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That's fine as long as you leave the money in the Ltd. But if you use any of the profits you will end up paying the same or more. This might be a good strategy if you work, then stop & start drawing dividends. As with everything, the actual scenario varies from person to person, and it can be very complex. Regardless of that & your post, I'd still wait a week.
Yes it is complicated but with paying a director's pension and repaying the director's loans made for deposits and purchase costs I will be able to take out all the money my company makes for several years without paying income tax.
I am not making any decisions based on the manifestos. My point was that unincorporating to avoid a 26% corporation tax does not seem a sensible choice.
I agree with you given your circumstances, however not everyone has that scenario, in fact I think it's probably less common than most alternatives. It does illustrate that everybody needs a personal financial plan.
Good point about the Election Nick. So much up in the air!! There is nothing wrong with incorporation but anything that gets really complex around that is something to be wary of, especially if there is any form of non-disclosure involved. Smoke and mirrors in property generally comes back to bite at some point. Also worth noting that Mark Alexander is not a qualified tax advisor, he's just the salesman of the scheme. Getting advice from salesmen is often not in someone's best interest in my experience, because they are going to sell you their solution, not the best one for your circumstances. That is why independent tax advice is so important.
I was Interested to read a post from Lisa Orme somewhere (possibly on the HMO Facebook page). She was saying that she has come across people who were struggling to remortgage because their personal tax affairs didn't match what the lender expected to see (due to BICT?). Would be interested to hear more about that and apologies to Lisa if my recollection is incorrect.
I mentioned that I had a client who was declined by lenders he had spoken to (before coming to me) as he had entered into a tax scheme that meant he didn't have any taxable rental income.
He had the mortgages in his name and wanted to evidence he was an experienced investor by providing his portfolio however his tax return showed no taxable rental income which caused the lenders to question where the rent was going, how he made his mortgage payments and how he lived. There's answers to those (pay the mortgage anyway, live off the non taxed money etc) but lenders don't want to a) get their head around this or b) take even the slightest risk that may be lending to someone who is involved in tax avoidance/evasion.
I simply suggested that entering into any such scheme may create similar issues.
Under the new PRA guidelines and those still to be implemented this year lenders require your portfolio for assessment and are looking a lot closer at how your tax returns compare to the mortgages they can see on your credit file and the portfolio you've declared. Differences are looked at very closely.
Brokers and lenders have in effect become unpaid tax collectors and we have had to refuse a numbers of clients until they get their tax affairs in order.
Lisa All comments are for education and information purposes only and do not construe as advice or a financial promotion. No liability is accepted for comments made. If you wish to receive information in an advisory capacity then please contact me about becoming a client. www.keys-mortgages.com
That's a really good insight, thank you for clarifying what I'd read.
I met a girl recently who was explaining her family tax avoidance scheme. If I remember correctly it involved a foreign trust, expat portfolio mortgage and a couple of other naughty bits. Seemed like a workable scheme though she did mention her father had been investigated 7 times!!
I found plenty of people online who had come foul of the same/similar schemes but it's amazing whats available to the very rich..