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  • Tax

    Tax free money from a company

    One major advantage a company has is that when a property is transferred from personal to company the equity in it can be withdrawn tax free from the director’s loan account. In personal the equity is much more difficult to get your hands on.

    Well worth being aware of if thinking of incorporating.

    EDIT: I've not got this quite right. Please ensure you read all the posts which explain where I've gone wrong. I offer an abject apology to all readers who I have confused.
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    And would the Company have to pay corporation Tax as it pays back the directors loan ?

    I realise its a return of funds to the director and the director receives the money tax free

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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.


    There is no doubt that under the right circumstances and key benefit of incorporation is extracting any capital gain tax free. It will probably be funded by after 19% tax on profits but if there are other resources then they would fit.

    However it's not the full value it's the gain. And depending on the structure it could trigger other taxes. It's a complicated set of rules which require professional advice.
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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Hi I have gifted equity to my company

    so there are directors loans which are owed to me

    my understanding is that the  company pays corporation tax when it pays me back the directors loan

    is my understanding right ?

    I know I have no further liability for tax

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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.


    A gift won't create a directors loan. Not wound it have avoided SDLT. Without a directors loan you can get cash out tax free as you suggest.
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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    sorry to be a pain But can I ask the question again

    I had property in my own name and I sold it to my company all taxes were paid at the time of transfer CGT and Stamp Duty

    The lender allowed Gifted equity

    IE sold at 80k new company mortgage of 60K

    So the company owes me 20k

    If the company has the funds and pays me back £10,000  would the company pay Corporation tax ie £1900

    I know I have no tax to pay  ie NO INCOME TAX

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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.


    If the company has funds no further tax is due on withdrawals from your DLA.

    Only income within the company is taxed at CT rates.
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    so neither myself or the company pay tax  when I recive the cash from the company

    Some folk say it is taxable some say its not thats why I get confused

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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.


    Hi DL

    If the company is repaying the directors loan from profits earned on rentals then it will have to pay CT.  If the company re-mortgaged and repaid your loan from the re-mortgage then it would not pay tax as it made no profit.  Obviously you would pay no personal tax either way as you are just having your loan returned to you.

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    you have confirmed what i thought so if its paying back from profits Corp Tax is payable  so its not tax free money

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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.


    Paul is right and I stand corrected. Please accept my abject apology.

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