Reply to: BTL property in LTD and VAT

[hugebrain]

Will that require a heat pump at that stage or soon after? That's £10k down the tubes as well.

Can’t you just pay yourself a low salary and get one for free? I think there’s a scheme for that.

[Lance]

P.S. Might have been better if I'd started a new thread instead of this off-topic tangent.

FTFY

[gisp]

Hi all,

just a few notes:

1. If you get 8% interest on the director's loan, I dont think a £1000 is tax free at all. I remember asking my accountant years ago and they said this interest allowance is for banks/savings. Can you confirm that?
2. What I make of the below: You can reclaim the 20% tax on the interest (up to £12570) paid by your company if your income is < £12570. You do this with your SATR.

If you charge interest


Interest you charge your company on a loan counts as both:

• a business expense for your company
• personal income for you

You must report the income on a personal Self Assessment tax return.

Your company must:

• pay you the interest less Income Tax at the basic rate of 20%
• report and pay the Income Tax every quarter using form CT61

P.S. Might be better if a mod can split the thread and leave this one about the VAT in BTL SPV.

[Fred Bloggs]

So, the smart(er) investor is aware of what is in consultation (and likely to be passed), and makes financial choices based on the information they have. Others sit back and hold on until after the horse has bolted.

Quite.

The C EPC requirements could in time even be extended to selling a house. There's thoughts afoot that selling a house with an EPC below C should be banned. Rendering (hundreds of?) thousands of houses economically unsellable and at the same time unrentable too. Best not say any more, too far off topic.

[WTFH]

This explains why I have not heard of it and purport to be trolling

"The proposal to change the minimum EPC rating remains open for consultation until December 30^th 2021. "

So, the smart(er) investor is aware of what is in consultation (and likely to be passed), and makes financial choices based on the information they have. Others sit back and hold on until after the horse has bolted.

[NowPermOutsideUK]

And anyway the smart(er) money would have their property portfolio exposure in their SIPP by investing in real estate investment trusts which are completely hands off, professionally managed and free of hassle as well as being within the SIPP tax shelter. But it doesn't sound half as sexy, I guess.

This explains why I have not heard of it and purport to be trolling

"The proposal to change the minimum EPC rating remains open for consultation until December 30^th 2021. "


https://burlingtonslegal.com/news/pr...lords-in-2025/

[Fred Bloggs]

Is this C certificate EPC rumour or fact?

Five seconds Googling will confirm it is fact.

I don't make stuff up and I don't troll these threads.

[BR14]

Is this C certificate EPC rumour or fact?

Fact

[NowPermOutsideUK]

Any casual observation of typical BTL housing stock round here reveals an awful lot of property without cavity walls. Insulating them to the levels required will be extremely expensive (if it's even possible) and then will turn the property into a breeding ground for mould spores.

Is this C certificate EPC rumour or fact?

[Fred Bloggs]

And the rest - it will cost more than £10k to update the internals to make a heat pump practical.

Any casual observation of typical BTL housing stock round here reveals an awful lot of property without cavity walls. Insulating them to the levels required will be extremely expensive (if it's even possible) and then will turn the property into a breeding ground for mould spores.

[Fred Bloggs]

Will that require a heat pump at that stage or soon after? That's £10k down the tubes as well.

Just the tip of the ice berg. The typical BTL terrace or semi round here will need probably 3x that or more spending to have any chance of obtaining a C energy rating. The smart folks are already steadily liquidating their portfolios.

[eek]

Will that require a heat pump at that stage or soon after? That's £10k down the tubes as well.

And the rest - it will cost more than £10k to update the internals to make a heat pump practical.

[Lance]

The next turn of the screw on BTL is close. By 2025 (IIRC) all BTL property will have to have a minimum energy certificate rating of C. That's going to wipe out several years of rental income for a large number of BTL properties to be compliant. Some properties are already being sold because they'll be uneconomic to comply with a C energy rating.

Will that require a heat pump at that stage or soon after? That's £10k down the tubes as well.

[Fred Bloggs]

The next turn of the screw on BTL is close. By 2025 (IIRC) all BTL property will have to have a minimum energy certificate rating of C. That's going to wipe out several years of rental income for a large number of BTL properties to be compliant. Some properties are already being sold because they'll be uneconomic to comply with a C energy rating.

[lecyclist]

Alternative is to leave the loan outstanding indefinitely and charge the 8% annually, pay 20% (withheld by company) and fill out the CT61 once a year. This continues forever if I choose never to have the load repaid, so long as the company is profitable / has funds. It could be one source of recurring income in my retirement. The company will always own the assets and the loan will always be outstanding to me... or to my dependents when the time comes.

Excellent advice. Thanks. The link below provides additional information on earnings related to interest payments.

https://www.gov.uk/apply-tax-free-interest-on-savings