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Company or Individual to do buy to lets.

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Hi All,


My self and my wife have recently returned from Australia to the UK permanantly. We a looking at investing in BTL's and forming a company to do this. We are not looking to borrow any money from Banks at moment as we want to create income. Has anyone set up a company to do BTL's  any help would be much appreciated as we want to get it right from the start and not try and shift properties at a later date back as I have read that stamp duty will need to be paid.




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Hi Stephen,


The first question I would ask is why are you wanting to set up a Limited Company? The decision of whether or not to invest personally or via a Limited Company will depend on many factors, so it's impossible for anybody to advise you on the best course of action without knowing your complete situation.


- Do you have other employment income? If not, then it could be more efficient to own the BTL's personally. Generally, Ltd Co's are more efficient for individuals who pay income tax at the higher rate.

- If you are not looking to borrow any mortgage finance, then again it could be more efficient to own personally.  One of the main advantages of a Ltd Co is the ability to offset mortgage interest as an expense, so if you are buying in cash outright, this won't apply to you.


I would always advise anyone in your position to seek professional tax advise from an accountant before doing anything.  The upfront cost of a few hundred pounds for a consultation could save you thousands over the lifetime of your investment if it ensures everything is set up in the best way from the outset!



Chris Hancox
Portfolio Manager



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Hi. Absolutely no reason to set up a limited company, at least for the first 5 properties, especially if you are buying in cash. Once you remortgage, you may want to think about setting up a company, and buying any additional properties with your loans in that company, so that you can offset the financing expense against your rental income, but until you get to that point, buy and keep the properties in your name. You've got the added advantage of having a wife, which, apart from many other benefits, means you can buy half the properties in your name and half in hers, thus maximising your tax position. Buy everything in a  company and you've lost that advantage, as you'll just have to pay a blanket tax of 20% on every  penny of profit you make. Also, if they're in your name, you don't have to pay dividend tax, as you do when taking money out of the company, so you can spend and thus enjoy your earnings. A company is really if you want to a) finance the purchases heavily, and secondly, if you want to keep the money in there, with the profits rolling over from one year to the next. Don't underestimate the pain of getting money out of a company. There are only two ways to do it: 1. pay yourself a nice salary with all the attendant taxes and national social security payments (i.e. you'll lose 30% that way), or 2. paying yourself a dividend at the end of the year. Here are the tax implications of that: https://www.freeagent.com/rates/dividend-tax/. Then you have all those nasty filings to make, accountants and lawyers to pay, etc. No, avoid companies until you have to have them - take my word for it as someone who's had a few of them in his working lifetime.

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