Fair Rents (Scotland) Bill or Artificial state manipulation of free market rent?10:34 AM, 6th November 2020
About 4 weeks ago 36
On the advice of my accountant about four years ago, I (they) set up a limited company for me to run my own portfolio of around 55 properties through.
With interest rates at an all-time low, cash flow is very positive so the Ltd Company sounded good to lower mine and my wife’s own tax liability.
We put through a fixed amount (15%) of the yearly rental income that would be similar to high street letting agents. This amount is based on the fact that we manage all the maintenance and file any eviction paperwork and attend court ourselves, so the 15% was deemed to be fair.
For the first year of the Ltd Company (tax year 10/11) we put in the region of £65k through it. This lowered our own personal income band to just below the 40% band and we only paid the Ltd company tax at I think the rate was 21%. I hope that makes sense.
Four years later HMRC are saying that the Ltd Company is just an avoidance scheme and therefore cannot be used.
My accountant is in the process of debating this with them.
I would welcome any feedback whether good or bad.
I am aware of other local landlords that have done similar.
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