PaulM

Registered with Property118.com
Saturday 11th October 2014

Insures properties through a broker recommended by Property118
No


Latest Comments

Total Number of Property118 Comments: 61

PaulM

20:26 PM, 7th February 2019
About 2 weeks ago

Question on tax when extracting money from a company

In response to the opening Post and JJ,
JJ's advice is spot on regards the Pensions, IHT planning, & CGT.

There are other Investment options such as VCT's, but for Corporations (Ltd Companies), the charges offset any benefit.

If you can take your income elsewhere, the most tax efficient advice I could give would be to invest it back into the business.

If you have excess cash and don't want to invest it in your own properties, you could always look at Corporate Rates of interest offered (circa 1%) or possibly bonds (basically longer term savings plans).
The other choice depending on your appetite to risk, would be secured or even unsecured loans to other businesses. The highest rates I've seen charged for unsecured loans was in excess of 55%.

If you have adult aged children, you could always employ them and pay them up to the tax thresholds. There are also low amounts of cash that could be paid to low skilled workers but I think it's circa £130ish per week.

Hope this helps....P... Read More

PaulM

20:13 PM, 7th February 2019
About 2 weeks ago

Question on tax when extracting money from a company

Reply to the comment left by Richard Jackson at 06/02/2019 - 09:49
Richard,
Corporation Tax is paid on the whole company profit, so in your example you will be paying 19% on the £100k and not 19% on the £15k (sorry).
Basic Rate Tax is increasing to £12,500 from Apr 19 so a slight benefit there.

Currently, (up to Apr) the Tax Calculations would be as follows:
£100k profit less £23,700 (2 x 11,850) = £76,300.00 profit.
£76.3k profit x 19% Corp Tax = £14,497.00 (payable 9 months post year end).
You'll then be left with £61,803 to distribute from the company.

Personally, you can then take £2k each free of tax with the remainder taxable at the 7.5% dividend rate assuming you take it all as dividends.
To ensure the dividends are "legal", you must make sufficient profits to vote them or they could be challenged by HMRC. If challenged, they could be classed as income with all the personal taxes associated with it.... Read More

PaulM

22:42 PM, 21st January 2019
About a month ago

Reduced rate VAT for landlords

Absolutely as it's the main contractor who's responsible for paying the Vat on materials at source but then only charging on at the Reduced Rate.

If you're doing the works yourself or supplying materials for someone else to install, then you can only benefit on the labour costs (assuming they're Vat registered). By definition, Property Investment is not a trade and therefore can't be VAT registered.... Read More

PaulM

22:26 PM, 21st January 2019
About a month ago

Reduced rate VAT for landlords

Hi Robert,
Exactly. The Council is the most reliable entity, but I have used Solicitors as well where it is an estate sale.
Unfortunately other utility companies won't provide any details whatsoever on previous occupiers.

The other thing I would advise is to speak to HM Customs & Excise if in doubt, as they don't bite and can be very helpful. In my experience, most contractors are too scared to do that so always err on the side of caution.... Read More

PaulM

14:47 PM, 21st January 2019
About a month ago

Reduced rate VAT for landlords

You also qualify for Reduced Rate VAT when you are bringing a property back into residential use when it has been empty and dilapidated for in excess of 2 years.

However a couple of points to be aware of:

1. You can't claim the VAT back if you are charged the wrong rate. It is your main contractors responsibility, so check his invoices before paying.
2. Depending on the size of your contractor, he may not be financially stable enough to do this as he will have to carry the additional 15% VAT liability until his next return. To clarify my point, he will have to pay the 20% vat on materials purchased, but can only charge you 5%. The reclaim of the additional 15% won't come until his next return.

I've found Contractors, Accountants, and Utility companies are unaware of this and some will challenge it, so have your records ready to challenge back!

My advice is to read the VAT Notice 708 well and read it again as it will save you money.... Read More