Can I Rent My Private BTLs to my own Ltd Company?

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    Can I Rent My Private BTLs to my own Ltd Company?

    I own 5 buy to let HMOs in my private name with mortgages and have to pay the higher rate of income tax. My properties are my only source of income.

    Can I set up a Ltd Company and rent my properties to it for a rental that is less than the higher rate tax band, say £45,000 total? The tenants would then pay full market rent to the company which would only pay 19% on the profits.

    My personal income will go down, but I am fine with that. Also I could leave the rental income to grow in the company as deposits for future BTLs.

    My long term plan is to sell the HMOs (they are in Reading, too far away from home) and buy flats in the Ltd Company.

    Does anyone have any experience of this? It sounds like a good idea to me, but I have a lot of ideas that sound good until I talk to someone who knows better....

    Thanks in advance for any advice.

    #2
    There are two obstacles.

    There's nothing specifically where HMRC says that you can't let properties to your company at below market rate, but it would probably fall foul of the general anti-abuse rule, because the arrangement exists entirely to reduce the amount of tax you pay - there is no other commercial benefit from the arrangement.

    Your mortgages terms almost certainly won't allow you to rent your properties to 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).

    Comment


      #3
      Hopefully chancellor will tighten up some of this sort of tax fiddling schemes.

      Taxes need to go up to pay for covid19 & Brexit
      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

      Comment


        #4
        I think your mortgage lender will object to renting of your BTLs to a company.

        But there is nothing to stop your company providing annual inspection and maintenance service to your flats ( 5 years external painting and internal decoration ) etc and charging a profit for the service.

        Comment


          #5
          Great, thanks JP and Gordon, very helpful.

          I currently do a lot of maintenance on my properties and whilst I claim for the materials I use I am not charging for my time so I may be able to do that though the company.

          For now I am setting up an SPV to buy a BTL through a company. I am thinking term I may sell my other properties in my private name and use the capital to buy more through the company. There are so many options to consider it is mind boggling, but I also get that I am lucky to be in this situation.

          Comment

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