Ltd company buy to let

[Trousers]

Hi, I’m a software consultant with ltd company. The company now has enough cash at the bank to buy a small house. I’m thinking that letting would be a better investment for the company, rather than leaving the cash at the bank with almost zero interest.

Is the company “allowed” to buy a residential property to let as an investment? If so, would it be liable for the new 3% tax on but to let property? What are other tax implications I should be aware of?

Many thanks,

Rob.

[Lockhouse]

Please use the forum search facility. The same question has been popping up every couple of months since the contracting beginning of time.

HTH.

[WTFH]

The other advice would be to ask your accountant.

[LondonManc]

The general consensus always seemed to be that you have to suck up the tax hit and go it alone rather than buy through your company, but that's never what people want to hear.

[vwdan]

The general consensus always seemed to be that you have to suck up the tax hit and go it alone rather than buy through your company, but that's never what people want to hear.

Except that advice is seriously out of date now, considering the tax changes on buying yourself. Many BTL landlords are trying to move into LTD now, not away.

My plan is still to form another company, though I've yet to fully understand the mechanism for transferring funds.

[craigy1874]

Not necessarily.

Set up new limited co
Loan funds to new ltd co from contracting co
Buy property through newco
3% ADST will be payable by newco but would be payable personally too
Shelter letting profits in newco and pay CT at 19% rather than ptax at 20% which will also affect BRB dividends.

There are other considerations that I talk through with clients, but this is the basics.

[vwdan]

Not necessarily.

Set up new limited co
Loan funds to new ltd co from contracting co
Buy property through newco
3% ADST will be payable by newco but would be payable personally too
Shelter letting profits in newco and pay CT at 19% rather than ptax at 20% which will also affect BRB dividends.

There are other considerations that I talk through with clients, but this is the basics.

Stupid question, but is the loan money pre-tax or post-tax.

[craigy1874]

Neither really as loans aren't taxable or tax deductible (potentially if written off but that is all).

The consideration to made here is will the company have sufficient cash to meet its other liabilities if it makes the loan. Therefore, to play it safe, you are better capping the loan at the after tax reserves figure.

[Trousers]

Thanks for your response. Why is it advisable to setup a 2nd company? I guess there must be a good enough reason to overcome the additional costs (accountant etc) of running the second company?

[Trousers]

No luck

Please use the forum search facility. The same question has been popping up every couple of months since the contracting beginning of time.

HTH.

I ran a search for "buy to let" but it came back with zero results?