Using a Ltd Co for Buying New Property and managing existing ones
I have large Portfolio of property in the NE and I am looking at a number of avenues to avoid this tax regime from the summer budget.
I have no income other than from property, have a very good cashflow and pay high rate tax now,
Yes I could move half of my BTLs to a LTD Co with little CGT or Stamp Duty to pay as half of my BTLs have been purchased since 2008 and there has been little Capital growth since then in the NE.
Even if this new evil tax had not come around the corner I would have thought of using a LTD co for future purchases. This would give me the option to bring my family into the Ltd Co via Shares Wife ,Son and Grandchildren.
Now I need to inflate my expenses on Management and Repairs to reduce the Taxable cash in my BTL business. My plan is to use my Co to do all the repairs for my BTLs
so lets say I have a repair cost on BTL of £100.00 my Ltd Co would do the repair with the help of a tradesman charge of say 25%. My BTL would then have an invoice for £125.00
The effect would be a larger Repair Bill for my BTL and My Ltd Co would have a profit of £25.00.
As I am 57 pensions would be a good choice for My LTD Co to fund my pension etc which is tax efficient.
Is this sort of arrangement legal and do others see any problems with the arrangement
Regards
DL
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Member Since October 2013 - Comments: 248
11:52 AM, 2nd October 2015, About 11 years ago
When I raised a similar idea on another thread, I was advised that HMRC would “take a dim view” if the limited company (that I was a director of) only managed my own properties.
Comments: 38
12:08 PM, 2nd October 2015, About 11 years ago
Reply to the comment left by “John Frith” at “02/10/2015 – 11:52“:
Hi John
I have taken quite a bit of advice on this topic
The HMRC may not like this arrangement but I do feel it would be a better solution in light of the forth coming events of new taxation
I would be ok with a challenge it has to be better than a 158% income tax bill if I leave things as they are ?
Member Since January 2011 - Comments: 12212 - Articles: 1417
2:43 PM, 2nd October 2015, About 11 years ago
Reply to the comment left by “Dislexic Landlord” at “02/10/2015 – 12:08“:
May I ask the gross value of your portfolio?
Please see >>> https://www.property118.com/tax-efficient-incorporation-landlords/77519/
.
Member Since December 2014 - Comments: 7
4:19 PM, 2nd October 2015, About 11 years ago
I have just setup a limited company and about to transfer one of my properties to it (no CGT) but have a question that I am struggling to find an answer to. I have no mortgage on the property but once its in the company then i want to refinance it to release some cash for my next purchase. I am not sure if i can refinance immediately as i think you need 6 months trading before anyone will refinance – even with a personal guarantee.
Is there a way around this?
Comments: 38
4:31 PM, 2nd October 2015, About 11 years ago
Reply to the comment left by “Mark Alexander” at “02/10/2015 – 14:43“:
Hi Mark
The vaue is around 3m an outstanding loan of 1.6m with a very heathy cashflow and I do pay 40% tax now
Comments: 38
4:37 PM, 2nd October 2015, About 11 years ago
Reply to the comment left by “haf ali” at “02/10/2015 – 16:19“:
I am not sure if the six month ownership is a problem with in a Company but I am sure a good Broker would tell you the situation
I started banking with Lloyds about 3 years ago with a business account for my current BTL
and I think it was a good move I have a couple of BTLs with them so I have a track record so they have advised that they would be interested in finance for my new Ltd Co
its also good to have a personal touch and its great to have a chat with someone who can say yes to a deal so you may want to do simier
Member Since April 2015 - Comments: 4
11:03 PM, 2nd October 2015, About 11 years ago
You can always structure a trust fund under section 162 and transfer your property into an offshore trust fund subject to mortgage provider approval if there is a mortgage attached.
Own nothing and control everything
Member Since January 2011 - Comments: 12212 - Articles: 1417
11:09 PM, 2nd October 2015, About 11 years ago
Ah but you need to be confident that your tenants would pay the 20% withholding tax from their rental income for you, or risk getting the properties siezed.
And how would you spend the money?
.
Member Since April 2015 - Comments: 4
11:33 PM, 2nd October 2015, About 11 years ago
Reply to the comment left by “Mark Alexander” at “02/10/2015 – 23:09“:
Ahh good question young man, it’s called HMRC mitigation if you I form HMRC before hand and what you do with the 20% or in this case profit HMRC are aware you invest it into a trust fund, in fact the money does not leave the UK .
The trust fund then can send you a loan in cash and you can do what ever you want, it’s none taxable.
Member Since April 2015 - Comments: 4
11:38 PM, 2nd October 2015, About 11 years ago
Just dawned on me you are talking about VAT then in this case this will have to be paid to the country of duristiction in some cases double tax treaty. Sorry Mark got to that time of day.