Limited company vs landlord

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    Limited company vs landlord

    Recently reading more and more posts on here and coming across quite a few landlords who have made a limited company.
    What made you do this?
    Are there financial benefits?
    Tax benefits?
    Is it something I should look at?
    I have 3 buy to let properties, 2 are mortgaged. I have a large mortgage on my own home and need to pay out my ex partner so penny pinching at the moment!
    Thanks Kelly

    Anyone considering having a Limited Company to hold BtL should in the first instance consult a suitably qualified Tax Accountant.

    As you are presently holding these three BtL’s in a personal capacity , transferring these to a Limited Company would be treated as a sale & purchase , so downside is immediate in sofar as the Ltd Co would have to pay SDLT and you in turn might have a CGT liability on their respective sales after taking account of your annual CGT allowance. The next issue is having to rearrange your mortgage funding(assuming you have loans in place) as you cannot transfer current borrowing rates.

    So again speak with either a chartered or certified accountant to enable you to understand the benefits and negatives of operating BtL’s via an SPV Company.


      There's obviously no harm in talking to an accountant about your options, but you might simply find that you come out wishing you had done things differently, but that there's no way of fixing it that makes financial sense.

      If you plan on growing your property business, it's definitely something to do before making any further purchases - even if you end up a mix of properties that you own and some in a company.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


        I can see an advantage for elderly people in using a Limited Company to run a business with a few rental properties. A relative was renting some properties out for years then he sold them in 2019 at the age of 75, but he found that he had to keep all his documents for 6 years, i.e until he is 81, so when he sold his business his small house is now full of thousands of receipts, invoices bank statements, etc .etc, whereas I believe if had been a Limited Company and closed it down, everything could have been chucked in a skip. (which is what one of my business tenants did when they went into Liquidation)
        Although for Capital Gains Tax purposes you have to keep bills "forever" in case if you say you spent money on improvements say 20 years ago and want to use what you spent to reduce CGT (which may go up) you may have to prove it.


          The 6 year rule for keeping invoices etc is a mandatory requirement by HMRC for anyone running a business irrespective of whether it relates to income from Land & Property or Window Cleaner, re dividend income from share investments etc


            The Times Newspaper ( Sat 13 Jan 2022,) Money Section page 62 &63 reported on BTL owners putting properties into a company..

            The paper showed there are 228,743 BTL limited companies by end of 2021.

            A company director can take £2000 in tax free dividends .

            A tax advisor said "if you're a small BTL landlord who needs rental money on month-by-month basis, it's better to keep hold of your property and pay a bit more in tax."


              I think the tax advantage of being able to take dividends instead of income has been reduced recently.


                Depends if your going to run your property empire like a proper business or not. Also consider your overall tax position, long term goals and tax planning. Each persons individual situation makes doing BTL through ltd company worthwhile or not.


                  There are a lot of merits to a landlord operating as a limited company. This is particularly so in an era of higher stamp duty land tax. Much simpler to transfer a share than a property...There is a much lower stamp duty on shares in a companythat real property; plus its much simpler to give a few away every year to children and grandchildren and thus use up husband and wife's CGT allowance, assuming one has a wife!


                    I have a mix of BTL privately owned and also BTL held within a Ltd company. My co-shareholder of the Ltd company wants to sell up and this has highlighted potential tax complexities. My recommendation would be to consider any future exit strategy should you wish to sell BTLs, consider getting advice from an accountant.


                      Ending a property investment company is something that most people don't consider when deciding to set one up and it's usually a mistake.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


                        As others have said, it is best to get advice from an accountant. For example I have some BTLs within a limited company that I am now looking to sell ( 6% gross yield on £600K if anyone is interested). I paid for advice from an accountant and their advice (for my situation) was the most tax efficient way to sell was selling the company shares as you only pay CGT at 20% rate vs 28% for residential property gains. Also the buyer saves on SDLT, for example in my case the buyer only pays £3K stamp duty on the shares vs £36K SDLT on a £600K BTL purchase.

                        You will find others asking is it best to have one or more properties within a Ltd wrapper, my view is the annual company accounts costs are roughly the same whether you have 1 or 5 BTLs in the company, but maybe when/if you look to sell later a larger diverse BTL portfolio might be harder to sell than one BTL in Ltd company as shares transaction?


                          I'm just setting up my first Ltd. Co which will start with 1 BTL in it, any estimate on bookkeeping and annual return costs? Any recommendations on someone to use (Northants/Warks area ideal).
                          I'll also have someone on payroll...




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