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  • Tax

    Paying less tax in a company (part 2)

    I have no argument that growing a BTL business within a Company structure is better than personal

    But Getting the profits out in for me I pay more tax which ever way I do it If a landlord is a 40% Tax payer and they are now being forced down the Company Route

    so when you think about this a company is not a great Tax deal

    They get you in the end

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    You make some good points but I disagree strongly with your blanket statement about a company not being a great tax deal and they get you in the end. A company can be a great tax deal in the right circumstances for many higher rate tax payers and you can be left in a much better position financially over the longterm if you manage your affairs properly. Simply focusing on income is not the way to look at it. All taxes have to be considered and having done extensive research on the matter I can confirm that for many higher rate tax payers that are in it for the long haul (which you should be if you'e a proper investor) a company is far more beneficial than in personal.

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    Im not sure if I am a proper investor my experience is very limited  indeed  I only own just over 100 properties

    But I ask you this question in the past 20 years of BTL most accountants recommended Personal ownership ??? So why was that

    The only thing which has changed is S24  and that is the main reason Landlords are using a company strategy

    If a Landlord is low on leverage high on yield there is still no real reason to form a company really

    and If I am wrong  why was it in the past that there were far less lenders lending co a Company Landlord

    I know personalty I would have never formed a company if it had not been for S24

    You can dress this up as much as you wish a Landlord taking property income or even selling property will pay more tax

    Unless they are pushing 40k a year max into there pension


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    I wasn't having a go at you about being a proper investor. I offer an abject apology if offence was taken by the way I tried to make my point. I was merely trying to say that a proper investor (which I consider you to be) should be in it for the longterm. As long as property is treated as a longterm business then I maintain that the tax situation overall will generally be better for highly leveraged, higher rate tax payers in a company. With over 100 properties you will find you will be better off longterm even if you don't think so now. Especially when house prices more than double over the next 5 years. No need to even use a pension though I agree this can be highly beneficial.

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    In my opinion BTL has to be long term

    I have feathered my nest quite well an I did it when lending was easy and we had no S24

    Im stuck with a bit of a tax problem But I am getting my way through it

    Get a Lemon so make some Lemon juice 

    I could sell up but I wont because I agree with you Long term BTL will always do well

    unless we get Corbyn  which I dont think will happen

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    As usual with comment from lay people or professional proponents of stand-alone limited companies, they fail to tell the whole story.  Meanwhile: - 

    1.    This example fails to mention the transactional costs such as fees, increase in lending rates and the like;

    2.    How do you get the properties into the Company in the first place;

    3.    If he has a job (£50K pa salary) he can’t claim s162 as the rental portfolio won’t be his main income, thus he’ll have to pay CGT and SDLT;

    4.    How will he deal with IHT?

    5.    In pure cash terms any extra monies that you want out of the Company can only be taken out as salary and be taxed at the marginal rate (plus NI) as all profit has already been withdrawn through the dividends;

    6.    It is not all about tax – there are other issues to take into account;

    7.    What does this strawman does with his profit from his rents – most of our clients spend the profit (school fees etc) – and hence the client still needs the same amount of income as before – so he has to withdraw all profits from the Company – which incurs CT and Divi tax/PAYE/NI.  

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    Tony Gimple

    Founding Director, for and on behalf of

    Less Tax For Landlords

    0203 735 2940

    http://www.lesstaxforlandlords.co.uk


    Thank you Tony  I agree with your view 100%

    A blind man can see what is going on here ?? We have S24 and Landlords are looking at an alternative ie a Company ???

    They dress it up to try and make it fit for purpose and try to fathom a way forward 

    But when a investors looks at all the facts it is second best compared to personal BTL

    A company is like an old fashioned Piggy Bank I recall from the 1960s made of  CHINA and sits on the Table Yes you can put the cash in the Piggy Bank and its great you can

    rattle and hear the Money But the only way you can get the money out is to smash the China Piggy Bank

    Company investment works to a point  But its restrictive and costly

    I shake my head when I see this sort of plan because such a lot is left out which is important and should be factored in




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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Indeed, and thank you very much for your comment and support.

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    Tony Gimple

    Founding Director, for and on behalf of

    Less Tax For Landlords

    0203 735 2940

    http://www.lesstaxforlandlords.co.uk

    I’ll prepare a formal response later this week.
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    cant help but like your style
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    Debbie Franklin

    Director of Tax Peplows Limited

    CTA ACA FCCA