Sanity check required!

Myself and my wife are established BTL landlords with a high value portfolio of six properties in London. The net result taxwise is that we both now have incomes of just above the higher rate limit of £43K and no other income.

The purpose of the portfolio is purely is to provide a long term retirement income.

We wish to make an out of London BTL investment in a house of about £95K . The problem is that due to Mr Osborne’s tax changes, when I did the sums to find out how much of my monthly “profit” will be taken by the taxman under the new rules, I was shocked to see that my profits were wiped out leaving me £25 a month for my trouble. Given that I wanted an investment for income and not particularly capital growth then logic dictates to me that I should not make this purchase.

Then I got thinking and came up with the following;

1. Raise £100K against an unencumbered London property in the form of a mortgage.
2. Create a limited company and lend the company £100k
3. The company purchase the property.
4. Only take the 5k tax free dividend form the company

The net result is that:

1. My own fiances will benefit form the mortgage interest tax relief on the new loan on the London property as I will get a bigger tax credit
2. My own non company income will not be increased by the rent.
3. My company will get the rent and I will be able to take that as tax free dividend (up to £5,000) to add to my non company portfolio income

I would consider porting all my BTL properties to the new company but CGT and Stamp Duty would make that prohibitively expensive..

Finally do you have property oriented accounts who can assist with the creation and maintenance of the Company?

So what do reckon?

Reasonable idea or not?

Thanks

Chris