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  • Section 24 HQ

    Ringfencing Theory -section 24.

    Good morning.

    Civil servants and government tend to create policy in anticipation of future possible outcomes and events.

    (Disclosure -Not currently affected by s24 and did not incorporate was too costly with stamp duty.)

    So I have a theory. Government created a situation so bigger landlords had to incorporate.

    A situation where incorporating was best measure and at same time got some lovely stamp duty and CGT out it. Government wanted to shield/ ring fence BTL industry same as they have done with banks. They know a future correction is on the cards and may even trigger it.

    A company is a separate entity that you control.

    limited liability means exactly that.  What a perfect way to ringfence BTL in the event of repos/ market correction and high interest rates.

    At the same time  added bonus of creating more new companies/ business. False growth.

    Shielding higher rate tax payers from bankcruptcy.

    Even if crash/correction doesn't happen.  They will just tax company in different way.

    Note indexation changes

    ( threat of vat at lower threshold mooted in papers at budget time.)

    The future :

    Making it harder to take profits out of company and double taxation issues.

    Who is going to buy the companies? Exit strategy?

    This also means less likely to rush for exit. Maybe exit strategy to sell your company to pension funds in future if you tick right boxes.

    Remember this just my opinion as an observer. I'm not out to scaremonger.

    another theory about brexit.

    P.s I also think the illusion of brexit has occured in the event if Italy/Greece defaults bail outs. Government Crunch 2020

    UK created a Get me out of jail free card. 40billion might be cheap price to pay.

    (Don't want to be on the hook for payments we can't afford should eurozone crises occur in next few years. Hedging our options.)

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 

    It matters not whether a corporate or sole trader  the bank still takes the hit if things go belly up.

    Shrewd LL  will ensure they have no other assets in their name once they have incorporated though personal guarantees are a problem.

    But it really doesn't matter whether a leveraged LL  is a sole trader or incorporated

    If the mortgages can't be serviced then the bank fakes the hit.

    They hope that deposits will be sufficient  to prevent losses after property is auto obedience off though this is unlikely.

    A run will occur on property values which will take years to recover from and as in the North still no recovery  to 2008 prices.

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    I also forgot to add. Section 24 forces you to deleverage position and buy without leverage in the future.

     doctors and high earners who would just sit on property or rent with small negative cashflow waiting for capital appreciation can no longer do so.

    Too many folk were doing this for pensions etc. Hoping to Replacing main income and retire early and leaving rat race.

    Governmentc can't have that

    they need you to work and pay taxes till age  70/80 and put money into your pension. Otherwise pensions would collapse earlier.

    Government is juggling so many plates at present to keep things from collapsing.

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs.