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Landlords Set Up Limited Companies to Acquire Properties

January 21, 2019 12:19 pm | This post was written by mmadigital | Posted in: Commercial finance, Commercial property, Company and commercial, General news, House sales and purchases, Salehs news, Wills

Recent tax developments have seen a significant percentage of UK landlords switching their portfolios to limited company structures.

The introduction of an additional 3 per cent stamp duty surcharge in April 2016 was closely followed by the reduction in mortgage interest tax relief for landlords from 50% to 25% in April 2019. This will be phased down to a 20 per cent flat rate in 2020.

Profitability for Landlords, particularly higher rate taxpayers, is being squeezed.

One solution can be to move property portfolios into a limited company structure and pay corporation tax (currently 19%).

Another potential advantage of incorporating a property portfolio is the potential for mitigating inheritance tax liabilities in the future.

Of course, there are also some disadvantages of incorporation:

A company purchasing the properties would have to pay stamp duty land tax. Capital gains tax could be payable on the transfer to a company, if there is an increase in value that the individual has enjoyed, and any company profits that are drawn by an individual director/shareholder as dividends or salary could still attract higher tax rates. In addition, borrowing through a limited company may be more expensive than borrowing as an individual.  These one off and set up costs could reduce the potential savings, but may still be outweighed by the benefits.

Salehs have helped incorporate landlords with property portfolios, working closely with tax specialists. Careful planning and obtaining timely tax advice will mitigate the disadvantages of the recent changes.

If you would like to consider if incorporation is the correct option for you, Richard Saleh can advise on the process to ensure that the appropriate solution is implemented for your individual circumstance.

For advice contact Richard Saleh on or alternatively call us on 0161 434 9991. With Salehs you’re in safe hands.


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