Don't create a BTL LTD company before watching this video!! | Property Investment UK
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- Опубликовано: 5 авг 2024
- To do or not to do…. Should you invest a buy to let in a PERSONAL or a LIMITED company? In this video I will be explaining why and how a limited company will work in your favour and how it differs from a personal investment. Remember the video sponsor GETGROUND are specialists in creating LTD companies! Go check them out, chat with them or drop them a message and they'd love to help YOU build your LTD company! Click the link below to check them out!
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00:00 - Intro
00:50 - Tax Implications
01:05 - Section 24
03:22 - LTD Company
04:26 - The differences
07:45 - Other things to consider
10:24 - Qualitative data
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As usual very useful content thanks man
Glad you think so!
LessTax4Landlors - absolutely fantastic setup. Tax experts!
Watch all your vids as I am also a young property investor who lives and breathes investing and property. When you mentioned Stoicism I actually thought wow this guy is my long lost brother lmao. The obstacle is the way!
Lol thank you!
Isn’t another benefit of a Ltd company the directors loan account? Any money you put into a Ltd company (to pay for a property deposit for example) you can take out tax free (as long as there are the funds in the business)?
E.g if you put £50k into a Ltd company to pay the 25% deposit on a BTL mortgage, you can take out £50k tax free at any point.
Correct. Also major Inheritance tax benefits in a Ltd too if it is set up correctly.
Pretty good video. I favour ltd companies due to their flexibility. Something people do not mention or consider when debating this issue. Easier to give chunks of shares to kids or pay family wages than when a property is in your personal name.
Government policy has been appalling and destroyed so many peoples pension pots.
There needs to be a ban on banks like Lloyd investing in property. They have access to BoE rates. No company or person can compete against the cheap finance they get.
I totally agree with your last point. I think it creates a huge conflict of interest if banks who control a lot of the residential mortgage lending are competing to buy the same properties.
Thanks as always Jamie, what’s your thoughts on this?
So, having properties in your personal name and keeping (your overall) income below the 40% tax threshold is a good shout would you say? You wouldn’t ever have huge monthly passive income but is a good strategy to be unaffected by S24. A decent pension right?
Hey Jamie, what happened to that video about living expenses through your company? I assume you mean things like claiming your mobile phone as an expense. want a new Drill? buy through your company etc (providing it can be justified)
Also another advantage of LTD is the fact you can have multiple shareholders, so your spouse can take dividends, utilising their allowance and only pay 8.75% on dividends. Potentially even a salary and pre-corp tax pension too
Great video! What about non UK resident expats, are they better off with limited company because of their lower tax bracket?
Hey, thanks for your informative videos, I need to know how to move your btl under a limited company structure? Thank you.
Good video Jamie
Glad you enjoyed it!
The government has targeted particular industries for tax purposes, in the construction industry, sub-contrators had to pay tax as they were paid by the main contractor, expenses then had to be claimed back in tax returns.
Also, those higher interest rates limited companies have to pay the banks aren't going away as the banks have increased risk on a limited company
Hi Jamie fantastic video as usual. I have a question. I got five properties including my residences house. When I asked my accountant to make a limited company, he said at least we need £100000 turnovers yearly. Otherwise it’s not worth to make a limited company? Is that you think?
B
I think it is easier for the government to seize a company than personal property.
If Labour gets in next time, I’d expect dividend tax to go up. Very hard to move your property back from a company structure to individual ownership. Just something to think about.
Best thing truss can do for me is put up the 40% tax bracket
Jamie! Great videos. Could you do an idiots guide to purchase a property for the first time to fix up and refinance from beginning to end please? I'm trying to sell my personal property with no chain,move in with family to save and then buy in a years time to renovate and then refinance but need a pros guidance.
Best advice is not to sell unless completely ready. You are better off renting it moving back in with family and saving assess your options after the year. Either remortgage or sell and invest
You pay 7.5% up to 37500 of Dividends. Then 32.5% above that. You are also missing the second home tax on doing it personally. I believe it is 3% in England. That could be a fair amount to add on to deposit and stamp duty.
Is there a benefit/consequence of using a foreign LTD company (ie based in Dubai) to purchase property in the UK?
loving these videos! thank you. I have two questions I'd love you to explore (it might be a flat up no) strategies for a Ltd co. owning houses outside of the UK and also if it's possible to remain owner of a ltd co. while being not being a tax resident of the UK? cheers
I’m interested in this too as a non resident, trying to get my first BTL mortgage has been a nightmare
Me too!
Waiting an kindly answer too : )
Can you do a video talking about propco opco.
So interest payments in LTD company are tax deductible? Is that right?
Any advice on moving property into a LTD company from your personal name? any companies that assist?
I’m about to create a LTD company to buy property for BTL. Can you advise me that when incorporating the company WHAT IS the correct wording of the model articles have been incorporated regarding a sole director
Maybe, given now you have new PM and King, JY should campaign to repeal Section 24 because it is discriminatory against the small man and favour big corporations/corporate tax structure!
Isnt the lower Dividens Tax an effective rate of 7.5%?
Ltd company will be more tax efficient while you hold the property but when you decide to sell (at retirement) won't there be more tax to pay vs owning the property personally? The company has to pay capital gains tax and then the money that ends up in your company account needs to be paid to you via dividends/salary which is also taxable?
Its differs, as there's many different aspects to consider
In my own experience..... Getting a mortgage now through a Ltd company is very very difficult, the mortgage companies simply don't like it and are being very awkward with less mortgage products to choose from, higher lending rates, high arrangement fees, questions on your company, your accounts and valuations coming back ZERO or down valued. They want YOU to jump 10 ft high to get their Ltd Company mortgage product...so in honesty I do not see how Get Ground can help as they are a conduit to Mortgage brokers. I say all this as Director of 2 Ltd companies. My latest product of 4.89 % with Main company never came off because their Valuer valued the house at ZERO . (Its got a tenant living there) What do you think Jamie?
That’s the wrong mortgage broker than a company in my opinion. Definitely more loops FOR SURE but I’m buying all of mine in limited companies and have no issues at all to be honest. Just the usual ones that come from property
@@JamieYork and what type of properties are they for example? What rates are you paying? I just did a round of remortgaging on a mix of single homes, multi units and commercial/resi, so it would be nice to compare.
Hi Jamie, Its not the broker, its the shift in attitude by lenders to Ltd Co mortgages in the last month, I have been buying in Ltd Co and own name dependent on property previously. The main lower fee brands like TMW etc have changed their attitude and denying lending with no solid reason. The remaining brands have some tasty arrangement fees and higher lending rates lined up so the monthly mortgage cost is significantly more than it was. Currently on a vanilla BTL house I am on my 2nd application. Which lenders are you using for Ltd Co lending?
@@clivepearce6857a bit late to add to this, but try a different broker. I’ve bought 2 via companies and had no issues. Product fees are higher and there’s a bit more admin, but it’s definitely doable.
New to the UK so excuse my question. But can directors not, when they want to get money out of the company, draw it as a salary and just pay the 40% personal tax on it (if they fall within that bracket)?
You can do that, but it’s probably better drawing it as a dividend in my opinion
How about drawing it out as interest paying for the loan from directors lending to the LTD company?
Wouldn't that pretty much defeat the object of going down the Limited Company route in the first place???? You're just at the normal income tax rate at that point.
The reason Im asking is because if its in your personal name then you will pay tax on all the income from all the properties. But in an ltd you can decide how much your salary would be and then pay personal tax on just that part.
My wife and i decided to go down the route of maximising the 20% personal income tax each. We are now doing our next investments in the Ltd company following this.
Wanted to ideally keep our eggs in multiple baskets just in case Ltd gets hit for what ever crazy reason or vice versa.
Wise move.....I have done the same....
Yes that's what we're doing.👍
@@rikardsaje given the hate on Ltd companies right now, I'm glad we didn't go straight into a Ltd. But I guess my particular situation with my wife is different to others so can't speak for everyone.
@@Solihul886 yes I'm glad we didn't either as the tax is getting silly it won't be worth working 😩.
My partner is going to finish working in a few years time so we'll put all the rental income in her name.
My plan was to go for more properties but I'm not so sure atm, I may try and pay off the mortgages but lets see how tough a Labour government will be on landlords if they win the next election.
Jamie - so if my annual rent is £15k, and i am a higher rate tax payer, i will get 20% relief? £3k relief? So i pay tax on £12k at 40%? Cheers
@@ILZ677 cheers - so 20% relief on the Mortgage Interest
Hi Jamie, I have a question and hope you’ll be able to advise.
I have a residential property bought using HTB so I can’t remortgage to release equity to start my BTL business. Instead, I want to sell, release the equity and then rent another property to live in (me and my family) Once sold, I should have circa £80-90k at my disposal to start the business. I know my approach is not conventional but I see it as the only option right now.
Do you think it’s a good way to go?
Your advise will be well appreciated. Thank you.
Seems a bit risky to me. Rents are through the roof for month thing so your monthly expenses will be going up. Do you plan to buy 1 or 2 houses BTL. If your buying 2 you won't have a cushion if one of your tennant's stop paying rent. Why can you not remortgage your HTB mortgage when your fixed term expires?
Why wouldn't you do it as salary so it comes off the profit amount and brings down the corps tax but still get an salary
I'll add as well you get NI allowance as well so win win if you have 2 jobs
That’s definitely an option, although it will completely depend on what level you’re going to pay at
Jamie, can you do a video on my strategy. I hold all my property privately and only buy homes I’d like to live in personally. When I get to retirement age I’ll sell my house then move into one of the investment property’s for 2 years and then repeat and take the money out tax free…
Erm....you still have to pay CGT unless you're evading tax. Good job you've put it on the Internet where nobody will find out...🙄
Still in line with law though?
speak to an accountant, but the tax would be pro-rated for the period you held it as an investment property
@@nicko808 well they said taking the money out tax free implying they won't be paying CGT...which isn't inline with the law!
Unless you are buying cash your BTL mortgage means this strategy is against any lender terms. If it’s cash, brilliant, if not you could be in a lot of trouble doing this.
First :-)
You are on it like sonic!
Great video ❤️👍
“ I hate all fucking politicians “ 😂😂😂😂
Not my best moment 😂
@@JamieYork it was.... monsters squeezing every penny out of us lately
You not accounting for the directors salary. Isn't that necessary?
If you want to live off the income from them then you’d usually put a below tax salary and the rest in dividends
@@JamieYork say the company only takes £1200 a year.. it pays out a salary..?
Too late!
Jamie got 3 letters for you. LLP my friend
Yep, they certainly have some benefits
Tories back-stabbing?! Bears and Popes...
You will own nothing a like it.
No. I won’t :)
@@JamieYork Ledge. Keep the content coming.
If all the mortgages are interet only Klaus is right.
You will own nothing.
It’s only property investors that think the restrictions on interest relief are wrong. They should go the whole way and stop tax relief on anyone who is just passively investing in property. If you don’t manage the properties personally and use an agent you are not running a business you are just investing.
you make simple talking so complex that it becomes difficult to understand.
better talk in a centre focus
u talk too much irrelevent
Thanks for the feedback
Just the video I needed to watch before I created my LTD
Glad it helped you! Good luck!
It's all on a case by case basis. But from my experience and understanding, those with multiple properties (minimum 4 I would say) would highly benefit from incorporating their property business into a limited company. Broadly, benefits are:
• Income tax - s24 interest relief, differing dividends on shares, remuneration planning, tax free drawdown usually on DLA
• Capital gains tax - uplift to MV on base cost of all properties (massive benefit if looking to sell a few properties in portfolio), no CGT if s162 relief available
• Inheritance tax must always be considered and smooth planning can only be undertaken with shares (rather than individual properties). A growth and freezer share structure can immediately stop an IHT problem getting worse and by use of introducing family members and/or trusts to the revised structure, IHT can be mitigated and at times, eliminated
SDLT relief usually available and care must be taken with ATED rules and obligations.
• Moreover, CT rates will remain at 19% so definite tax savings there for HR / AR taxpayers.
Feel free to reach out: omar@aswatax.co.uk 😀