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  • Tax

    Minimising Tax - Sole Trader vs Ltd Co?

    80% tax as an individual landlord

    50% tax as a Ltd Co extracting the dividends

    19% tax as a Ltd Co extrating no dividends.


    to move to a Ltd Co, you may fullfill the criteria for incorporation rollover relieve if you transfer ALL propertes, however SDLT will be due at the rates increase april 2016.

    Overall in the long term for myself I found it more beneficial to transfer to a Ltd Co.

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    Thanks for all your comments.

    Since doing a lot more homework and taking further advice, there are legitimate ways to defer CGT and not have to pay SDLT when incorporating. So this makes going the company route more financially feasible.

    However, just spoken to a chartered accountant who seems to have the answer (for my situation).

    In a nutshell - we form a LLP and a Ltd Co, all profits go into Ltd Co, but purely as a book entry, then by using a letter of trust the actual rents stay in the LLP. So we'd only pay 19% on rental profit as drawings from LLP, and we could claim mortgage interest relief. I'm waiting for the figures to show how it will work in practice. Is this what anyone else is doing?

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    Pete100

    Did you get the figures and can I ask who the Chartered Accountant is please

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    I would get a coupe of second opinions on the route your going to use

    My own Tax advisor who works for a large accountancy firm say this sort of thing will not work

    He has said a number of times if it was viable he would do it himself and he is not going down this line

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    Learn Change and Adapt ?????


    I would get a second opinion as there has been anti avoidance legislation for mixed partnership for some time to prevent exactly what you describe above.

    Deb

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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA