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Limited company vs sole trader


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That’s my first post and I’m looking for strategy advice. Here’s a little background to my story. 

Together with my wife we are planning to buy our first investment property by the end of this year. We live in Bristol and plan to buy in Liverpool a 3 bedroom house and renting rooms ideally around £400 each. We have £10k savings and we can have another 10k by November. In August we are going to remortgage our residential property releasing potentially up to £20k. Our main plan is to become financially independent as soon as possible. I earn 35k and my wife 13k with little prospect for any of us for promotion and pushing us into a higher tax band

My first question is: would it be wise to invest most of our savings and convert our loft into a 3rd bedroom hoping to increase value of our residential by 30-40k property and releasing more equity in August?

My second question is should we buy the house for ourselves or as ltd keeping in mind that gradually as our portfolio builds up we’d like to slow down with investing and live off the money from rent. 

Many thanks for all your answers!

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Hi Vladamir 

I can help give you a steer on the second question. There are advantages and disadvantages of investing in your own name and within a limited company. Without knowing all of the details of your situation, I can see from the limited info you provided that there my be scope for you to initially invest in your personal names as with with some tax planning you can still take advantage of being basic rate tax payers. If you are planning on scaling up your portfolio beyond just 1 or two properties then you could explore setting up a limited company. Equally you could decide to invest straight into a limited company if there was a change in your situation and you thought your salaries were likely to increase significantly. It is a decision that you should ideally seek professional advice on if you are unsure.

Which structure to invest in is your decision, this article I wrote highlights some of the advantages and disadvantages of personal ownership vs limited company and might help guide you.

Best of luck.

David M Slater ACMA 
Accufy Accounting
01946 552801


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