Browse All Tribes or choose a Tribe below:
By signing up I agree to Property Tribes Terms and Conditions
Already a PT member? Log In
Sign Up With Facebook, Twitter, or Google
By signing up, I agree to Property Tribes Terms and Conditions
Already a PT member? Log In
Don't have an account? Sign Up
To reset your password just enter the email address you registered with and we'll send you a link to access a new password.
I would be interested to know if anyone has any experience with regard to this scenario ?
I hold a number of personally held properties, all of which are mortgaged. Can I legitimately form a management company to receive the rent from the properties, charging myself a market rate of 15% for full management.
I currently do most of this management anyway, however this approach would appear to be beneficial in reducing my personal income tax liability, by giving me a 15% expense to use against my own self assessment calculations, in addition to any dividend income taken from the Management Company.
I would only be looking at managing my own properties, not taking on additional management of 3rd party properties.
I'd be very pleased to hear if anyone has view on if this is actually a viable scheme with regard to HMRC.
HMRC should be ok with it as long as charging 'market rate'. Though letting agencies will have some requirements such as being a members of PRS and have PI Insurance etc... Id check if these are required if you are managing own properties or not. There will be other costs such as filing accounts, corporation tax, etc.. to take into account.
In addition the "money" in a LTD Company is not "your money" it is that of the company (as a separate legal entity) withdrawing funds out of the company you may be taxed' further.
If you have not already talk to an accountant about lowering tax liabilities.
_________________________________________________________________________The above post is not financial advice, its often me rambling - passing time on a coffee break.If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance._________________________________________________________________________
Thanks for the reply Adam. Yes, the 15% full management charge would be in line with the current market rate in my local area.
I can confirm it works
although HMRC could be a little funny over the arrangement so If you can I would also manage another Landlords property if you can
and it may be better if you can have another director who is not connected with your personal mortgages
I use my wife as a co director of the management co
Learn Change and Adapt ?????
Just also remember companies pay Corporation Tax on there profits before the distribution of dividends. With all the additional costs of incorporation and Corporation Tax might be interesting how much you would benefit.
Yes it works, but note that if the Ltd turnover is > £85,000 then it will have to pay 20% VATIan,
Setting up a Company costs £10. The advantage is for a higher rate tax payer who wants to defer payment of tax above 20% (possibly forever).
Thank you for the replies on this subject.
Yes, the benefits to me would be in creating a helpful expense to offset higher income tax exposure as S24 progresses, and also in holding funds within in a company structure, having paid the 20% ( and hopefully still decreasing ) Corporation Tax to use at a later date.
I'm somewhere in the middle of it being worthwhile to have the additional incorporation costs and under the Vat threshold of the putting a 15% management fee through the company.
I was looking to to do the same thing, however after going through the sums, I found out it wouldn't actually benefit me. But then that it is my personal situation, I already own a separate company, so I can control my income from that based on my rental income.
If you are in the higher tax bracket and will be affected with the new tax changes, and you are in full term employment, then you would benefit from this strategy.