{"id":6038526,"date":"2022-01-06T09:15:14","date_gmt":"2022-01-06T09:15:14","guid":{"rendered":"https:\/\/www.buyassociation.co.uk\/?p=6038526"},"modified":"2022-01-06T09:15:14","modified_gmt":"2022-01-06T09:15:14","slug":"should-i-invest-in-uk-property-through-a-limited-company","status":"publish","type":"post","link":"https:\/\/www.buyassociationgroup.com\/zh-hk\/2022\/01\/06\/should-i-invest-in-uk-property-through-a-limited-company\/","title":{"rendered":"Should I invest in UK property through a limited company?"},"content":{"rendered":"

More landlords and property investors than ever now choose to purchase properties through a limited company, but it’s important to weigh up the pros and cons.\u00a0<\/strong><\/p>\n

From small-time landlords to big portfolio investors, investing through a limited company is something most in the industry will consider at some stage. It became a particularly popular option with the rollout of the Section 24<\/a> amendment to property tax rules, which began in 2017.<\/p>\n

For some landlords, tax bills could have increased as a result of the change. Since the rollout was finalised in April 2020, landlords can no longer claim back their financing costs (such as mortgages<\/a>) when calculating their incomes. Instead, the relief is replaced by a tax credit equivalent at the basic rate of tax (currently 20%).<\/p>\n

A study last year showed that in 2020, a total of 41,700 limited companies were set up for buy-to-let businesses. According to research by London estate agency\u00a0Hamptons<\/a>, this is an increase of 23% from 2019. The numbers have even more than doubled since 2016, with a rise of 128% since tax changes for landlords were first announced.<\/p>\n

Why invest through a limited company?<\/h4>\n

The major benefit of operating through a corporate structure is that the owner should be able to take advantage of more favourable tax rates. This is particularly important since Section 24<\/a> took effect. The tax change affects higher rate tax payers the most, so these are the most likely candidates for looking into a limited company.<\/p>\n

For those operating through a corporate structure or limited company, the full interest amount can still be off-set against profits, and these are subject to corporation tax (currently 19%) instead of individual income tax, while a variety of reliefs are also available.<\/p>\n

Ruban Selvanayagam of Property Solvers points out some of the other advantages of property investment through a limited company: “When profits are compounded over an extended period within a corporate vehicle, larger amounts of capital can be deployed for future investments than would be the case if the funds were carried forward in one\u2019s own name. Therefore, \u2018mini-portfolios\u2019 can be built where an investor can stop buying in one company (SPV) and buy in another. Each will pay down all its debts and\/or generate a cash positive surplus to reinvest in properties within new SPVs as the overall business grows and becomes more efficient.<\/p>\n

“Family members can be more involved through becoming shareholders and directors, resulting in potential inheritance tax (IHT) and capital gains tax (CGT) benefits.”<\/p><\/blockquote>\n

“As a company director, investors can also pay money into a personal pension. Here, the amount of profits that the company earns is reduced and therefore the amount of corporation tax owed also decreases. Money in Self-Invested Personal Pensions (SIPPs) can also invest in commercial properties.”<\/p>\n

Should all landlords consider it?<\/h4>\n

Sometimes, smaller landlords such as those with just one property, and those in the lowest income tax bracket, might not benefit as fully from setting up a limited company. Particularly for those who already own the property, this would involve effectively selling it to the company, which could incur stamp duty<\/a>.<\/p>\n

Borrowing for limited company buy-to-lets is also generally more expensive and can be\u00a0harder to obtain\u00a0compared to standard buy-to-lets, and the associated costs involved with setting up and running a limited company in the first place must also be considered by any landlord thinking of making the switch.<\/p>\n

At BuyAssociation can put you in touch with one of our partners for more advice in limited company structures. You can also browse our available property investment opportunities<\/a> here, or contact us<\/a> for more details.\u00a0<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

More landlords and property investors than ever now choose to purchase properties through a limited company, but it’s important to weigh up the pros and cons.\u00a0 From small-time landlords to big portfolio investors, investing through a limited company is something most in the industry will consider at some stage. It became a particularly popular option… Read more »<\/a><\/p>\n","protected":false},"author":1069,"featured_media":12818,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[8,18],"tags":[428],"acf":[],"_links":{"self":[{"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/posts\/6038526"}],"collection":[{"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/users\/1069"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/comments?post=6038526"}],"version-history":[{"count":0,"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/posts\/6038526\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/media\/12818"}],"wp:attachment":[{"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/media?parent=6038526"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/categories?post=6038526"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buyassociationgroup.com\/zh-hk\/wp-json\/wp\/v2\/tags?post=6038526"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}