Jump to content

Expat BTL Tax Advice


Recommended Posts

I'm an expat living in the middle east, I do not pay income tax here in Qatar but file tax returns for my two properties in the UK which are under mine and my Wife's name. 

I plan to buy a number of other BTL properties over the next few years whilst living in Qatar, before eventually return to the UK. It has been suggested to me that it may be more tax efficient in the long run to buy any future properties under a ltd company. When I return to the UK I will be a higher rate tax payer but my wife will not. 

Does anybody have any advice? I'm beginning to look for my next property and obviously want to structure any future purchases as efficiently as possible. I already feel I may have made a mistake by not buying my last property under a ltd company. 

Thanks

Link to post

If you are buying property jointly when you return to the UK, If your wife is a basic rate taxpayer then with some simple tax planning you can can make a joint property election so that effectively she gets the lions share of the rental profits from a tax perspective. This could save some tax if you are a higher rate taxpayer. If further purchases, or increasing income for your wife, push her income towards the higher rate threshold then you could consider a limited company and benefit from 19% corporation tax and ability to deduct mortgage interest as an allowable expense. 

David M Slater ACMA 

Accufy Accounting  - Proactive accounting for property investors 

0208 242 4926    info@accufy.uk

 

 

Link to post
  • 2 weeks later...
On 2/2/2021 at 11:18 AM, stevie-s said:

I'm an expat living in the middle east, I do not pay income tax here in Qatar but file tax returns for my two properties in the UK which are under mine and my Wife's name. 

I plan to buy a number of other BTL properties over the next few years whilst living in Qatar, before eventually return to the UK. It has been suggested to me that it may be more tax efficient in the long run to buy any future properties under a ltd company. When I return to the UK I will be a higher rate tax payer but my wife will not. 

Does anybody have any advice? I'm beginning to look for my next property and obviously want to structure any future purchases as efficiently as possible. I already feel I may have made a mistake by not buying my last property under a ltd company. 

Thanks

There's a few things to consider when deciding on your structure

  • Limited companies pay lower taxes due to Section 24
  • Limited companies pay corporation taxes on profits at 19%. Higher rate tax is 40%
  • Limited companies have more flexibility. You can pay your wife a salary. You can take dividends
  • Limited companies have more flexibility with IHT planning
  • Limited companies have higher accountancy fees
  • Limited company mortgages are more expensive
  • Limited company mortgage are more difficult to be approved for

It's not a simple question! I wrote an article that covers the pros and cons in far more detail. The majority of btl purchases are in limited companies at this point

 

_______________________________________________________________________________________________________________________________
Vin Gupta
Property Investor and Developer
UK Property Blog: https://evolutionblogger.com/article/uk-property-articles
Travel Blog: https://soulfultravelguy.com/

Link to post

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...