ARCHIVE | Feb 18 Results

introducing steve mears – independent financial advisor the money man

Should you form a limited company for your buy-to-let investment?

We have had a lot more clients asking about Limited Company Buy to Let in recent weeks, so I thought I would provide some very brief information. With such a big decision, a chat with us is obviously a good plan, but an accountant is also a must!

Pro’s There are a couple of financial reasons why you might choose to own property as a company rather than an individual. Firstly, the way you are taxed on the rental income will differ slightly. If you own a property as an individual, the money you get from rent will be taxed as income tax, alongside your other earnings. But, if you choose to invest a property in your limited company, the profit you make will be liable to Corporation Tax instead, which is usually lower than the higher rates of income Tax. Therefore, it could make a huge difference to the amount of tax you pay, if you pay income tax at 40% or higher. Rental profits taken as salary or dividends will be taxable income taken from your band. However, there are ways you can take your dividends to maximise tax efficiency, or you can leave them within the company to use on your next investment property. For low rate Tax payers, it’s harder to justify restricting yourselves to this type of product, but still seek advice. Con’s The main difficulty you might come across if you intend to use your limited company to buy property, is finding a suitable lender. We can help with this,

” “ …as usual, make sure you get the very best deal available – a consultation costs nothing… but the majority of buy-to-let lenders will not lend to limited companies, and if they do, Rates and fees are usually higher. Although it is possible to approach a commercial lender, you are likely to come across even higher interest rates and lower loan-to-value ratios. The other downside is that you will need to file annual company accounts that might incur additional costs and time. As usual, My advice to anyone with any borrowing at the moment, is to make sure that they have the very best deal available to them, as a consultation costs nothing but a little time, and rates are still very competitive. We are always available at the auctions to have a quick chat, or our office is on Alma Vale Road, right around the corner. Happy bidding and we hope to talk soon.



to contact Steve, email , telephone 0117 973 4300 or to find out more about Steve Mears Independent, visit

Made with FlippingBook HTML5