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Dear all

 

We have a couple of buy to let’s in our personal names and our looking to purchase our first in a limited company. As yet we have not registered the company, but have seen a property we would like to make an offer on. How long does it take to set up the company and associated bank account to put put an offer forward to the estate agents.

 

Question 2 the property will need a renovation and we will be renting it to students. There won’t be time to complete the works before the new academic year so we are expecting an 8 month void. For tax planning how do losses an renovations get treated in a ltd company compared to renting as an individual.

 

cheers Nick 

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Hi @nick bower

We've actually seen quite a rise in Hubbers asking about investing through a limited company recently! 

If you give this episode of the Property Podcast a listen, it should answer question one; https://propertyhub.net/podcast/tpp125-should-you-create-a-limited-company-for-your-property-portfolio/

While for question two, this article by Rob Dix on Property Geek should have you covered; https://www.propertygeek.net/article/mortgages-for-limited-companies/

Mark Rocks
Community Builder and Content Writer

www.propertyhub.net

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7 hours ago, nick bower said:

How long does it take to set up the company and associated bank account to put put an offer forward to the estate agents.

A company can be set up quickly potentially in as little as 24 hours or less. The bank account can take a bit longer it just depends which bank you are using. The process of setting up bank accounts has taken longer recently because of COVID-19 so ensure you factor in a few weeks at least for this to be safe.

 

7 hours ago, nick bower said:

For tax planning how do losses an renovations get treated in a ltd company compared to renting as an individual.

Losses are treated similar under both structures. In a limited company you could either use them up in the current year and set against total profits (if you have non - property related income in the same company for example) or be carried forward to use against future years profits.

Investing in your own name there is no sideways loss relief so you can't for example offset against sole trader or PAYE losses. As with limited company they can be carried forward to offset future years rental profits until the losses are fully utilised, at the first available opportunity.

Renovations are also treated similarly, you just need to make sure you are correctly claiming as revenue expenses where the expenses are revenue (as most expenses should be in a refurb usually) so that you can claim against rental profits.

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David M Slater ACMA 
Accufy Accounting
01946 552801
  david@accufy.uk
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  • 10 months later...

Perhaps the greatest benefit for some is that maintaining your business as a restricted organization can empower you to genuinely pay less private duty than a sole broker. Restricted organization benefits are dependent upon UK Corporation Tax, which is presently set at 19%. A private restricted organization expects to have and keep a base settled up capital of Rs. 1 lakh. It could go higher, as recommended by MCA every now and then. There could to be sure be a duty reserve funds to be made by changing from sole dealer to a restricted organization. While sole merchants pay Income Tax on benefits and classes 2 and 4 National Insurance, restricted organizations pay Corporation Tax on benefits, which is a lower rate than Income Tax, and no National Insurance.

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On 4/19/2021 at 9:43 AM, Nick Bower said:

We have a couple of buy to let’s in our personal names and our looking to purchase our first in a limited company. As yet we have not registered the company, but have seen a property we would like to make an offer on. How long does it take to set up the company and associated bank account to put put an offer forward to the estate agents.

 

Question 2 the property will need a renovation and we will be renting it to students. There won’t be time to complete the works before the new academic year so we are expecting an 8 month void. For tax planning how do losses an renovations get treated in a ltd company compared to renting as an individual.

 

Hi Nick. Losses on your property investment business are treated in the same way in ltd co and in personal name. However, your accountant will need to decide if its a revenue expense or a capital expense. You can only claim capital expenses once you sell the property. 

I've written a some articles on limited company taxation, which I think could be useful. This article talks about the tax benefits of limited companies. This article talks about how you can transfer properties into a limited company, without paying any tax. It's definitely worthwhile doing your research, as the tax savings can be substantial

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

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