Buying a flat

[Clare@InTouch]

Can I just revive this old thread?

I'm in the situation now where I'd like to buy a flat for 135k cash, to live in full time.

Most of money is in the limited, so I'm looking at a dividend for almost the full amount on April 7th.

Does anyone have any links that will help me decide whether I'm best to do this via the company or personally?

It seems to me that buying in the company might be more expensive and more hassle over the long term, but that may be preferable to withdrawing 95k cash at 40% tax.

If I go via the company, the elements I think I need to be aware of are:

1) Benefit in kind of around £9k per year to me in rent. How do I calculate how much tax would I pay on this annually? This hardly credible source suggests 20%, so around £1800 tax to pay per year. That doesn't sound so bad - it would take me over 15 years to pay back the amount I'm going to be paying on my self assessment bill.

1a) I believe there is an option to pay rent into the company, reducing BIK exposure, but I believe this rent would then be 20% taxed and 20% VAT'd, making this much the worse option.

2) How much would the purchase reduce my corporation tax by out after this purchase? It sounds like it would be immaterial from the discussion above.

3) If it's in the limited name, would things like council tax and maintenance become expensible to the company?


I don't plan on selling or closing the company for a long while.

Edit - I assume the recent 15% stamp duty thing is just for houses over 2 million?

The £95k dividend would be taxed at dividend rates, not income tax rates, so it would be less than 40% (mostly at 25% in fact, depending on other income). Say £25k for arguments sake.

Ignoring the BIK implications for a second, one of the main factors to consider is the fact that you'd have to pay CT on any gain if you sold it - you don't get the PPR (Principle Private Residence) exemption that you'd get if you owned it personally. If you keep it for 15 years and it increases in value by £100k - that's a CT bill of £20k. Plus you'd have paid BIK in the interim.

If you wanted to close the company at any time then you'd have to sell the flat back to yourself - crystallising any gain as well as incurring legal fees and stamp duty.

Have a look here to start the BIK calculation: Living accommodation: Section 107 ITEPA 2003: cost basis or market value basis

[Waldorf]

This may assist if you are contemplating property investments

http://www.nixonwilliams.com/images/...20Taxation.pdf

[Kanye]

Thanks for the comments so far.

I'm extremely bearish on property so don't expect capital gains to be an issue.

[escapeUK]

Is this post for real????

Buy your home with your money. End of..

Well It looks like he didnt take this post to heart.

Northernladuk - I've just started browsing the forum again after a while away and have seen numerous posts to which you have replied.

Do you know that you come across as a total bell-end in most of your posts? I'm just letting you know, as if it was me I'd want to know.

[d000hg]

Your company could buy it specifically to let to contractors. Such as you - AND other contractors when you're not using it.

[Kanye]

Well It looks like he didnt take this post to heart.

I took it to heart by concuring with Dantes post that NorthernLadUK is an absolute prime example of a <mod snip>

[northernladuk]

I took it to heart by concuring with Dantes post that NorthernLadUK is an absolute prime example of a <mod edit>stirling chap</mod edit>.

<sniff> You made me cry