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tax implications for paying off mortgage in Ltd company


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Hi

I have a BTL property within a Ltd company.

Mortgage rates will rise soon quickly and I am at the end of my mortgage term. I have funds to clear the mortgage and I am inclined to do do.

Questions:

Are there any tax issues I shold be aware of if I was to pay off the mortgage? I guess it should be in the form of a Director's Loan?? 

What is the best way to withdraw the profits from the company?

Many thanks for your help

Andy

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I’m reading you will pay money into your company in order to pay down mortgage debt? The only tax implication might be that you pay more tax as cost of serving debt is lower so less costs to offset rental profit. 
 

to withdraw profit from company your options are repayment of directors loan, salary or dividends or combination of the three.

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David M Slater ACMA 
Accufy Accounting
01946 552801
  david@accufy.uk
  www.accufy.uk
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Look at this a different way. If you have borrowed money yourself ( personally ) and lent it to the company ( perhaps to buy a property ). Any interest due on the loan ( YOU ) took out can be paid back to you from the company without hitting or effecting your personal ( is it £1,000 ) a year allowance. Something to do with double taxation. Or, what I do is just stack it up in the directors loan account. I've got finance from mortgaging unencumbered private assets then lent the funds to my company. Saves about 1% on the borrow rates. If I really need the money back I can just borrow against the new company assets.

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  • 1 month later...

So, at the moment my company owes me about £10k in interest due on loans to the company a year. Because for the past 3 years I've been refurbishing properties ( 3 of them ) I have a loss in the company of about £38k and now all of the property is let. So, I should be able to start drawing funds out of the company, firstly to pay down the interested due on the loans to the company and then later to perhaps erode the capital debt. However, I don't need the money at the moment so I might leave it just incase something pops up to buy.

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