may incur when passing assets to children. So that's worth discussing with an accountant,

    If your wife is a higher rate tax payer it may be beneficial to look at the ownership structure of "your" current properties. It may be beneficial to make a number of incremental transfers to avoid incurring CGT (although there are legal costs that may offset any benefit).

    Getting income out of a company isn't as simple as it might appear, dividends are taxed with only a small allowance, and paying interest or salary means income for the recipient. And, should circumstances change - if one of the shareholders dies for example, unwinding the company or passing on its assets can be complicated. Make sure you consider how you will exit the company.

    Corporate lending can be more costly than personal lending. Shop around.

    Leave a comment:

  • loanarranger
    There is nothing to be concerned about in starting a Ltd Co to hold Property, make sure you have the relevant SIC code just in case you decide to purchase another property and raise a mortgage to complete the purchase or subsequently wish to raise a remortgage.

    You clearly are aware of the current tax benefits of owning property in such a vehicle , which cannot be guaranteed going forward. The startup costs and admin costs will be discussed with a suitably qualified accountant and ideally one that understand Residential property investment. A company can be setup at a nominal cost yourself or it can be done by the accountant but the costs will as you would expect be much higher, get a couple of quotes.

    Money from your personal resources can indeed be loaned to the company and repayment can be arranged as and when it suits your purposes, your accountant will again advise you.

    So find a good accountant , get advice and an indication of costs and what work is involved. If however you do not intend to buy anymore that this one you might feel that it might just be better to buy in your joint names.

    Leave a comment:

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