According to research from Kent Reliance, landlords are moving buy-to-lets into limited companies in response to recent changes to their tax treatment which is due April 2017.
Over 100,000 buy-to-let mortgages were given to limited companies in the first nine months of the year. This figure has doubled since the whole of 2015 and over 12,000 a month in the last quarter.
Benefits of Property Through a Limited Company
The recent shift is down to the widespread changes to the way buy-to-let investments are being treated by the taxman.
However, there are several benefits of operating through a limited company when dealing with property.
– Tax savings – with the new tax changes affecting buy-to-let, there are bigger tax bills for landlord who currently pay the higher rate (40% – 45%) of income tax. The new £5000 tax-free allowance on dividends would allow landlords to significantly reduce the tax you will need to pay annually on your rental income.
– Grow your portfolio faster – an SPV allows investors to re-invest a higher percentage of profit in another property. If you are a higher-rate tax payer, your income tax rate will be 40% to 45% compared to the corporation tax of only 20%.
– Easier change of ownership – when an individual purchases a property, by law there can only be a maximum of four names on the deed. Through an SPV however, the shareholders (investors) are owners of that company. As a company can have unlimited shareholders, it is therefore very easy for a group of investors to come together to invest in a property.
How can Gorilla help?
For only £50+vat per month, Gorilla Accounting can provide you with an expert BTL service. Our BTL offering includes of the following:
Our all-inclusive accountancy package includes:
- No set up fees.
- Competitively priced – £50+VAT per month & £10+VAT for any additional properties. Some firms charge up to £950+VAT per year (per property) plus set up fees.
- One tax return included – some firms charge up to £225+VAT.
- As a group we have financial/investing/legal/banking expertise.
- Dedicated accountant.
- Conveyancing/solicitor relationships to assist with property purchases.
- All-inclusive service.
For more information on how a BTL works within a limited company, contact a member of our New Business team today on info@gorillaaccounting.com.
